Friday, June 16, 2006

New Jersey Hospital System Agrees to Pay $265 Million to Settle Medicare Overcharges

Saint Barnabas Health Care System, the largest health care provider in New Jersey that operates nine hospitals, entered into a settlement agreement with the Department of Justice for Medicare overcharges.  The settlement agreement (here) requires it to pay $265 million, payable over the next six years. The government alleged that Saint Barnabas increased the costs billed to Medicare for certain patients who incur unusually large charges for which Medicare provides extra reimbursement.  The cases, called "outliers," were manipulated by Saint Barnabas, as described in a Department of Justice press release (here): "Under Medicare‚Äôs outlier formula, therefore, a hospital that rapidly raised its charges in excess of its costs could obtain outlier payments for cases that were not extraordinarily costly.  The Department of Justice alleged that, between October 1995 and August 2003, Saint Barnabas hospitals purposefully inflated charges for inpatient and outpatient care to make these cases appear more costly than they actually were, and thereby obtained outlier payments from Medicare that they were not entitled to receive."  The hospital system agreed to a Corporate Integrity Agreement (here) with the Department of Health and Human Services under which, among other things, it will appoint an outside compliance monitor to ensure that its Medicare charges are proper.  The case originated in three qui tam law suits filed against Saint Barnabas alleging the Medicare overcharges, and the individuals who filed the suits may receive up to 25% of the $265 million payment. (ph)

Civil Enforcement, Fraud, Settlement | Permalink

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