Hospitals to pony up $28m for false kyphoplasty claims

The U.S. Justice Dept. said today that a group of 32 hospitals agreed to pony up a collective $28 million to settle charges that they billed Medicare at the inpatient rate for outpatient kyphoplasty procedures.

In kyphoplasty, a treatment for vertebral compression fractures from osteoporosis, surgeons create a void within the vertebra and fill it with bone cement. The Justice Dept. said it’s collected $105 million from more than 130 hospitals for allegedly mischarging the federal health program for kyphoplasty procedures. The 32 hospitals in the settlement announced today admitted no liability, according to the DoJ.

Some 29 of the hospitals in the deal were named in a whistleblower lawsuit filed by Craig Patrick, a former reimbursement manager for Kyphon, and Charles Bates, a former regional sales manager for Kyphon in Birmingham, N.Y. The duo are slated to reap nearly $4.8 million from the settlement, the Justice Dept. said.

In 2008, Medtronic (NYSE:MDT) paid $75 million to settle federal charges that Kyphon, which it acquired in 2007 for $3.9 billion, coached providers to bill at the outpatient rate.

The DoJ said the hospitals involved in the agreement include:

• The Cleveland Clinic, Cleveland – $1.74 million.
• Citrus Memorial Health System, Inverness, Fla. – $2.6 million.
• Cullman Regional Medical Center, Cullman, Ala.  – $350,000.
• Martin Memorial Medical Center, Stuart, Fla. – $2 million.
• MultiCare Tacoma General Hospital, Tacoma, Wash. – $983,000.
• Norwalk Hospital, in Norwalk, Conn. – $920,000.
• Princeton Community Hospital Association, Princeton, W.Va. – $1.5135 million.
• Sacred Heart Medical Center, Spokane, Wash. – $906,000.
• Sarasota Memorial Hospital, Sarasota, Fla. – $972,000.
• Spartanburg Regional Health Services, Spartanburg, S.C. – $1.725 million.
• St. Cloud Hospital, St. Cloud, Minn. – $500,000.
• Tampa General Hospital, Tampa – $2 million.
• Community Health Systems, Franklin, Tenn. (5 hospitals) – $3.5 million.
• Tenet Health Care, Dallas (5 hospitals) – $2.2 million.
• Health Management Associates, Naples, Fla. (5 hospitals) – $2 million.
• BayCare Health System, Clearwater, Fla. (3 hospitals) – $1.5 million.
• Banner Health, Phoenix (2 hospitals) – $2.685 million.

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