Hospital settles charges of Medicare fraud

March 26, 2009 1:44:33 PM PDT
One of Houston's most prestigious hospitals has agreed to pay nearly $10 million to settle allegations it defrauded the federal Medicare program, the Justice Department announced Thursday. [SIGN UP: Get headlines and breaking news sent to you]

The settlement resolves claims The Methodist Hospital in Houston improperly increased charges to Medicare patients to obtain enhanced reimbursement from the federal health insurance program for the elderly.

"Today's settlement demonstrates the continued commitment by the Justice Department to protect Medicare when it is overcharged by hospitals," said Michael F. Hertz, an acting assistant attorney general.

The hospital said it is paying the $9.9 million settlement so it can continue focusing on its clinical and academic missions and avoid a lengthy dispute with the government.

In the settlement agreement, the hospital denied the government's accusations.

"Methodist has always been, and continues to be, in compliance with all Medicare rules and regulations," hospital spokeswoman Stefanie Asin said in a statement.

Federal prosecutors said the alleged fraud occurred between January 2001 and August 2003.

Medicare, besides its standard payment system, pays something called outlier payments -- supplemental reimbursement to hospitals to pay for care when it is unusually high.

Outlier payments were enacted by Congress to make sure hospitals treat patients whose care has high costs.

The Justice Department said Methodist improperly inflated charges for inpatient and outpatient care to make its costs for providing such care appear greater than they actually were, allowing it to get outlier payments it shouldn't have received.

"Our ultimate goal is to make certain that every Medicare dollar is used for the benefit of Medicare recipients," said Tim Johnson, acting U.S. Attorney in Houston. "We will continue in our efforts to ensure that is done."

The hospital said it followed all Medicare rules during the time in question and that it got less money from the Medicare program than it cost to provide the care.

"The Methodist Hospital has always had a high number of outlier payments because the hospital is an acute care, urban teaching hospital which treats the sickest and most complicated patients from a broad regional and national service area," Asin said.

Methodist, located in Houston's famed Texas Medical Center, was the home hospital for 60 years for pioneering heart surgeon Michael DeBakey, who died last year.

The hospital is also home to the Methodist DeBakey Heart & Vascular Center, where surgeons earlier this month replaced an aortic valve in former first lady Barbara Bush.
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Statement from Methodist Hospital:
The Methodist Hospital is paying $9.9 million to settle claims on Medicare outlier payments made between 2001 and 2003. The Methodist Hospital is settling the claims to continue focusing on its clinical and academic missions and avoid a lengthy dispute with the government.

Methodist followed all Medicare rules during the time period in question and, in fact, received less money from the Medicare program during this period than it cost to provide the care. Medicare's claims are based on the failure of a third party intermediary to update Methodist's outlier formula. Rather than contest these claims in court, we decided it was best to settle. Medicare is not requiring any ongoing oversight of Methodist, which confirms no wrong doing.

The Methodist Hospital has always had a high number of outlier payments because the hospital is an acute care, urban teaching hospital which treats the sickest and most complicated patients from a broad regional and national service area.

Methodist has always been, and continues to be, in compliance with all Medicare rules and regulations.

The Methodist Hospital consistently is named among the country's top hospitals by U.S. News & World Report. The Methodist Hospital System was named No. 8 on FORTUNE's "100 Best Companies to Work For" in 2009.

The Methodist Hospital System is a non-profit, faith-based organization comprised of a major academic medical center, three community hospitals and a research institute. Methodist provides state of the art medical care, preventive and primary care, traditional hospital services and translational research.

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