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Hospitals to Pay $12M to Settle Medicare Upcoding Case

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NEW YORK (AP) — The U.S. Department of Justice said Tuesday that a group of 14 hospitals will pay more than $12 million to settle allegations that they converted some outpatient spinal surgeries into more expensive inpatient procedures so they could get bigger payments from Medicare.

The Justice Department said the hospitals overcharged Medicare for kyphoplasties, a procedure used to treat certain kinds of spinal fractures usually caused by osteoporosis. Kyphoplasties can often be performed as outpatient procedures, but the Justice Department says the hospitals involved in the settlement kept patients in the hospital for extra time so they could get larger payments from Medicare.

The settlement payments will end the government’s investigation, officials said.

The surgeries were performed between 2000 and 2008.

In 2008 the Justice Department agreed to a $75 million Medicare billing settlement with Medtronic Inc.’s spine business. The government was investigating allegations that Kyphon, a company that had been acquired by Medtronic Spine in 2007, advised hospitals to do inpatient kyphoplasties to bulk up their Medicare payments even though the procedures could have often been done on an outpatient basis.

The 14 hospitals in the latest settlement are in New York, Mississippi, North Carolina, Washington, Indiana, Missouri, and Florida.

The largest payments are being made by Plainview Hospital in New York, which will pay $2.3 million; North Mississippi Medical Center in Tupelo, which will pay $1.9 million; Mission Hospital in Asheville, N.C., which will pay $1.5 million; and Wenatchee Valley Medical Center in Washington state, which will pay$1.2 million. Four hospitals associated with Adventist Health System/Sunbelt Inc. in Florida will pay a total of $3.9 million.

Six other hospitals will make the remaining payments.

The Justice Department said it has settled investigations into more than 40 hospitals related to overcharging for kyphoplasties under Medicare. Those combined settlements are worth about $39 million, in addition to the amount Medtronic paid.

The investigations began in 2008 as the result of a whistleblower lawsuit brought by two former Kyphon employees. The Justice Department said those two employees will get about $2.1 million from the settlements.

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