Hospital Agrees To Pay $40 Million To Settle Fraud Charges


Editor’s Note: This article reinforces the need to audit hospital bills. If your group is with a PPO, you are either prevented from auditing claims you are funding, or you have limited audit rights. It makes perfect business sense to audit your telephone bill, credit card bill, and all other bills. So why do plan sponsors give up their audit rights under a PPO plan? That makes no sense at all.

Yesterday Kentucky’s largest hospital, King’s Daughters Medical Center, in Ashland, announced its agreement to pay $40.9 million to settle charges that it committed Medicare and Medicaid fraud by billing for coronary procedures that were unnecessary and by falsifying medical records related to those procedures.  According to this morning’s Modern Healthcare, the settlement also covers charges the hospital violated the Stark Law by paying its cardiologists unreasonably high salaries.

King’s Daughters will also enter into a five-year corporate integrity agreement requiring it to revamp its internal corporate compliance program and arrange for third-party review of its billing of government programs.

The announcement was not a complete surprise, as the hospital had disclosed the settlement negotiations in its 2013 annual report.  The hospital insists that the settlement is not an admission of wrongdoing but says that the ongoing investigation was draining hospital resources.  Negative publicity was also taking a toll.

King’s Daughters is but one of a number of hospitals under investigation for what the government sees as unnecessary stent procedures.  The government’s rule-of-thumb is that the procedure is unnecessary unless the artery is 70% or more blocked.

Today’s post was contributed by Norman G. Tabler, Jr.