Case not closed: Inpatient-outpatient conundrum

Earlier this month, a hospital group in Florida agreed to pay the federal government more than $10 million to settle a lawsuit over billing for interventional cardiac and vascular procedures. I doubt it will be the last we’ll see of cases involving reimbursement for inpatient services.

The crux of the issue is services billed to Medicare for inpatient care that the government deems “should have been billed as less costly outpatient care or as observational status,” according to the U.S. Department of Justice (DOJ). The DOJ issued a summary of the settlement that included a series of chest-thumping quotations from officials about cracking down on fraud and overspending.  

Morton Plant Mease Health Care and its affiliated hospitals settled the suit “to avoid protracted litigation and to resolve claims where the billing status was disputed by the government,” according to a statement posted on its website. “There is no admission of liability or wrongdoing in this settlement. The healthcare provided was reasonable and necessary.”

Case closed. But the larger issue is far from resolved. This autumn, the American Hospital Association (AHA) and four hospital systems sued the U.S. Department of Health and Human Services (HHS) over rescinded Medicare reimbursement for services such as cardiac catheterizations.

“The Medicare program has been refusing to pay hospitals for hundreds of millions of dollars’ worth of care provided to patients, even though all agree that the care provided was reasonable and medically necessary as the Medicare Act requires,” according to the filing. “The government’s refusal to pay for this care is harming hospitals and patients.”

The plaintiffs—the AHA; Missouri Baptist Sullivan Hospital in Sullivan, Mo.; Munson Medical Center in Traverse City, Mich.; Lancaster General Hospital in Lancaster, Pa.; and Trinity Health in Livonia, Mich.—argue that the actions violate the Medicare Act. They want “declaration to that effect as well as monetary and other relief.”

One distinction worth mentioning: Morton Plant Mease was a whistleblower lawsuit.

This is worth keeping an eye on. The stakes are high, not only for the hospitals suing HHS but for others who inadvertently might get caught in the inpatient-outpatient conundrum. By the AHA’s calculation, hospitals have had to repay $236 million in 2012 alone “for medically necessary items and services that RACs [recovery audit contractors] deemed should have been provided on an outpatient, rather than an inpatient, basis.”

Stay tuned. We will share these developments as they unfold.

Candace Stuart

Cardiovascular Business, editor