Hospital system pays $97M to settle inpatient dispute

Community Health System (CHS) agreed to pay more than $97 million to settle a suit alleging that it improperly submitted claims for several cardiac conditions as inpatient rather than outpatient services as well as violated the Stark Law with the director of a cardiac rehabilitation unit.

The Justice Department charged in 2011 that CHS submitted claims for Medicare reimbursement for medically unnecessary inpatient admissions to emergency departments that should have been treated as outpatient or observation cases. Conditions included transient ischemia, heart failure, syncope, chest pain and cardiac arrhythmia.

The lawsuit also targeted Laredo Medical Center in Texas with charges of inappropriately submitting claims for cardiac and hemodialysis services over the five-year period. In addition, the government alleged that Laredo Medical Center entered into what it termed an improper financial relationship between 2007 and 2012 with Benson Huang, MD, medical director of a cardiac rehabilitation unit, with referrals that it considered in violation of the Stark Law.

CHS agreed to pay $97,257,500 to settle the federal claims, $892,500 to pay states for their portions of the Medicaid claims, plus $9 million to settle the Laredo charges. CHS emphasized that the payments are not an admission of guilt and denied any wrongdoing.

“The question of when a patient should be admitted to a hospital is, and always has been, a matter of medical judgment by the individual physician responsible for a patient’s care,” Wayne T. Smith, CHS chairman and CEO, said in a release. “Unfortunately, shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with the regulations.” 

CHS is a publicly traded company based in Franklin, Tenn., that owns, leases or operates 206 affiliated hospitals in 29 states.