Community Health Systems, Inc., agreed to pay $98.15 million to resolve whistleblower lawsuits accusing the company of overcharging for inpatient care, the Department of Justice announced Monday. Services should have been billed at lower-paying outpatient or observation levels, prosecutors said.
"Charging the government for higher cost inpatient services that patients do not need wastes the country's healthcare resources," said Assistant U.S. Attorney General Stuart Delery in the announcement. "In addition, providing physicians with financial incentives to refer patients compromises medical judgment and risks depriving patients of the most appropriate care available."
CHS denies any wrongdoing in this case, The Tennessean reported.
"The question of when a patient should be admitted to the hospital is, and always has been, a matter of medical judgment by the individual physician responsible for a patient's care," said CHS CEO Wayne Smith in a statement quoted by the paper. "Unfortunately, shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with the regulations."
But Grant & Eisenhofer director Reuben Guttman said the allegations "tell the story of a large publicly traded for-profit hospital chain gobbling up local community hospitals and running them with an eye toward financing their acquisitions by a scheme to bill the government for unnecessary medical services."
Lawsuits alleged that CHS, a Tennessee-based operator of 206 acute care hospitals, ran the scheme to boost revenues by admitting patients from emergency rooms regardless of medical need, according to the law firm Grant & Eisenhofer.
This reportedly happened in several states: Tennessee, Alabama, Arizona, Arkansas, California, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, New Jersey, New Mexico, North Carolina, Oklahoma, Pennsylvania, South Carolina, Texas and Virginia.
CHS entered into a five-year corporate integrity agreement as part of the settlement. Pursuant to that agreement, independent reviewers will check the appropriateness of future CHS claims for inpatient care to patients insured through government programs, the Justice Department noted.