Hospital faces $8.1M suit for inflated malnutrition rates, gaming reimbursements

Kernan Hospital in Baltimore is facing a $8.1 million lawsuit for manipulating patient data to receive more federal reimbursements, reports The Baltimore Sun.

According to the lawsuit filed by the Department of Health & Human Services (HHS) and Department of Defense, the hospital system upcoded patients for a severe form of malnutrition called kwashiorkor to receive higher payments from Medicare and Medicaid.

Kernan's computer system recognized the words "protein malnutrition" as "kwashiorkor," which compelled clinicians to diagnose the disease, notes The Sun. Secondary diagnosis of kwashiorkor at Kernan jumped from zero cases in 2004 to 287 in 2007, the federal government noted in the lawsuit.

Officials from the University of Maryland Medical System, which owns Kernan, said the medical system doesn't agree with the government's findings and that it has been in ongoing discussions with prosecutors regarding its coding processes for malnutrition.

Upcoding patient diagnoses to boost hospital reimbursements is nothing new. Earlier this year, the Services Employees International Union (SEIU) accused Prime Healthcare Services--a rapidly growing for-profit hospital chain in California--of falsely billing Medicare for treating a large number of kwashiorkor patients. Prime was also under HHS and Department of Justice investigation for allegedly treating high rates of patients with septicemia--which also began with SEIU numbers-crunching, according to FierceHealthFinance.

For more:
- read The Baltimore Sun article
- here's the FierceHealthFinance editoral