NC hospital will pay $1.9 million over false claims

Rex Healthcare, a 655-bed hospital in Raleigh, N.C., has agreed to pay $1.9 million plus interest back to the U.S. to settle allegations that it overbilled Medicare by ordering higher-cost services for patients who often only just needed basic outpatient treatments, the Justice Department said Monday.

The hospital allegedly billed Medicare for a variety of minimally invasive spinal surgery procedures -- including kyphoplasty (a procedure used to treat spinal fractures) -- between 2004 through 2007, the Justice Department said. The hospital classified these cases as inpatient admissions in order to increase its reimbursement from Medicare -- despite the absence of medical necessity justifying this more expensive inpatient status.

The hospital's chief medical officer, Linda Butler, however, said in an interview with the Associated Press that the inpatient surgery  was accepted practice at the time and was only second-guessed within the past few years. Butler said the hospital settled with the government to limit its costs, and that it was not fraudulently billing Medicare.

The qui tam allegations emerged from a lawsuit that was brought under the whistleblower provisions of the False Claims Act. The lawsuit was filed in 2008 in a federal district court in Buffalo, N.Y., by two former employees of Kyphon (now Medtronic Spine). They will receive a total of about $80,000 as their share of the settlement proceeds for those claims related to kyphoplasty procedures.

Rex is one of 26 hospitals in nine states that has agreed to settlements sparked after the initial whistleblower lawsuit in Buffalo.

For more details:

- see the Justice Department release 
- view the AP article
- see the News & Observer article

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