Hospital with 0.7% Error Rate Hit with $1.88 Million False Claim Act Settlement

If this hospital was targeted by the DOJ, where does that leave everyone else?

Today I have a great mystery to present. Last week the U.S. Department of Justice (DOJ) announced a $1.88 million False Claims Act settlement with Genesis Medical Center in Davenport, Iowa. In the settlement, the DOJ noted that Genesis “retained Medicare overpayments for inpatient admissions which should have been billed at a lower rate as outpatient or observation services for the period between 2013 and 2016.”

We all know False Claims Act settlements are not uncommon; in fact, on Friday the DOJ announced a $3.2 million settlement with an orthopedic and anesthesia group that was alleged to have conspired to perform surgeries at a surgery center instead of the physician’s office and an $11.5 million settlement with a radiation therapy company which is accused of paying illegal inducements to drive volume.

But what makes the Genesis case stand out is that unlike the other two false claims cases, this case was not initiated by a whistleblower. In fact, there was no indication of what initiated the DOJ investigation, and a spokesperson for the US attorney’s office specifically noted that it was not a whistleblower who initiated the case.

So why did the DOJ go after Genesis Medical Center? My next stop was Google, where I noted another settlement for Genesis for over $53 million, but quickly realized this was a different Genesis; that Genesis was a company that owns and operates nursing facilities and it is clear that they were under investigation for doing a lot of non-compliant things, to have to pay a $53 million settlement.

Then I noted that Genesis Medical Center was in fact audited by the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) in 2014 for services provided in 2010 and 2011. Now I was onto something. Genesis must have done really poorly on this audit, so naturally the OIG opened a False Claims Act case.

Well, lo and behold, Genesis did have its inpatient admissions audited. In fact, the OIG must have been concerned, because they audited 283 charts. And how many were determined to be billed improperly? Two. Yes—two out of 283 were improper. In fact, Genesis did well in almost every area audited and they even admitted guilt with every error the OIG found.

So it remains a great mystery as to why Genesis Medical Center was investigated when there was no whistleblower and a recent audit’s results were much, much better than most hospitals’. And it worries me. This 300-bed hospital had an error rate well under 1 percent, and when I look back at other OIG audits of inpatient admissions, I found much larger hospitals with inpatient admission error rates from 25 percent to almost 50 percent.

Until we figure this out, every hospital should ensure its processes to determine patient status are compliant and followed to the letter, because we have no idea how they are picking their targets and who is going to be next.

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