Healthcare News & Insights

Hospital pays nearly $9M to settle Medicare overbilling allegations

New Jersey’s Overlook Hospital, along with its parent companies, have agreed to pay $8,999,999 to settle allegations that they violated the False Claims Act (FCA).

According to the U.S. Department of Justice, the settlement resolves allegations that Overlook Hospital, which is owned and operated by AHS Hospital Corporation and Atlantic Heath Systems, Inc., overbilled Medicare by billing for patients who were treated on an inpatient basis, when they should have been treated on an observation or outpatient basis.

This settlement also partially resolves a False Claims Act suit by  former Overlook employees. The whistleblower provision of the FCA allows individuals to file such actions and share in a portion of the proceeds recovered by the federal government.

“Billing Medicare for unnecessary inpatient services steals from taxpayers,” said Daniel Levinson, inspector general for the U.S. Department of Health and Human Services (HHS). “Although that’s bad enough, it also requires hospitalizing people who don’t need it, causing inconvenience, discomfort and worse. The size of this settlement underscores the seriousness of the conduct.”

In addition, the size of the settlement shows how seriously the government takes its commitment to uncover fraud, and puts emphasis on the fact that it expects hospitals to bill for services accurately and honestly.

Turning up the HEAT

This settlement is part of the government’s emphasis on combating healthcare fraud headed by the Health Care Fraud Prevention and Enforcement Action Team (HEAT) Initiative.

HEAT is a partnership between the HHS and the Justice Department.

The focus of this alliance is to reduce and prevent Medicare and Medicaid fraud, and that’s exactly what it’s been doing.

Since January 2009, the Justice Department has used the FCA to recover more than $7.7 billion in cases involving fraud against federal healthcare programs.

Note: Overlook admitted no wrong doing in the matter. A spokesperson for Atlantic Health System said the settlement was reached in order to bring an end to an investigation that focused on hospital activity from 2002 to 2009.

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