Mercy Health System owes Medicare $7.9M

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Montgomery Life > News
Mercy Health System owes Medicare $7.9M
Published: Monday, August 23, 2010

By Keith Phucas

Mercy Health System, which includes Mercy Suburban Hospital in East Norriton, agreed to pay $7.9 million for overbilling Medicare during a six-year period, according to federal prosecutors.

The multimillion-dollar settlement follows Mercy’s voluntary disclosure that its hospitals improperly billed the federal health care program. The hospitals reportedly billed Medicare for one-day inpatient hospital admissions between Oct. 1, 2001, and Sept. 30, 2007, that should have been coded as “observations” or “outpatient visits.” The incorrect coding resulted in higher reimbursements for the medical centers.

The False Claims Act makes it illegal for any person or entity to present a false or fraudulent claim to the United States for payment or to keep overpayments that were received.

Medicare is the U.S. government’s health insurance program for people 65 and older, younger people with specific disabilities and persons with kidney failure requiring dialysis or a transplant, according to MedicineNet.com.

The federal program, which is funded by the Social Security Administration with a budget roughly equal to 10 percent of the entire U.S. budget, is available to about 40 million people. Medicare Part A covers inpatient hospital stays, while Medicare Part B covers physician and outpatient services.

According to the 2009 Medicare Trustees Report, Medicare expenditures were $468 billion in 2008. But going forward, those expenditures are projected to increase faster than workers’ wages and the economy as a whole.

The trustees estimate that Medicare’s long-term unfunded obligation, benefits promised but unpaid for, totals $37.8 trillion, or more than two-and-a-half times the current U.S. economy.

Medicare only reimburses hospitals for services that are “reasonable and necessary,” according to the U.S. Attorney’s Office of the Eastern District, and medical providers, including Mercy Health System, are given clear guidance to determine when hospital admission is necessary.

The Department of Health and Human Services (HHS) Office of the Inspector General publishes compliance guidelines that urge hospitals to have systems in place for ongoing audits, set policies for admissions and educate doctors and medical staffs to ensure inpatient claims are reasonable and necessary. Although Mercy hospitals had some procedures in place, it did not prevent the overbilling and did not immediately identify and return the overpayments.

U.S. Attorney Zane David Memeger said the Justice Department and federal prosecutors across the country have made “cracking down” on Medicare fraud and overbilling a priority.

According to Attorney General Eric Holder, each year the government loses tens of billions of dollars in Medicare and Medicaid funds to fraud and overbilling, money that could be spent on additional medication, elder care or emergency room visits.

The U.S. Attorney complimented Mercy for disclosing the billing discrepancy found during its own audit. The hospital system’s compliance is being evaluated by HHS’s Office of the Inspector General, and Mercy will continue to implement its corporate compliance program without the need for a Corporate Integrity Agreement overseen by the Inspector General.

In 1965, President Lyndon B. Johnson signed the Medicare bill into law in the presence of former President Harry S. Truman in Independence, Missouri, according to MedicineNet.com. During Truman’s presidency, he had attempted in vain to get a national health insurance program through Congress.

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