Suit Over Medicare Outlier Payments Settled
New-Jersey based Saint Barnabas Health Care System, which owns nine hospitals, has agreed to pay $265 million to settle allegations that it overcharged Medicare by about "half a billion dollars," the Wall Street Journal reports (Wall Street Journal, 6/16).
In 2002, three whistleblowers filed two federal lawsuits against the hospital network, alleging that Saint Barnabas, between October 1995 and August 2003, inflated charges for room and board and other overhead services for tens of thousands of inpatients and outpatients under the Medicare outlier payment system. The Medicare outlier system allows hospitals to receive higher Medicare reimbursements for patients whose costs are "unusually high" because of serious illness, the Bergen Record reports.
During the eight-year period, Saint Barnabas received a total of $4.15 billion in Medicare reimbursements, authorities said (Klein/Layton, Bergen Record, 6/16). The hospital system, which did not admit any wrongdoing, has agreed to pay the settlement and have an outside monitor supervise its Medicare billings for the next six years (Washington Post, 6/16).
"This agreement will allow us to focus our energy and resources on our mission of providing the highest quality of care to our patients," Saint Barnabas spokesperson Michael Slusarz said, noting that the hospital system cooperated with the federal inquiry (Wall Street Journal, 6/16).
The settlement resolves charges in the lawsuits brought by the whistleblowers but does not address parts of the case against other defendants that remain "active and under seal," the Record reports.
The government is not pursuing criminal charges against Saint Barnabas, First Assistant U.S. Attorney Ralph Marra said, adding, "They did not view it as breaking the law. They viewed it as flexibility in the system." According to Marra, the settlement is the first of its kind in the U.S. and could serve as a model for similar cases against other U.S. hospitals (Bergen Record, 6/16).