Kusserow’s Corner: 55 More Hospitals Settle With DOJ as Part of its National Kyphoplasty Initiative



Fifty-five hospitals located throughout 21 states have agreed to pay the United States a total of more than $34 million to settle allegations that the health care facilities submitted false claims to Medicare for kyphoplasty procedures, the Justice Department (DOJ) announced in a July 2, 2013 press release.  Of those hospitals, twenty-three, or about half, were affiliated with HCA Inc., of Nashville, Tennessee.  The remainder included six hospitals affiliated with Lifepoint Hospitals, Inc. of Brentwood, Tennessee; five hospitals affiliated with Trinity Health of Livonia, Michigan; four hospitals affiliated with Morton Plant Mease BayCare Health System of Clearwater, Florida; three hospitals affiliated with Baptist Memorial Health Care Corporation of Memphis, Tennessee; two hospitals affiliated with Covenant Health of Knoxville, Tennessee; and two Hospitals affiliated with Bayhealth Medical Center of Newark, Delaware.


Kyphoplasty is a minimally invasive procedure used to treat certain spinal fractures that often are due to osteoporosis. The goals of the surgical procedure are to stop the pain caused by a spinal fracture, to stabilize the bone, and to restore some or all of the lost vertebral body height due to the compression fracture. In many cases, kyphoplasty can be performed safely and effectively as an outpatient procedure without any need for a more costly hospital admission. The settlements announced today resolve allegations that the settling hospitals frequently billed Medicare for kyphoplasty procedures on a more costly inpatient basis, rather than an outpatient basis, in order to increase their Medicare billings.

Kyphoplasty Initiative

The DOJ began to focus on kyphoplasty in May 2008 when Medtronic Spine LLC, the corporate successor to Kyphon, Inc. (Kyphon), settled with the federal government for $75 million plus interest to resolve allegations that Kyphon counseled providers to admit patients for inpatient hospital stays in order to increase Medicare reimbursement, when the procedure can safely be performed on an outpatient basis. This settlement created a precedent upon which the government kyphoplasty initiative was launched.  The DOJ, with the assistance of the HHS Office of Inspector General (OIG), has over the last five years engaged in an aggressive investigation targeting individual hospitals that had billed for inpatient stays following kyphoplasty procedures.  The DOJ initiative was declared to be part of the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, launched in May 2009 to better enforce the False Claims Act (FCA) (31 U.S.C. sec. 3729, et seq.), among other goals.


The first round of settlements with hospitals occurred during 2009 and 2010 with 18 hospitals.  In 2011, another seven additional hospitals settled in order resolve similar allegations. By then, the total amount paid by hospitals in kyphoplasty-related settlements reached approximately $30 million.  The initiative continued into 2012 with the DOJ announcing settlements with another fourteen hospitals.   By the current DOJ announcement, the total number of settlements the DOJ has reached more than 100 hospitals totaling approximately $75 million.


The DOJ methodology is to perform computer checks on billings for Kyphon-related services under the appropriate procedure code. If a pattern of claims is for inpatient service, rather than outpatient, then the hospital is targeted for further investigation.  Any request for Kyphon-related records should be a “red flag” for any hospital that it may be under investigation.  It should immediately conduct an internal review of all such claims to see if a “bad” pattern exists.  All such claims should be reviewed to ensure they satisfy criteria for inpatient admission.  The results of the review will be scrutinized by DOJ at some date.  As such, a hospital should make sure it is properly performed.   It is also important to see if there is evidence of any contact by an employee with Kyphon salespeople that might indicate influencing the decision process.  The DOJ will likely make a similar determination.  If a hospital finds inappropriate billing from the review, it should make a standard overpayment refund to its fiscal intermediary. This has to be done before direct contact by the DOJ.  Once the DOJ is actively involved, this will not be acceptable. If contacted by the DOJ, the hospital should offer complete cooperation in order to mitigate potential penalties.

Richard P. Kusserow served as DHHS Inspector General for 11 years.  He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance-related matters.  The SM sister company CRC provides a wide range of compliance tools, including sanction-screening. 

Connect with Richard Kusserow on Google+ or LinkedIn.

Copyright © 2013 Strategic Management Services, LLC.  Published with permission.