Rex Healthcare paid the U.S. government $1.9 million to settle allegations that it overbilled Medicare for various treatments.
Most of the procedures for which the hospital settled claims were for kyphoplasty, a spinal fracture treatment. The allegations of overbilling stem from a whistleblower lawsuit filed by an Alabama man and a Wisconsin man. Rex is one of 26 hospitals in nine states that has settled federal allegations on kyphoplasty investigations, said Timothy McCormack, the men's lawyer.
The U.S. Department of Justice said Rex classified cases as inpatient admissions from 2004 to 2007 to increase payments, when less expensive outpatient treatment would have been more appropriate.
Dr. Linda Butler, chief medical officer at Rex, said the government changed rules in 2007 and applied them to patients back to 2004. As a result, some patients who had overnight stays or spent time in the intensive care unit could be billed only as outpatients.
Under the procedure, an incision is made in the back, and a balloon inserted at the spot of the spinal compression. The balloon is inflated to make space, and a cementlike material is injected.
Some of the patients were in their mid-70s to early 80s with compression fractures due to cancer, making their cases more worrisome, Butler said.
"What we did was medically best for the patient," she said. "There was no fraudulent billing."
The hospital decided to settle because "you cannot fight someone with unlimited resources," Butler said.
The $1.9 million, paid last week, was a fraction of the hospital's net patient revenue of $575 million last year.
The Justice Department found a variety of treatments at Rex where inpatient charges were made for minimally invasive procedures. Butler said 95 percent of the cases involved kyphoplasty.
Rex is the second North Carolina hospital to settle with the Justice Department over Medicare payments for the spinal surgery. Presbyterian Orthopaedic Hospital in Charlotte settled for $637,872 last year.
UNC Health Care Systems, which has owned Rex since 2000, audited its records and could not find similar issues at UNC Hospitals in Chapel Hill. Patients there who had kyphoplasty had complications that qualified them for inpatient treatment, spokeswoman Karen McCall said.
The Department of Justice could not say Monday afternoon whether other North Carolina hospitals were under investigation.
The federal investigations into hospital billing were triggered by a whistleblower lawsuit filed by two former employees of Kyphon Inc., a company that sold materials and equipment for the kyphoplasty procedure and advised hospitals on billing practices.
The lawsuit alleged hospitals were unnecessarily keeping kyphoplasty Medicare patients overnight when they could have received safe outpatient treatment, McCormack said.
The whistleblowers will receive about $80,000 as their share of the Rex settlement.
News & Observer publisher Orage Quarles III sits on Rex's board.
