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Rex, feds settle allegations of inflated Medicare claims

Posted April 4, 2011

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— Rex Healthcare has agreed to pay $1.9 million to settle allegations that it submitted false claims to Medicare, the U.S. Justice Department announced Monday.

Government attorneys alleged that the hospital routinely submitted claims to Medicare for a variety of minimally-invasive procedures from 2004 through 2007 and classified them as inpatient admissions in order to increase its reimbursement from Medicare, despite the absence of medical necessity justifying the more expensive inpatient admissions.

“We pursue cases like this because when hospitals submit false claims in order to increase their Medicare reimbursement, as we allege here, it artificially drives up the cost of health care, leaving taxpayers to foot the inflated bill," Tony West, assistant attorney general for the Justice Department’s Civil Division, said in a statement.

Dr. Linda Butler, Rex's chief medical officer, said the hospital did nothing wrong and settled the allegations only because it didn't want to spend its resources fighting the government.

"You're going against someone with unlimited resources and you think to fight the claim would cost much more than to settle, so you basically settle," Butler said.

The allegations resulted from a whistleblower lawsuit filed in 2008 in Buffalo, N.Y., by two former employees of Kyphon, a company that specializes in procedures to repair fractured vertebrae. The employees will split $80,000 from the settlement, officials said.

Rex's settlement includes claims for kyphoplasty, where bone cement is injected into fractured vertebrae, performed by the Raleigh hospital, as well as other minimally-invasive procedures that the government contends were outpatient surgeries that shouldn't have received Medicare reimbursements for inpatient care.

Butler said that, for years, it was standard industry practice to perform such procedures as inpatient, but in 2007, the government changed its reimbursement policy to make it an outpatient procedure. The government also made that change retroactive to 2001 and demanded hospitals pay up, she said.

About 25 other hospitals nationwide have settled similar claims with the government, Butler said.

"Submitting inflated claims, as Rex Healthcare is alleged to have done, drains critically-needed dollars from government health care programs," Daniel R. Levinson, inspector general for the U.S. Department of Health and Human Services, said in a statement.

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  • Arapaloosa Apr 5, 2011

    billzieger, to answer your question...

    "You're going against someone with unlimited resources and you think to fight the claim would cost much more than to settle, so you basically settle," Butler said.

  • Arapaloosa Apr 5, 2011

    "in 2007, the government changed its reimbursement policy to make it an outpatient procedure. The government also made that change retroactive to 2001 and demanded hospitals pay up"

    Hmmm, and hospitals are the bad guys?

  • hraleigh Apr 5, 2011

    They made a mistake and are paying for it. I'm sure this is a complicated matter and one that most of us have little to no understanding of.

  • billzieger Apr 5, 2011

    I'm a little confused. Rex, along with others, paid up for procedures done before the rule change. Why could they not contest the US Govt's passing of a post facto regulation. Something does not add up here.

  • shawnwilliams159 Apr 5, 2011

    So Dr Linda Butler and Rex Hospital payed 1.9 Million in extortion money to the US government because they did nothing wrong. That about right? Our health care system is rotten to the core.

  • mikeyj Apr 4, 2011

    Isn't this the same as a car owner filing a claim on their insurance policy for a fake hit and run by another indivual. It is called "insurance scams" HAMMER TIME!!!!!!!!!!!!

  • bubbasu1 Apr 4, 2011

    When my late husband was under Hospice Care ( Wake County) he was on several medications that the Hospice nurse would order from a mail order company. Each time the meds arrived there would be 3 to 4 times the amount ordered and they cannot be returned. I finally went to the Medicare website where one can report fraud . He was under Hospice care for 2 months after he passed I discarded ( after finding out what the proper way was) over 30 bottles of liquid form meds, and 100's of tablet form meds. It is really a shame that programs like Medicare,medicaid, food stamps ect. that were put in place to help people have become so abused. I cannot afford health insurance, yet I work hard, and pay taxes so someone else can have health care!!

  • delilahk2000 Apr 4, 2011

    EVERYTHING MEDICARE PAYS FOR IS OVERPRICED. I KNOW SOMEONE THAT GOT A WHEELCHAIR AND IF THEY PAID CASH IT WAS 4,000.00, BUT WHEN MEDICARE SAID THEY WOULD PAY FOR IT, THE PRICE WENT TO 8,000.00. SOMETHING NEEDS TO BE DONE ABOUT THIS...

  • nativenorthcarolinian Apr 4, 2011

    This story doesn't give enough detail to know what happened here. Lots of ignorant commentary from people who obviously know little about the subject though!

  • donnaferguson21 Apr 4, 2011

    Being chronically ill, on Medicare and frequently hospitalized at Rex, this article sure raises concerns.

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