CHW, a California not-for-profit corporation that operated hospitals in California, Arizona, and Nevada, was at the time the eighth largest hospital system in the nation and the largest not-for-profit hospital provider in California.
Her main concern, expressed to management throughout her employment, was that the hospital system had case management protocols and utilization review processes, such that the foreseeable result was and had been occurring: significant number of inpatient admissions that lacked medical necessity. This, she opined, was especially true with regard to Medicare admissions, estimated at 40% of the total system admissions.
Medicare and Medicaid pay hospitals for inpatient admissions based upon the DRG. Inclusive in this cost to Medicare and Medicaid, is the hospital administrative utilization review functions required in 42 C.F.R. § 482.30. Her case, and her main concerns revolved around the welfare of the patients: the hospital system failed to be the medical necessity gatekeepers of its own hospital doors, resulting in increased costs to Government Healthcare Programs and putting patients in serious risk of morbidity. In general, hospital systems that seek to submit claims to Government Healthcare Programs for inpatient admissions without sufficient utilization review, fostering an environment where over-documentation of patient severity occurs, resulting in payment for higher weighted DRGs.
In her initial Complaint, we alleged inappropriate admissions for procedures that included: (1) Transurethral prostatectomy (TURP), the most common type of prostate surgery in men and is most often used to treat benign enlargement of the prostate gland; (2) Pacemaker and ICD Implantations, contending that the Heart Rhythm Society recently had stated that inpatient status is required only for “patients who require more intensive monitoring, intravenous hydration, medication titration and extended nursing or physician care,” but that under Dignity’s policy, despite the recommendations of the Heart Rhythm Society, such procedures were passed as inpatient; and (3) Kyphoplasty, a minimally invasive procedure performed to treat persistent pain or instability resulting from vertebral compression fractures attributable to osteoporosis or neoplasms in the bone. Although kyphoplasty could be typically very safely performed as an outpatient procedure, the complaint alleged that defendant hospitals encouraged and directed that patients be admitted for the procedures.
Five years later, the case concluded: Dignity Health agreed to pay the United States $37 million to settle allegations that 13 of its hospitals in California, Nevada and Arizona knowingly submitted false claims to Medicare and TRICARE by admitting patients who could have been treated on a less costly, outpatient basis. Dignity, formerly known as Catholic Healthcare West at the time of the settlement, was one of the five largest hospital systems in the nation with 39 hospitals in three states.
The covered conduct involved allegations that 13 Dignity hospitals billed Medicare and TRICARE for inpatient care for certain patients who underwent elective cardiovascular procedures (e.g., stents, pacemakers) in scheduled surgeries when the claims should have been billed as outpatient surgeries; that 4 of the hospitals billed Medicare for beneficiaries undergoing elective kyphoplasty procedures that should have been billed as less costly outpatient procedures; and last, that 13 hospitals admitted patients for certain common medical diagnoses where admission as an inpatient was medically unnecessary and appropriate care could have been provided in a less costly outpatient or observation setting.
The case was captioned United States ex rel. Hawkins v. Catholic Healthcare West, et al., case number CV C 09-5604 JCS, and we filed it in the U.S. District Court for the Northern District of California. Kathleen received approximately $6.25 million before legal fees. In addition, we were able to very favorably resolve Kathleen’s additional claims against Dignity arising out of the circumstances of her employment.
Since the case was resolved, Kathleen has continued to contribute to the health and welfare of patients and hospitals systems across the country.