Florida Hospital Flagler Spared Sister Hospitals’ Fraud Lawsuit and Medicare Penalties

There’s bad news on two counts for Adventist Health System, the national health care chain whose hospitals in Florida include Florida Hospital Flagler and Florida Hospital Memorial in Ormond Beach. But there’s good news for Florida Hospital Flagler on both counts.

On one count, a federal judge in Orlando last week is letting a whistleblower lawsuit go forward against seven of Adventist’s Florida hospitals. That trial is now set for December 2013 in Orlando. In a lawsuit filed in July 2010, two whistleblowers alleged that Adventist submitted fraudulent reimbursement claims to Medicare, Medicaid and TriCare/Champus and other private insurers, including false billing and overcharging for Octreotide, a drug used to improve the radiological imaging.

On another count, Medicare, the federal government’s insurance program for the elderly, announced that it would penalize more than 2,000 hospitals in the country for having excessive re-admission rates. Ten of Adventist’s Florida hospitals are among those that will be penalized. In combination, the penalized hospitals across the country will lose a combined $280 million in Medicare dollars over the next year as the government begins a wide-ranging push to start paying health care providers based on the quality of care they provide.

The good news, for Florida Hospital Flagler, is that it is not one of the seven Adventist hospitals named in the federal lawsuit. And it is not among the Adventist hospitals facing re-admission penalties. Florida Memorial in Ormond Beach isn’t named in the lawsuit, either, but it faces a small penalty for its re-admission rates.

First, the lawsuit.

Amada Dittmann is a Realtor living in California. From 1996 to 2001, she worked for Florida Radiology Associates as a compliance officer, and from 2001 to 2008, she worked for Adventist. (Florida Radiology Associates is not related to Radiology Associates and its various imaging centers, nor is Radiology Associates involved in the lawsuit.) Charlotte Elenberger is a Realtor and a physician who worked at Florida Radiology Associates from July 1995 to June 2008, and who had staff privileges at an Adventist hospital from July 1995 to November 2009. In their July 2010 lawsuit, they named seven hospitals:  Florida Hospital Orlando, Florida Hospital Altamonte, Florida Hospital Apopka, Florida Hospital East Orlando, Florida Hospital Celebration Health, Florida Hospital Kissimmee and Winter Park Memorial Hospital.

The whistleblowers said Adventist improperly sued three billing code modifiers to bypass normal procedures and overbill government insurers, according to court papers. They claim the hospitals also charged the insurers for 5,000-mg doses of Octreotide when 1,000-mg doses were used. The cost for a 1,000-mg dose is $622. The cost for a 5,000-mg dose is $3,110. The overcharges, they allege, totaled almost $2 million. They also alleged that Advetist falsely billed the government insurers for computer-assisted analysis of mammograms, when, in fact, the software was not used in those mammograms.

While assigned to the Radiology Department at Florida Hospital, Dittmann voiced “constant objections” and concerns about improper billing for multiple scans provided to the same patient on the same day, and other billing processes, court papers show. Her supervisor viewed her as a problem, the court papers state, and she was transferred in march 2008 to the Revenue Management Department, retaining her responsibilities for radiology  but assuming new job responsibilities for all seven of Adventist’s Orlando-based campuses. In her new position, she perceived “a multitude of compliance issues” occurring “daily throughout the Adventist Hospital System,” but was not permitted to take corrective action, court papers state.

Elenberger also noted “billing discrepancies” between Adventist’s billing information and Florida Radiology Associate’s billing, when Adventist downloaded its billing for imaging studies into a billing computer. (Read the full complaint here.)

In February, Adventist filed a motion to dismiss the case. The complaint, Adventist countered, “baldly alleges that improperly coded bills were ‘electronically submitted to the Government by Defendant,’ but the specifics of such submissions are not all included.”

Regarding the overbilling for the imaging drug, Adventist countered that the complaint “does not allege what the Government Payors actually paid for those claims, but assumes that overpayments were made, and alleges that when Adventist discovered the overcharges through the audit, it ‘made no effort’ to correct the overcharges or to issue refunds to the appropriate Government Payor,” and that no facts were presented to document the allegation. Adventist also countered that all the mammogram “programming errors” were corrected in 2007. (Read Adventist’s full response here.)

In his ruling last week, Federal District Judge John Antoon II ruled that the two whistleblowers “described in sufficient and extensive detail the fraudulent activities allegedly engaged in by” Adventist, and that the two (current) Realtors are not “outsiders,” but had personal knowledge of the events at issue, describing “attendance at meetings and discussions with defendant regarding the practices at issue.” (Read Judge Antoon’s ruling here.)

The unrelated matter of Medicare penalties and hospital readmission rates relates to the nearly  one in five Medicare patients returning to the hospital within a month of discharge. The federal government considers readmissions a prime symptom of an overly expensive and uncoordinated health system. Hospitals have had little financial incentive to ensure patients get the care they need once they leave, and in fact they benefit financially when patients don’t recover and return for more treatment.

Nearly 2 million Medicare beneficiaries are readmitted within 30 days of release each year, costing Medicare $17.5 billion in additional hospital bills. The national average readmission rate has remained steady at slightly above 19 percent for several years, even as many hospitals have worked harder to lower theirs.

The penalties, authorized by the 2010 health care law, are part of a multipronged effort by Medicare to use its financial muscle to force improvements in hospital quality. In a few months, hospitals also will be penalized or rewarded based on how well they adhere to basic standards of care and how patients rated their experiences. Overall, Medicare has decided to penalize around two-thirds of the hospitals whose readmission rates it evaluated, the records show.

The maximum penalty will increase after this year, to 2 percent of regular payments starting in October 2013 and then to 3 percent the following year. This year, the $280 million in penalties comprise about 0.3 percent of the total amount hospitals are paid by Medicare.

According to Medicare records, 1,933 hospitals will receive penalties less than 1 percent; the total number of hospitals receiving penalties is 2,211. Massachusetts General Hospital in Boston, which U.S. News last month ranked as the best hospital in the country, will lose 0.5 percent of its Medicare payments because of its readmission rates, the records show.  The smallest penalties are one hundredth of a percent, which 50 hospitals will receive.

Most hospitals in Florida—not just Advetist’s—were penalized, but none got a penalty of more than 1 percent. Locally, Flagler Hospital in St. Augustine was penalized 0.49 percent, Florida Hospital Orlando was penalized 1 percent, as was Florida Hospital Fish Memorial. Florida Hospital Memorial, in Ormond Beach, was penalized 0.31 percent. And Halifax hospital in Daytona Beach was penalized 0.26 percent. The full list is available here.

–FlaglerLive and Kaiser Health News