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

| August 13, 2012

Storm clouds buffeting Adventist Health System hospitals in the state blew past Florida Hospital Flagler. (© FlaglerLive)

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

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8 Responses for “Florida Hospital Flagler Spared Sister Hospitals’ Fraud Lawsuit and Medicare Penalties”

  1. palmcoaster says:

    This keep taking place because the thieves are protected and get away with it! Otherwise look at our governorship!
    Is not Medicare’s fault but the lack of real harsh punishment for these healthcare delinquents…shielded
    by the umbrella of the mighty corporative power.

  2. Will says:

    This seems to be a time to say congratulations and good wishes to the team at Florida Hospital Flagler for not being involved in the reported allegations. Over 900 of our neighbors are employed by our hospital organization here, and I think they deserve our support whenever possible.

    Florida Hospital Flagler will celebrate its 10th anniversary later in September which will be something for our community to celebrate too.

  3. Keep Out says:

    Flagler may not have the re-admissions because those that enter may not be making it out alive. I would have to be in a life and death situation before I would go to Flagler Hospital.

    • Geezer says:

      Hello Keep Out:

      For the sake of clarity: You mean Florida Hospital–Flagler (the one on 100 in PC)

      The best hospital in the area is Flagler Hospital in St. Augustine.
      They are not-for-profit, and recognized as one of America’s top hospitals.
      They don’t turn patients away because of insurance issues, nor do they rush you out from a stay.

      Many people who worked in Florida Hospital-Flagler, migrated to Flagler St. Augustine for better working conditions.

      I for one am amused by all the “Jesus imagery” at the hospital on 100, and think it’s a joke that
      they refer to their hospital as a continuation of “Jesus Christ’s Healing Ministry.”
      THERE WAS NO SUCH THING. Check a bible. Yes he healed people, but not as a ministry.
      And I understand that Jesus never charged for healing.
      And how did they get those pictures of Jesus? :-)

      Funny how Flagler, a secular hospital in St. Augustine, is the hospital that doesn’t put profits first.
      Far more Jesus-like, I think.

      Just my three cents. I’ve been to both hospitals, and if in an emergency I can hang on a half hour, rush me to Saint Augustine even though I live less than a mile from our hospital on 100!

      • Lauren says:

        Hello Geezer, I wanted to address one of your statements about Florida Hospital Flagler.

        Florida Hospital Flagler is in fact, a not-for-profit hospital. Any profit after operating expenses, including the 900+ employee salaries, are invested back into the Flagler County community to continuously improve and expand health care services available to this community.

  4. tulip says:

    I was an inpatient there and came out worse off than when I went in. The day surgery and procedure section where they do colonoscopys, minor surgeries,etc. is great. If the inpatient section was that good, then we’d have a hospital to be proud of.

    Hospitals have their own ways of cheating Medicare—-too many expensive tests, a doctor walks in your room and asks how you’re doing and is out the door before you can answer, and charges a big bill to Medicare, meds and supplies not actually used, and a lot of hospitals and doctors just don’t get caught at it. It goes on and on.

    Medicare is about the only business that can have continous, and unchecked fraud done to it and nobody cares.

  5. Anonymous says:

    I agree and then Medicare sends you this bill which they’ve paid and you’re supposed to know all the items that were billed for your surgery. I was unconscious, how could I know or see the itemized list they bill Medicare. How about when some Dr. in Orlando is on the bill for consultation which you never see. The whole system is ripe for fraud and corruption. Sometimes I think the system is set up that way to support Dr’s. There are a lot of good Dr’s and medical staff at Flagler Hospital but billing is left to Boy Scouts Honor.

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