WASHINGTON – Methodist Hospital in Houston has agreed to pay the U.S. government $9.99 million to settle allegations that it defrauded the federal Medicare program.

The settlement resolves allegations that Methodist improperly increased charges to Medicare patients in order to obtain enhanced reimbursement from Medicare.

"Our ultimate goal is to make certain that every Medicare dollar is used for the benefit of Medicare recipients," said Tim Johnson, acting U.S. Attorney for the Southern District of Texas.

The government alleged that, between January 2001 and August 2003, Methodist improperly inflated charges for inpatient and outpatient care to make its costs for providing such care appear greater than they actually were, and thereby obtain outlier payments from Medicare that it was not entitled to receive.

Medicare pays supplemental reimbursement, called outlier payments, to hospitals in cases where the cost of care is unusually high. Congress enacted the supplemental outlier payment system to ensure that hospitals possess the incentive to treat inpatients whose care requires unusually high costs.

"The department has brought numerous actions against hospitals alleged to have sought excessive outlier payments and will remain vigilant in ensuring that hospitals do not file false claims for outlier payments in the future," said Michael F. Hertz, acting assistant attorney general for the Civil Division at the U.S. Department of Justice.