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Memorial Hermann settles improper billing allegations with DOJ for $2 million

Memorial Hermann allegedly billed for inpatient services for Medicare beneficiaries that could have been treated on outpatient basis, the DOJ said.

Beth Jones Sanborn, Managing Editor

Memorial Hermann Southeast Hospital in Houston, Texas. Credit: Google MapsMemorial Hermann Southeast Hospital in Houston, Texas. Credit: Google Maps

Memorial Hermann will pay nearly $2 million dollars to resolve allegations that it improperly billed government healthcare programs, the Department of Justice announced. 

According to the DOJ, Memorial Hermann allegedly billed for inpatient services for Medicare beneficiaries that were admitted for scheduled surgeries, but "should have been treated in a less expensive outpatient or observation setting."

The alleged illegal activity spanned Jan. 1, 2009, through Dec. 31, 2014, during which time three Memorial Hermann Health System facilities including the Texas Medical Center, Southwest and Memorial City submitted Medicare claims for surgical procedures in which the patient's inpatient hospital stay was two days or less. The DOJ said those claims should have been submitted as outpatient services, and the submissions allegedly caused the hospitals to receive higher reimbursements than they were entitled to collect. 

"These payments were mistakenly made and caused MHHS to be unjustly enriched, entitling the United States to compensation," the DOJ said.

Memorial Hermann said the submissions were detected during a "routine audit" of claims from 2009 to 2014 and it was found that those claims "lacked the detailed information necessary under complex billing documentation requirements in regards to physician decisions to admit patients as inpatient versus outpatient." 

Hospital officials said the care provided was needed and appropriate. 

[Also: Memorial Hermann ordered to pay $2.4 million over immigrant incident]

"We make every effort to ensure that we have a robust documentation process in place that adheres to our highest standards of accuracy. An agreement has been reached with the U.S. Attorney's Office to refund the overpayment flagged in the audit dating back to before 2014.  Additionally, we have a longstanding compliance program to ensure that we continuously meet the rigorous documentation standards required in an increasingly complex regulatory environment," the system said.

There has been no determination of liability in this case.

Memorial Hermann isn't the only system to come under fire for improper billing associated with inpatient care. In April, Banner Health settled with the government for more than $18 million after allegations were made that 12 of the system's hospitals had in Arizona and Colorado knowingly admitted patients for inpatient care who could have been treated on an outpatient basis. The government had also alleged that the system had inflated the number of hours patients received outpatient observation care in their Medicare reports. 

Earlier this year, Scripps Health was hit with a $1.5 million settlement after allegations were made that the system had charged government payers for services that were rendered by clinicians that were not properly supervised by a physician, which is required by law when billing Medicare and Tricare.

A former Scripps employee filed the whistleblower lawsuit. Scripps attributed the billing to a technical processing error.

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com

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