Medicare Compliance & Reimbursement

If this allegation can be proven, the government might not even have a false claims case.

The American Hospital Association recently asked the federal government to review the appropriateness of its "kyphoplasty initiative," in which authorities are investigating hospitals that billed inpatient stays for Medicare patients who received the spinal procedure.

In a September letter to the U.S. Attorney General and HHS Secretary, AHA notes that the kyphoplasty initiative originates from an FCA settlement involving a manufacturer of medical devices used in the surgical procedure to artificially restore collapsed vertebrae. The DOJ alleged in the investigations that "the manufacturer misled physicians and hospitals about the medical necessity of an inpatient hospital stay following a kyphoplasty, and the applicability of certain billing codes to the procedure and the inpatient stay," AHA states.

AHA goes on to say that form letters being sent by the government to hospitals in the kyphoplasty initiative put forth an argument presuming that "(a) the physician judgment on which hospitals must depend was compromised in every case; and (b) hospitals knowingly or recklessly acceded to that judgment."

The trade group goes on to note, however that "CMS' guidance recognizes that inpatient hospitalization may well be appropriate under certain circumstances -- many of which likely apply to the Medicare-covered population." (To read the rest of the letter, go to www.aha.org/aha/letter/2010/100907-let-HEAT-FCA.pdf.

Defense attorney Antonia Giuliana in Washington, D.C. believes hospitals could assert some strong defenses in kyphoplasty cases in these following areas.

1. Medical necessity. "Typically, medical necessity is a difficult standard to litigate because it requires the plaintiff to tackle difficult factual issues such as the independent judgment of physicians and clinically accepted practices," says Giuliana.

And "AHA's letter showed the kyphoplasty cases appear to involve a clinically accepted practice."

2. The patient's best interest. The AHA letter doesn't "touch on a key rationale behind a healthcare false claims case," which is that doctors should make treatment decisions based on what's "therapeutically best" for the patient rather than how much money they will make for a service, Giuliana points out. The opposite is true in this case, she observes. "The government is arguing that hospitals should have performed the kyphoplasties, which seem like sensitive procedures, on an outpatient basis instead of on an inpatient basis." Seemingly, "the overnight stay would benefit the patient."

3. Lack of requisite knowledge of a false claim. The FCA complaint filed against the manufacturer, Kyphon, which triggered the cases against hospitals, alleges that the manufacturer's sales reps were showing hospitals and physicians studies supporting the need to perform the kyphoplasty procedure with an overnight hospital stay, Giuliana points out. And "one thing the government has to prove in a false claims case is that a defendant knowingly submitted a false claim," she says. "If the hospitals are relying on studies provided by sales representatives or representations made by the sales reps, assuming those allegations can be proven, the government is going to have a difficult time showing the hospitals knew the surgeries should have been done on an outpatient basis." And if the government can't prove that? It doesn't have a false claims case, Giuliana concludes.