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Beth Israel to pay $5.3m settlement over Medicare billing

Beth Israel Deaconess Medical Center paid $5.3 million on Monday to settle allegations by the federal government that it overcharged Medicare by admitting patients to the hospital who should have been treated less expensively as outpatients.

The government examined records for patients who were admitted to the Harvard teaching hospital for brief stays between 2004 and 2008 and who were suffering from congestive heart failure, chest pain, gastroenteritis and nutritional and metabolic disorders, federal officials said in a written statement released Monday. The records were subpoenaed from Beth Israel Deaconess in 2010.

The hospital did not admit any liability or wrongdoing as part of the settlement, which both sides described as a way to avoid a costly lawsuit. But US Attorney Carmen Ortiz and Susan Waddell, special agent in charge of the Department of Health and Human Services Office of Inspector General, implied in their comments that the hospital may have overbilled Medicare to boost profits.

“When hospitals unnecessarily admit Medicare patients for short inpatient stays when the appropriate treatment would be outpatient or observation care, they improperly boost hospital profits at significant expense to taxpayers and patients,” Waddell said.


She said her office is “committed to uprooting such schemes” as part of an effort to eliminate waste in federal health care programs.

Hospital general counsel Jamie Katz said in a written statement that the investigation “involved an extremely technical issue’’ and that the organization “admits no liability whatsoever.’’ He said the hospital “vigorously defended claims for an inpatient level of service delivered to patients whom physicians had concluded should be admitted to the hospital because of their condition.”

Patients who are treated in the emergency room or who have cardiac catheterization or other procedure may need to stay in the hospital for more than several hours. Hospitals can classify these patients as “observation” status, which is usually less than 24 hours but can be longer. This means the patient is not sick enough to be admitted, but is too sick to go home.


If doctors decide the patient needs more intense or longer-term care, they can admit the patient to the hospital, which generally costs Medicare $5,000 more than an outpatient observation stay.

Federal officials have been heavily scrutinizing hospitals that admit large numbers of patients for brief stays, to determine whether they are medically necessary or are an unnecessary cost that enhances hospital revenue, said attorneys who specialize in health care law.

“They are really cracking down,’’ said Rochelle Zapol, a partner in the health care department at Prince Lobel in Boston.

Ortiz said in the government’s statement that the settlement “furthers two critical purposes: ensuring that precious federal health care dollars are spent appropriately and in accordance with the law, and emphasizing that patient needs, not the bottom line, must be the basis for treatment decisions.”

Katz said that the settlement “is not a fine, penalty or other sanction” and that the amount was being paid from a reserve fund and “will have no effect on hospital operations.”

Liz Kowalczyk can be reached at kowalczyk@globe.com.