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Hospital’s Medicare billing examined

Beth Israel flagged for large number of short stays

Federal investigators have subpoenaed six years of records from Beth Israel Deaconess Medical Center as part of an investigation into whether the hospital overbilled Medicare by admitting patients for short stays who could have been treated less expensively as outpatients.

Beth Israel Deaconess received a subpoena from the office of the inspector general of the US Department of Health and Human Services and the US Department of Justice, in 2010, the hospital disclosed in financial statements over the last six months.

The Boston teachinghospital said it did not know whether it would have to pay a fine or settlement, or the potential amount, but acknowledged in its financial filings that the outcome of the investigation could harm profits.


“At this point we don’t have any details about their findings or how this will unfold,’’ hospital spokeswoman Judy Glasser said. “If there have been errors, we are committed to fixing them and to being completely responsive to any guidance from the government.’’

A spokeswoman for the inspector general did not return a call from the Globe, and a spokesman for the Justice Department declined to comment.

A patient who is treated in the emergency room or has a procedure like a cardiac catheterization may need to stay in the hospital for more than several hours. Hospitals can classify the patient as being in “observation’’ status, which is usually less than 24 hours but can be longer. The status 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, according to the Health Care Compliance Association in Minnesota.

But when hospitals admit large numbers of patients for brief stays, like over one night, federal officials increasingly scrutinize whether those admissions are medically necessary or if they are simply an unnecessary cost that enhances hospital revenue, said several attorneys who specialize in health care law.


The problem, the attorneys said, is that Medicare’s guidance on when hospitals should observe patients and when they should admit them is unclear, leaving hospitals vulnerable to unintentional errors.

“It’s a hugely confusing area,’’ said Seattle lawyer Robert Homchick, who specializes in health care regulatory law.

The 1199SEIU United Healthcare Workers East, the largest health care union in Massachusetts, wrote a detailed letter in 2008 to Lois Silverman, then board chairwoman of Beth Israel Deaconess, about the financial risks of too many short hospital stays. The union said that these quick inpatient visits increase hospital profits, but warned that federal regulators were taking a closer look at short stays in their efforts to control soaring health care costs.

The union also sent the letter to an official at the office of the inspector general in Boston, saying it was concerned about “the high rate of one-day stays at BIDMC and certain other Caregroup hospitals.’’ Caregroup is a failed holding company formed by Beth Israel Deaconess and other loosely affiliated hospitals. It is unclear whether the union’s letter led to the investigation.

In the letter, the union said its analysis of Medicare data found that 21 percent of Beth Israel Deaconess’s 67,365 discharges from 2000 through 2005 were for one-day stays, far higher than the national rate of 13 percent.


Glasser declined to comment on the union’s letter. But she pointed out that the government review does not involve the quality of care at the hospital.

In a statement Friday to the Globe, the union said: “This investigation further validates the watchdog role 1199SEIU caregivers have played in the Boston healthcare market, not only standing up for workers’ rights, but also ensuring quality, affordable care by protecting key public healthcare programs like Medicare.’’

The union criticized the hospital for not notifying bond holders and rating agencies until last year, even though the union raised concerns in 2008 and the federal government routinely provides hospitals with data on their short-stay rates.

In his letter to the board, Mike Fadel, 1199SEIU executive vice president, pointed out that the Massachusetts Health and Educational Facilities Authority was about to offer $785 million in bonds for Beth Israel Deaconess and other affiliated Caregroup hospitals and urged disclosure of the high rate of one-day stays because revenue from those stays might be unsustainable.

Glasser said the hospital disclosed the issue publicly at the appropriate time, after it received the subpoena.

Several lawyers who defend hospitals against charges of improper Medicare billing said the government is scrutinizing short-stay admissions at hospitals across the country. Fines vary widely, depending on the extent of the issue. St. Joseph’s Health System in Atlanta paid $26 million in 2008 to settle allegations it overbilled Medicare for one-day stays between 2000 and 2005. This year, MetroWest Medical Center in Framingham had to repay the government $104,000 for 16 inappropriately billed short stays.


Thomas Crane, a partner at Mintz Levin in Boston, said “fraud recovery is going to be a significant contribution’’ to paying for the expansion of insurance coverage in the country, according to financial estimates in President Obama’s affordable care act.

“The government has gotten more aggressive in this area, but this is a medical call,’’ Homchick of Seattle said. “It seems to me for the US attorney to weigh in on whether my 80-year-old grandmother needed to be admitted to the hospital, he doesn’t know what . . . he is talking about.’’

Paul Enzinna, a lawyer with Brown Rudnick in Washington, said: “Any individual case is a judgment call. What Medicare is worried about is a person saying ‘my stomach hurts’ and the hospital admits the person.’’

Civil penalties may be imposed when overbilling results from an oversight, he said, but when it is found to be intentional, hospitals may be subject to criminal fines. “If a hospital is putting pressure on doctors to do this upcoding, that is clearly fraud,’’ Enzinna said.

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