January 5, 2012

DENVER – Denver Health and Hospital Authority, doing business as Denver Heath Medical Center, will pay the United States and the State of Colorado $6,300,000 to settle allegations that it overbilled Medicare and Medicaid by misclassifying patients for hospital admissions.

Both federal and state funds are involved. Medicare is the federal system of health insurance for people over 65 and certain younger people with disabilities. Medicaid is a government program – funded in Colorado 50% by federal funds, and 50% by state funds – that provides health insurance to people requiring financial assistance.

The agreement relates to allegations that Denver Health and Hospital Authority overbilled Medicare and Medicaid in the way it classified certain patients when they were being admitted to the hospital. Both Medicare and Medicaid reimburse hospitals, like Denver Health Medical Center, a certain amount of money when a patient is treated as an “outpatient,” or is admitted into “observation” status. They reimburse hospitals a much larger amount of money, however, when a patient is admitted and treated as an “inpatient.”

Through a whistleblower lawsuit under the False Claims Act, the United States was made aware of allegations that Denver Health Medical Center was inappropriately admitting patients as “inpatients,” when those patients were more appropriately classified as “outpatients” or “observation” patients. As a result, Denver Health Medical Center was allegedly receiving a higher level of reimbursement from Medicare and Medicaid than it should have.

Denver Health and Hospital Authority, which cooperated in the investigation, has agreed to pay the United States and the State of Colorado $6,300,000 to resolve these allegations relating to its billing between January 1, 2006, and December 31, 2009. The State of Colorado’s share of the settlement proceeds is $1,106,608, and the United State’s share is $5,193,192. As part of the settlement, the whistleblower will receive $817,959, and the False Claims Act case has been dismissed.

“It is crucially important for government health care plans to be efficient as possible,” said U.S. Attorney John Walsh. “This case serves as a reminder that hospitals must scrutinize their billing practices to prevent overbilling. I want to thank the excellent work of agents with the Health and Human Services Office of the Inspector General and the Colorado Attorney General’s Medicaid Fraud Control Unit for bringing this matter to a successful conclusion.”

“This settlement represents OIG’s commitment to protecting federal health care funds from fraud and waste,” said Les W. Hollie, Special Agent in Charge of the Kansas City Regional Office of Investigations for the Department of Health and Human Services’ Office of Inspector General. “We will continue to utilize provisions of the False Claims Act to protect our beneficiaries, tax payers, and trust fund I also want to thank the Colorado United States Attorney’s Office for their work in this investigation.”

“Colorado’s Medicaid program provides essential health services to the neediest among us,” Colorado Attorney General John Suthers said. “Our work to recover these funds for the state of Colorado underlines the work we do every day to police Medicaid providers. We will continue to work with our state and federal partners to ensure that no health care provider overbills public health programs, which results in fewer resources for those who need them most.”

This matter was handled by the Health and Human Service Office of the Inspector General’s Office of Investigations, and the State Medicaid Fraud Control Unit. Assistant U.S. Attorney Marcy Cook handled this case for the U.S. Attorney’s Office.

This agreement is neither an admission of facts or liability by Denver Health and Hospital Authority, nor a concession by the United States that its claims are not well-founded.

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