A corporation that owns five Kentucky hospitals, including Central Baptist in Lexington, will pay $8.9 million to settle claims that it overbilled Medicare for treating patients.
The settlement covers claims of improper billing from 2001 through 2006 at Baptist Healthcare System hospitals in Lexington, Louisville, Corbin, La Grange and Paducah, and at Hardin Memorial Hospital in Elizabethtown, which Baptist Healthcare manages.
Federal officials announced the settlement with the Louisville-based company Thursday in a news release.
The federal government contended that the hospitals covered by the settlement billed Medicare at higher rates than justified by the treatment they provided.
When hospitals submit bills to Medicare seeking payment, they use codes to describe the services they provided to patients.
Baptist Healthcare facilities used inappropriate codes, which resulted in higher reimbursements than warranted, federal regulators argued.
"This settlement will return a significant amount of money back to the Medicare Trust Fund that should never have been paid out," Derrick L. Jackson, an official with the U.S. Department of Health and Human Services, said in the news release.
The codes involved in the settlement generally involved respiratory infections and inflammations, accumulations of fluid in the lungs, respiratory failure and blood infections, according to the news release.
Don Riggs, vice president of compliance for Baptist Healthcare System, said in a statement that the issue in the case was whether the billing codes the company used reflected the severity of each case.
The codes are complex, and different codes can be selected for each diagnosis in addition to designating the level of severity or complications, Riggs said.
The company and federal officials had independent, outside reviews done on the claims at issue, and each came to different conclusions on whether the bills were justified, Riggs said.
"After lengthy negotiations, we agreed to disagree, and Baptist decided it was best to settle," Riggs said in the statement.
The release did not say whether $8.9 million was the total amount the Baptist Healthcare facilities was accused of overbilling.
The company agreed to pay the government $5,785,000 to resolve claims related to the five hospitals it owns. The Hardin County hospital, which it manages, agreed to pay $3,115,000 to settle claims of improper billing there.
The federal government had not filed a civil or criminal case in federal court related to the billing.
However, the government claims resolved by the settlement were for payment by mistake, and unjust enrichment, according to the news release.
Baptist Healthcare and Hardin Memorial did not admit liability as part of the settlement, which they must pay by Sept. 1.
No issues concerning quality of patient care were raised in the settlement, according to a news release.
The U.S. attorneys' offices in Louisville and Lexington and the Office of Inspector General of the Department of Health and Human Services announced the settlement.
The news release provided no other details about the investigation.
In addition to its hospitals, Baptist Healthcare has interests in surgical centers, clinics, affiliated physician practices and other facilities.
The company has 2,000 licensed hospital beds in Kentucky and employs more than 13,000 people, according to its Web site.