Hospital Settles Hyperbaric Oxygen Claims for $3.4 Million

A hospital in Albany, New York agreed to pay $3,373,898.28 to resolve improper Medicare claims for hyperbaric oxygen therapy treatments (HBOT).

Our Lady of Lourdes Memorial Hospital determined after an internal review that it had improperly billed Medicare for hyperbaric oxygen therapy services rendered by a third party in a facility that failed to satisfy the requirements for “provider-based status.”  As a result, the hospital received payments from Medicare that it was not entitled to receive.

When a hospital-owned entity qualifies for “provider-based status,” Medicare will reimburse for both a facility fee and a professional fee for services.  To qualify for this status, however, a hospital-owned entity that does not physically reside within the hospital must comply with very specific requirements promulgated by the Centers for Medicare and Medicaid Services (CMS).  

The provider-based entity must operate under the same license as the hospital, and it must be financially and clinically integrated with the hospital.  Financial integration includes the sharing of income and expenses, as well as the reporting of provider-based facility costs in the hospital’s financial statements.  Clinical integration includes common medical staff privileges, integration of medical records, and central control of quality assurance.  These are just a few of the many requirements.

Billing Medicare for facility fees and professional fees without complying with all of the provider-based status requirements can result in significant liability under the federal False Claims Act, including restitution of three times the amount paid by Medicare and penalties of up to $11,000 per claim. 

By disclosing the improper billing and Medicare payments, the hospital in this case avoided potential treble damages and penalties that the government could have sought under the False Claims Act.  The government also agreed that the hospital would not have to enter into a corporate integrity agreement that could have required extensive monitoring and reporting in the future.