The Choice Between Inpatient and Outpatient Care May Depend Upon Your Likelihood to be Audited?

The U.S. Department of Justice has issued a press release regarding Medical Center-Navicent Health in Georgia, stating it will pay the federal government $20 million to settle a complaint over Medicare billing.


In the news release, DOJ accused this hospital of submitting claims for short-stay inpatient admissions that should have been billed as outpatient care.


Department of Justice lawyers said that the 650-bed hospital breached the federal False Claims Act “by knowingly charging Medicare for medically unnecessary inpatient admissions when the care provided should have been billed as less costly outpatient or observation services.”


The legal news website Law360 commented that “Hospitals have strong financial incentives to admit patients because the reimbursement for inpatient care tends to be many times larger than outpatient reimbursement. The fact that the appropriateness of admissions relies heavily on physician judgment also means that hospitals have wide discretion to admit patients — subject, of course, to audits down the road.”

What is the “takeaway” for Substance Use Disorder treatment providers who rely on private insurance?  As always, this segment of the health care industry is the last to get noticed. But with the federal Parity law starting to be felt by carriers, we believe that insurance carriers are going to start to rely on audits as a way to denying claims and filing clawback suits.

About Jeffrey Lynne

Jeffrey C. Lynne is a South Florida native, representing individuals and business entities relating to licensing, accreditation, regulatory compliance, business structure, marketing, real estate, zoning and litigation pertaining to substance abuse treatment facilities and sober living residences. Mr. Lynne has been recognized across the region as a leader in progressive public dialogue about the role that substance abuse treatment has within our communities and the fundamental need and right to provide safe and affordable housing for those who are both in treatment for addiction and alcoholism as well as those who are established in their recovery.