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NY hospital repays Medicaid $76.5 million

Patient Financial Services Weekly Advisor, May 20, 2005

Staten Island University Hospital said it will repay $76.5 million that prosecutors say it fraudulently billed New York State's Medicaid program over the last few years, according to a May 18 report in the New York Times. It's the largest cash settlement with a healthcare provider in the history of Medicaid.

This is the second time in seven years that the hospital has been investigated and fined for improperly billing Medicaid, the Times reported.

The hospital-the largest on Staten Island-agreed in 1999 to repay New York Medicaid $45 million and provide $39 million in free care for indigent patients for bills it had improperly submitted.

The hospital's executives intended to profit illegally from Medicaid, according to a criminal complaint against the hospital released by Attorney General Eliot L. Spitzer's office.

Yet Spitzer chose not to bring any criminal charges against the executives, telling the Times it would be "the end of the institution, which would have been contrary to public policy." His office dismissed the complaint in return for the hospital's agreement to repay the state over the next 12 years, as well as implementing internal reforms to prevent the fraud from recurring, the Times reported.

The main complaint surrounded overbilling: The hospital once owned 500-plus part-time clinics through CHAPS Community Health Services, Inc. The Department of Health pays a higher rate for services done in part-time clinics than for those done in regular clinics, but the state only allows them to operate 60 hours a month To take advantage of higher rates, the hospital operated many of the clinics much longer-and in one case, 60 hours a week.

The complaint also says the hospital lied on financial reports it filed with the state, which artificially inflated the rate it was paid at the clinics, the Times reported.

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