Hospital pays $4.5 million in pneumonia probe

Doctors Hospital of Hyde Park in Chicago will pay the United States $4.5 million — the largest settlement of its kind to date — to settle allegations that it misused a pneumonia diagnosis code in claims submitted to Medicare and Medicaid between 1993 and 1997, the U.S. Department of Justice has announced. The hospital becomes the sixth victim of a whistle-blower suit first filed in 1996 by Health Outcomes Technologies, a Philadelphia software firm.

The U.S. alleged that from January 1993 to June 1997, Doctors Hospital improperly billed Medicare and Medicaid with a principal diagnosis for a rare category of pneumonia. The suit alleged that about 15,000 false and fraudulent claims resulted in roughly $37 million in overpayments.

According to the suit, the number of bacterial pneumonia cases paid for by Medicare in 1993 and 1994 that were billed under the ICD-9 code 482.89 and DRG 79 was less than 4% of all pneumonia cases. In contrast, Doctors Hospital averaged nearly 35% over the same period.

The settlement agreement requires the hospital to pay the $4.5 million in four installments of roughly $992,000 over the next two years after receiving credits for about $291,000 already repaid to Medicare and Medicaid. Health Outcomes Technologies will receive $519,391 for its role in the litigation. The hospital has also entered into a corporate integrity agreement with the U.S. Department of Health and Human Services and agreed to assist in related cases.