Nationwide Kyphoplasty Investigation
By: DAVID M. GLASER
We are aware that hospitals in Minnesota, Alabama, Florida, and New York have been contacted by the U.S. Attorney’s Office for the Western District of New York (Buffalo) and the Office of Inspector General (“OIG”). In several cases, investigators from the Buffalo, New York U.S. Attorney’s Office, or OIG agents have simply appeared at hospitals and asked for the CFO, the risk manager, OR mangers or staff orthopedics, neurosurgery, or interventional radiology. In other cases, the first contact has been by telephone. The government has requested to interview employees and requested documents.
It appears that the investigator’s premise is that Kyphoplasty procedures should be done on an outpatient basis. Kyphoplasty is a procedure to treat patients with vertebral compression fractures. A needle is inserted into the spine, and a balloon is inserted in the vertebrae to create space. Cement is then injected into the space to restore the collapsed vertebral body.
In May, Kyphon, the company that manufactures Kyphoplasty equipment, settled allegations that it was improperly advising physicians that the procedure should be done on an inpatient basis. According to the complaint in that “qui tam” case, Medicare reimbursement for the APC for Kyphoplasty was too low for hospitals to recover their costs. The complaint claims that as a result, Kyphon encouraged hospitals to admit the patients as inpatients because the DRG reimbursement was higher. As part of the settlement, the company denied all wrong-doing. For a copy of the First Amended Complaint in the Kyphon case, please click here.
The government’s theory that Kyphoplasty should have been done on an outpatient basis appears to be deeply flawed. Several independent organizations have indicated that Kyphoplasty was properly considered an inpatient procedure. For example, InterQual, McKesson’s well-known care management tool, listed Kyphoplasty as an inpatient procedure until May of 2008. The AHA’s coding clinic in the Fourth Quarter of 2004 stated “Kyphoplasty is typically performed in an inpatient setting.” As a result, it is difficult to understand why the government would assert that it was fraudulent to admit a Kyphoplasty patient as an inpatient. Nevertheless, that appears to be the position of the U.S. Attorney’s Office for the Western District of New York.
Hospitals that have performed Kyphoplasty procedures should make certain that their staff, including their medical staff, are prepared to address unexpected contact from government investigators.
If you would like copies of a free pocket card you can provide employees to prepare them for contact from a government agent, please contact Heather King.
If you have any questions about this article, please contact David Glaser, 612-492-7143.