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Hospital Settles FCA Case Filed by CO Over Modifiers; Make Sure People ‘Feel Heard’

John Peter Smith (JPS) Hospital in Fort Worth, Texas, agreed to pay $3.3 million to settle false claims allegations in a case with a hot risk area, a compliance officer-turned-whistleblower and a self-disclosure. Erma Lee, the former director of compliance, alleged the hospital improperly billed for three modifiers and didn’t return the overpayments even after she alerted executives, according to her 2018 False Claims Act (FCA) complaint.[1] During the subsequent Department of Justice investigation, the hospital voluntarily repaid its Medicare administrative contractor $438,673, according to the settlement, which was announced by the U.S. Attorney’s Office for the Northern District of Texas Aug. 27.[2]

The government alleged JPS submitted Medicare claims with “inappropriate or otherwise unjustified” modifiers 25, 59 and XU from 2008 through 2016, the settlement states. The U.S. attorney’s office declined to intervene in the lawsuit, and the hospital corrected the modifier problem after the whistleblower separated from the hospital, said its attorney, Jason Mehta.

Modifiers allow providers to bypass National Correct Coding Initiative billing edits that otherwise prevent improper payments for evaluation and management (E/M) services and procedures when they’re not separately payable. They’ve been under the microscope of Medicare watchdogs for years, with the HHS Office of Inspector General (OIG) finding high error rates for certain modifiers. In April, OIG added an audit to the Work Plan of modifier 25 on dermatologists’ claims for E/M services, while CMS produces comparative billing reports on modifier 25.[3]

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