False Claims versus Medical Necessity

Rosemary Flanigan

July 13, 2010

I read an article in Trustees, the Horty Springer Publication, for March/April 2010. It is entitled, “False Claims Act Litigation and Medical Necessity: Hospitals Beware!” and tells how a small rural hospital in Minnesota recently paid almost $850,000 to the federal government to settle a False Claims Act lawsuit.

A former medical staff member filed a whistleblower lawsuit alleging another physician’s medically unnecessary services. The federal government evaluated the claim and decided to intervene. This intervention led not only to charges against the physician but also against the hospital for “deliberate ignorance” concerning these claims.

“Hospitals are between a rock and a hard place when it comes to medical necessity. When they monitor admissions, length of stay, use of diagnostic tests, and other measures related to the use of resources, some physicians will cry foul and claim the hospital is engaged in ‘economic credentialing.’

But if hospitals don’t evaluate such factors, the government may allege they violated the False Claims Act.”

Document, document, document. Since lawsuits of this nature frequently take place years after the event/s, hospital trustees were warned in the article to see that admissions and procedures were benchmarked against similar hospitals, that effective case management and utilization review plans were provided and reviewed, support adequate documentation to justify medical necessity, and make sure a solid peer review system is in place.

I shudder to think of the effects of a fine of that magnitude to that 25-bed hospital!! Ethics committee members, be part of the solution, not the problem!