Community Health Systems, a for-profit hospital operator based in Franklin, Tenn., has agreed to pay nearly $98 million to the federal government, settling allegations that it submitted false claims for short-stay admissions that should have been billed as outpatient charges.

The Justice Department alleged that CHS admitted patients when it wasn’t medically necessary and then billed Medicare, Medicaid and the military’s Tricare program for those inpatient services. CHS and the Justice Department announced the settlement this week.

The settlement came with "no finding of improper conduct by CHS or its affiliated hospitals, and the company has denied any wrongdoing," hospital officials said in announcing the settlement.

The government said that from 2005 through 2010, CHS "engaged in a deliberate corporate-driven scheme" to boost hospital admissions of patients older than 65 covered by Medicare, Medicaid and Tricare who came into emergency rooms at some 119 CHS hospitals.

Several whistleblowers - including Emergency Department physicians and case managers - alleged CHS admitted patients through its emergency departments and then billed for medically unnecessary procedures when patients should have been treated as outpatients or placed on observation. The whistleblowers argued CHS established certain admissions benchmarks to improve profitability, since inpatient stays pay more than outpatient care.

The settlement also resolved so-called "qui tam" lawsuits filed by several individuals under the False Claims Act, which allows private citizens to sue on the government’s behalf and to receive a portion of the money recovered from companies. The individuals who filed suits included physicians, nurses and supervisors at several CHS hospitals.

CHS previously set aside $102 million to cover the settlement and related legal costs. The settlement also resolved separate allegations of inappropriate cardiac and hemodialysis services and self-referrals at CHS’ Laredo (Texas) Medical Center.

Wayne Smith, CEO at CHS, said in a statement that "the question of when a patient should be admitted to a hospital is, and always has been, a matter of medical judgment by the individual physician responsible for a patient’s care. Unfortunately, shifting and often ambiguous standards make it extremely difficult for physicians and hospitals to consistently comply with the regulations. We are committed to doing our best, despite these challenges."

Smith said the rules for admission have complicated clinical decisions, adding that CHS hopes to work more closely with the government to determine what constitutes appropriate inpatient care.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.