For-profit health system, CEO to pay $12.5M to settle alleged False Claims Act violations for unbundling orthopedic surgeries — 5 things to know

Written by Laura Dyrda | December 11, 2018 | Print  |

Coordinated Health, a for-profit hospital system in eastern Pennsylvania and western New Jersey, along with its CEO Emil Dilorio, MD, will pay millions of dollars to settle allegations that it violated the False Claims Act by submitting claims with unbundled orthopedic codes to Medicare and other federal healthcare programs, according to Lehigh Valley Live.

Here are five things to know:

1. The federal government alleged Dr. Dilorio and the health system unbundled orthopedic surgery codes on claims improperly to boost reimbursement. Specifically, the health system used Modifier 59 on claims, including total joint replacements and arthroscopic surgeries, on services that weren't separately billable.

2. From 2007 to mid-2014, the health system allegedly used Modifier 59 inappropriately, during which time the government says outside coding consultants notified Coordinated Health it was improper unbundling.

"Coordinated Health simply ignored the consultants' recommendations and continued abusing Modifier 59 to improperly unbundle orthopedic surgery claims until mid-2014," according to a news release.

3. The Department of Justice also alleged Dr. Dilorio changed operative notes that would direct billers to maximize reimbursement by unbundling the codes improperly.

4. Coordinated Health will pay $11.25 million and Dr. Dilorio will pay $1.25 million to settle the allegations. Neither the health system nor its CEO admit to wrong doing or liability.

5. HHS will monitor the health system's billing practices for the next five years in accordance with an integrity agreement, as part of the settlement.

In responses to the settlement, Coordinated Health released the following statement: "We are pleased to have come to a resolution with the federal government regarding allegations of our past use of a specific Medicare billing modifier, involving a complex Centers for Medicare and Medicaid Services rule, which does not relate to the quality of patient care. We have already updated our billing practice to resolve the issue in question, and have taken a number of decisive actions to reduce the potential for issues in the future. Our focus has been and always will be providing the best possible patient care in the communities we serve."

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