Whistleblowers Expose Hospitals Fleecing the Public's Back

What happens when two whistleblowers separately expose widespread Medicare fraud to authorities? Other than nearly $90 million in fines, one wrongdoer loudly protests that she just lacked supporting documentation for the fraud.

Such is life in the case of medical device maker Medtronic Spine LLC and its hospital customers. After two former employees alerted the Justice Department of a scheme that ran from 2002-2008, Medtronic’s acquisition of Kyphon Inc. came back to haunt it with a $75 million fine. Kyphon made equipment and materials used to perform kyphoplasty. It promoted the procedure as a hospital money-maker if clients billed Medicare for inpatient rather than outpatient surgery.

Yes, in a cringe-worthy twist, hospitals were making decisions on inpatient versus outpatient status based on financial gain, not medical necessity. Just not according to Pamela Jones, St. Francis Hospitals’ chief legal eagle: "It is important to note that the probe had nothing to do with quality of care, patient safety or medical necessity ... the issue is that the documentation did not support the inpatient stay." Well Pamela, as for medical necessity, receipt of the lawsuit’s largest hospital fine for fraud ($3,158,629) would suggest otherwise. And I would hope St. Francis wasn’t jeopardizing patient safety and providing low-quality care while fleecing the public.

So what is kyphoplasty? It’s a procedure that lends itself perfectly to Medicare fraud, as it addresses vertebral compression fractures. Vertebrae are the bones that make up your spine, and they are more prone to fracture as we age and develop osteoporosis. Kyphoplasty is a minimally invasive way to address the pain and deformity of these fractures by restoring vertebral height and shape.

Don’t confuse kyphoplasty with its close cousin, vertebroplasty. Vertebroplasty has been around since 1986 and addresses pain only, by cementing fractures. And, as it turns out, not effectively. Two recent studies both demonstrated it had no benefit beyond a sham placebo surgery. Hey, if it’s just the anesthesia that’s really providing the benefit, that’s much less invasive (and expensive) than messing with your spine.

Let's do a quick comparative waste analysis. Six hospitals in Indiana, Alabama, and Minnesota have been assessed total fines of $10.6 million in the ongoing Medicare kyphoplasty fraud case. But consider that 100,000 vertebroplasties were performed in the US last year, at $2,000-$5,000 each. Imagine the millions of dollars wasted on ineffective treatment since 1991, when the procedure first became available in the US. It wasn’t just insurers footing the over-sized bills, but patients and taxpayers too. Why did we wait over 20 years to study outcomes? We can't get that money back!

So how do you avoid this kind of unnecessary medical care and hospitalization? First, get behind evidence-based medicine. As we’ve just seen, it’s not about denying necessary care, but avoiding the trauma and expense of ineffective treatments in favor of things that DO work. Second, ask questions about your care. You’re just watching your back.

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