Phoenixville Hospital Took Medicaid On 'Employable' Patients: DOJ

PHOENIXVILLE, PA — Phoenixville Hospital and one of its contractors have agreed to pay large settlements related to accusations by the Department of Justice that they committed Medicaid fraud, submitting claims for patients who were 'employable' and therefore not eligible for Medicaid coverage.

Phoenixville Hospital and Phoenixville Hospital Co., LLC has agreed to pay $100,000 to resolve alleged violations of the False Claims Act by "causing submission of altered forms to the Pennsylvania Department of Human Services, which administers Medicaid in Pennsylvania," according to United States Attorney William M. McSwain .

Additionally, Firstsource Solutions Ltd., a revenue cycle management services provider operating in Pennsylvania, has agreed to pay $225,000 for processing the alleged false claims on behalf of Phoenixville Hospital.

Whistleblowers in the case will receive $60,000 of the settlement, the U.S. Attorney's Office said.

The United States Attorney's Office contends that Phoenixville Hospital participated in making false claims to Medicaid for inpatient treatment and/or emergency room visits billed by Phoenixville Hospital. The claims resolved by this settlement are allegations only and there has been no determination of liability, only an agreement by the hospital and its servicer to pay the settlements.

On certain occasions, Phoenixville Hospital allegedly allowed alteration of one of the standard Pennsylvania Department of Public Welfare General Assistance Forms, the Employability Assessment Form (PA Form 1663), to exclude the option for the medical provider to certify that the self-pay patient was "employable."

The DOJ contends that, in some cases, the patient was therefore not disabled and not entitled to Medicaid coverage for the treatment being billed by the hospital. The United States further contends that Phoenixville Hospital submitted such forms from January 2008 through February 2012 and that some of these claims for Medicaid beneficiaries were false in light of Phoenixville Hospital's conduct.

Firstsource Solutions provides revenue cycle management services to hospitals, assisting with the submissions for determination of eligibility of uninsured patients, to the Medicaid program. The government alleges that from August 2009 through February 2012, Firstsource Solutions knowingly submitted false claims to Medicaid for inpatient treatment and/or emergency room visits billed by its client, Phoenixville Hospital.

This case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General. All of the allegations occurred between 2008 and 2012.

Phoenixville Hospital joined Tower Health in October 2017, five years after any of the alleged fraudulent Medicare submissions happened, said Jessica Bezler, Tower Health spokesperson.

The Department of Justice, U.S. Attorney's Office, Eastern District of Pennsylvania, said on Aug. 20 that the allegations of Medicaid fraud were originally alleged in two cases filed under the whistleblower provision of the False Claims Act. The Act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The whistleblowers in these cases will receive a total of about $60,000 of the settlement.

"My Office will continue to investigate credible allegations of fraud against federal healthcare programs, especially when the alleged conduct has potential implications for patient treatment," said U.S. Attorney McSwain.

"Hospitals that treat Medicaid patients and the entities that process Medicaid claims must know the billing and payment rules required by those programs, and abide by them. We would also like to thank the citizens and their lawyers who initially brought this case to our attention."

"Investigating allegations of the False Claims Act is a top priority," said Maureen R. Dixon, Special Agent in Charge for the Office of the Inspector General, U.S. Department of Health and Human Services. "We will continue to work with the U.S. Attorney’s Office to ensure the integrity of the Medicare and Medicaid Programs."

The DOJ said its pursuit of cases like this shows its emphasis on combating healthcare fraud and applying the False Claims Act. For the U.S. Attorney’s Office, the investigation and settlement were handled by Assistant U.S. Attorneys Viveca D. Parker and Scott W. Reid, with assistance from auditor George Niedzwicki.

Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 1-800‑HHS‑TIPS.