The U.S. Department of Justice is conducting a nationwide investigation of medical facilities to determine whether Medicare claims for kyphoplasty were improperly billed as inpatient rather than outpatient procedures. Kyphoplasty is generally acknowledged to be an effective procedure for treating vertebral fractures caused by bone cancer or osteoporosis. It involves the surgical insertion of a balloon into the fracture, which is then filled with cement. Under governing Medicare rules, it is not always appropriate to perform the procedure as inpatient surgery.

The inquiry began after two former employees of Kyphon, Inc. filed a False Claims Act case against Kyphon, which developed kyphoplasty and marketed products used in the procedure. The whistleblowers – Craig Patrick, a former reimbursement manager and Charles Bates, a former sales manager – alleged that Kyphon conducted a seven-year marketing spree to convince hospitals to perform kyphoplasty on an inpatient, rather than outpatient basis. Under Medicare guidelines, hospitals receive $12,000 to $15,000 for inpatient kyphoplasty as opposed to just $2,500 to $4,500 when the procedure is done on an outpatient basis.

In 2008, Kyphon’s successor, Medtronic Spine LLC, paid a handsome sum to settle the dispute with DOJ. Now the whistleblowers have filed similar complaints against a number of hospitals in a separate filing.

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