Overpayment settlement puts health systems on notice

Three hospitals within Mount Sinai Health System will pay nearly $3 million to settle a whistle-blower suit alleging they held onto Medicaid overpayments beyond the 60-day repayment window, marking one of the first settlements over an issue that could affect health systems across the country.

The New York City health system agreed to pay $2.95 million rather than go to trial over $844,000 in retained Medicaid overpayments, where they could have faced triple damages as well as $4.9 million in False Claims Act penalties for the 444 payments in question. Mount Sinai had asked a federal court in 2014 to throw out the case. The settlement will be split between New York state, the federal government and a whistle-blower.

The hospitals—Mount Sinai Beth Israel, Mount Sinai St. Luke’s and Mount Sinai Roosevelt—were part of Continuum Health Partners at the time of the alleged overpayments in 2009 and 2010, and they have since merged with Mount Sinai.

A New York state comptroller audit in September 2010 and a whistle-blower email in February 2011 alerted Continuum and the hospitals to the potential overpayments, which were caused by a computer glitch.

But they didn’t refund all of the overpayments until March 2013, according to federal and state prosecutors, well beyond the allotted window to return overpayments to the government.

Under the 2009 Fraud Enforcement and Recovery Act and a 2010 provision in the Affordable Care Act, Medicare and Medicaid providers have 60 days to repay overpayments from the time they are identified. After that window, the retained overpayments are subject to the False Claims Act and additional potential liabilities. Hospitals have strongly opposed these rules.