John Peter Smith Hospital agreed to pay $3.3 million to settle a case alleging it violated the False Claims Act by upcoding claims given to federal healthcare programs such as Medicare, TRICARE, and VA health benefits programs. The suit stems from a complaint filed by JPS’ former Director of Compliance Erma Lee, who said the hospital upcoded hundreds of claims to increase payments. JPS maintains that the errors were unintentional.
Upcoding is when hospitals add billing modifiers to indicate significant care administered on top of the other medical procedures beyond the bundle included in the original care. The upcodes result in higher reimbursement for the provider but are illegal if more care wasn’t administered.
In September 2020, Lee said the hospital had been improperly adding modifiers from 70 to 95 percent of the time in specific procedures, often double billing for the care provided. At the time, JPS failed to reimburse payors for overpayment stemming from improper claims. The False Claims Act allows private citizens with evidence of fraud to sue on behalf of the government and share any proceeds, and Lee exercised her right via complaint.