New Jersey’s Silver Lake Hospital as well as some of its investors have agreed to pay $30.6m to settle allegations of Medicare overbilling. 

The allegations of False Claims Act and Federal Debt Collection Procedures Act (FDCPA) breaches were announced by the US Attorney’s Office, District of New Jersey on 16 January.  

Silver Lake, also referred as Columbus LTACH, is a long-term care hospital based in Newark, New Jersey. 

As per the Attorney’s Office media release, the hospital has to pay over $18.6m, plus interest, to resolve accusations of claiming excessive cost outlier payments from Medicare.  

Some investors will pay $12m, plus interest, for alleged fraudulent money transfers by the hospital to its investors under the FDCPA. 

The agreed settlement amounts will be paid incrementally over a five-year span, with Silver Lake Hospital’s payment terms negotiated due to the institution’s reported inability to pay.  

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By GlobalData

Medicare’s cost outlier payments, which are supplemental reimbursements for unusually high-cost care, are at the main focus of the allegations.  

These payments are calculated using a formula that adjusts hospital charges to costs, based on previously submitted cost reports. 

Allegations suggest that Silver Lake Hospital manipulated the cost outlier payment system by significantly raising charges without a corresponding increase in costs, exceeding the hospital’s financial capacity for repayment upon Medicare cost report reconciliation.  

The settlement also addresses claims that Silver Lake made substantial transfers to its investors without equivalent returns, at times when the hospital was likely unable to meet its Medicare debts, actions that purportedly breached the FDCPA. 

Besides, the settlement agreement specifies that Silver Lake’s principal investor Dr Richard Lipsky and Columbus Management South, which represents other hospital investors, will make the payments to resolve the FDCPA allegations.  

This settlement further marks culmination of efforts by various government agencies, including the Health and Human Services Office of Inspector General (HHS-OIG).   

HHS-OIG special agent in charge Naomi Gruchacz said: “When a hospital submits false information to seek higher reimbursements, it can affect the availability of funds and services for others and drive up the cost of taxpayer-funded health care. 

“HHS-OIG will continue to work with our law enforcement partners to ensure that health care providers are held accountable if they attempt to exploit federal health care programmes.” 

Last month, Indiana’s Community Health Network was fined $345m to settle allegations of Medicare overbilling and flouting rules barring self-referrals. 

The hospital and associated investors will pay the agreed settlement amount incrementally over a five-year span.