Carolinas HealthCare to pay $6.5 million settlement over urine tests

Carolinas Medical Center
Carolinas Medical Center Charlotte Observer file photo

Carolinas Healthcare System has agreed to pay a $6.5 million False Claims Act settlement to settle charges over its billing practices brought by a whistleblower, U.S. Attorney Jill Rose said Friday.

Prosecutors contended the Charlotte-based hospital system had been improperly “up-coding” claims for urine drug tests in order to receive much higher payments than CHS would have if billed properly.

The allegations arose from a lawsuit filed by Mark McGuire, a former lab director at CHS, the U.S,. Attorney’s Office said.

According to court documents, from 2011 to 2015, Carolinas HealthCare conducted urine drug tests, categorized as “moderate complexity” tests by the Food and Drug Administration, but submitted claims indicating the company had conducted “high complexity” tests.

As a result, federal health care programs paid CHS and certain facilities under contract with the system about $80 more per test for the claims submitted with the higher-paying code.

McGuire will receive almost $1.4 million from the settlement, according to the U.S. Attorney’s Office. The False Claims Act allows citizens to collect a portion of such payments when they blow the whistle.

“Medical service providers must respect public resources in government health care programs,” Rose said in statement announcing the settlement.

“As more Americans struggle with healthcare costs, we must ensure that our programs are efficient and compliant,” she said. “For those medical providers who seek to unlawfully and unfairly take advantage of government health care programs, this case resolution should serve as fair warning.”

N.C. Attorney Gen. Josh Stein called up-coding “an unacceptable waste of taxpayer dollars, and my office will not allow it.”

In a statement Friday, CHS said it has “fully cooperated” in the government’s review of the allegations, “but after almost two years we determined it was in our best interest to move forward and resolve this issue.”

“The lawsuit is not about our patient safety, quality of care, or whether the urine drug screen tests were done correctly,” CHS said. “It is about the interpretation and application of complex and constantly changing billing guidelines.”

In 2010, the Centers for Medicare and Medicaid Services rejected “the long standard American Medical Association’s CPT billing codes for drug screens in favor of its own coding system,” Carolinas HealthCare System said. In 2013 and 2014, Carolinas HealthCare said it asked two separate outside consultants to review its coding and both confirmed its coding selection.

“Carolinas HealthCare System takes compliance with Medicare and Medicaid regulations very seriously, and our Corporate Compliance Department is dedicated to facility and physician compliance,” the system said.

Joe Marusak: 704-358-5067, @jmarusak