For Immediate Release - April 13, 2015

Hallmark Health to Pay MassHealth $1.75 Million Over Claims of Improper Billing for Hospital Stays

AG’s Office Alleges Hallmark Submitted Improper Claims for Reimbursement of Inpatient Admissions in Violation of MassHealth Regulations

BOSTON – Hallmark Health Systems has agreed to pay $1.75 million to settle allegations that it improperly billed the Massachusetts Medicaid Program (MassHealth) for certain inpatient admissions at its hospitals, resulting in overpayments by MassHealth, Attorney General Maura Healey announced today.

The settlement alleges that from March 2008 to December 2013, Hallmark used a specific default code that classified MassHealth patients as having received short-stay inpatient services, when an observation or outpatient level of care would have been more appropriate. This protocol resulted in higher payments to Hallmark hospitals from MassHealth.

“Improper billing to MassHealth hurts taxpayers and undermines the integrity of our healthcare system,” AG Healey said. “Our office is committed to working with our partners to lower healthcare costs and stop practices that impose unlawful or unnecessary costs on MassHealth.”

MassHealth reimburses acute hospitals at a flat rate that covers all non-physician inpatient services for the first 20 days of an admission. If a hospital provides outpatient services, MassHealth reimburses such services using a lower rate. To assist hospitals in determining whether to bill services as outpatient or inpatient, MassHealth promulgated guidelines that provide clear standards for allowing a hospital to bill MassHealth for an inpatient admission.

The AG’s Office alleges that Hallmark’s practice of billing and receiving reimbursement for certain inpatient stays violated MassHealth guidelines that inpatient admissions always require case-by-case review to determine a heightened need for care based on clinical criteria or physicians’ orders.

The AG’s Office alleges that Hallmark knew or should have known that the case management system did not properly rely on clinical criteria or physicians’ orders, and therefore resulted in improper claims for inpatient admissions for MassHealth patients staying at Lawrence Memorial Hospital and Melrose-Wakefield Hospital in Melrose, two of the acute hospitals Hallmark operates.

This matter was handled by Chief George Zachos and Deputy Chief Steven Hoffman, of AG Healey’s Medicaid Fraud Division, and was investigated by Investigator Eric Panicucci, with assistance from MassHealth.