Beth Israel Admits Inflating Fees for Medicare Patients Beth Israel Medical Center has admitted that it fraudulently inflated its fees for services to Medicare patients, deliberately deceiving the federal government into paying many millions of dollars more than their treatments actually cost. The hospital's admission, and its agreement to pay the United States government more than $13 million in damages, came in a health care False Claims Act lawsuit simultaneously filed and settled this week and announced Thursday by Preet Bharara, the United States attorney for the Southern District of New York. "The Medicare program provides a vital lifeline for its elderly and disabled beneficiaries," Mr. Bharara said. This settlement demonstrates our commitment to pursuing those whose conduct drives up the cost of health care. According to the complaint, Beth Israel, which is part of Continuum Health Partners, began the fraudulent practice known as "turbocharging" in the late 1990s, to take advantage of Medicare's so-called outlier payments - reimbursement for patients whose care was much more costly than the norm. As the threshold necessary to qualify for such payments rose - to $33,560 per inpatient discharge in 2003, from $9,700 in 1997 - hospital administrators drastically increased the prices of services most likely to affect elderly patients, even though the actual costs for such patients "were barely rising," the complaint said. In part because of statutes of limitation, the settlement covers only the period from Feb. 21, 2002, through Aug. 7, 2003, when the federal rules changed and turbocharging stopped. But the complaint quotes from internal memorandums and e-mails by hospital executives who embraced the strategy for increasing Medicare outlier payments recommended by a consultant, the National Revenue Group, years earlier. For example, in an e-mail exchange in 2000, Continuum's vice president for patient financial services wrote that the hospital was going to try to "keep the charges high even at the lowest levels of service in the E.R." The vice president for patient accounting agreed, "This is a good start. ... Go for the gusto! Later, another executive wrote of "feeling a bit giddy" at the thought of "getting $10 million of outlier revenue," while another advised caution because she had become wary that Beth Israel's turbocharging would be detected. In an e-mail, Jim Mandler, a spokesman for the hospital, said only, "We are content that this issue with the Manhattan U.S. attorney's office, which has lingered for many years, has been settled."