Outlier payments are reimbursements by the Medicare program to compensate hospitals for extraordinarily costly inpatient cases, as compared to average or typical costs incurred in connection to inpatient care. Congress intended these payments to compensate hospitals only for treating inpatients whose care involves extraordinarily high costs. The Medicare program relies on hospital-reported charges, adjusted to cost pursuant to a regulatory formula, to determine outlier payments.

A dishonest hospital submits false cost reports to the Medicare program by representing that its costs associated with inpatient medical care were higher than they actually were. In other words, through a scheme commonly called “turbocharging,” a hospital manipulates its charge structure to make it appear as though its treatment of certain inpatients was extraordinarily costly, which in fact it was not.  The end result is that the hospital receives millions of Medicare outlier payments that it would not have received if it had not implemented these charge increases.

This alleged Medicare fraud was most recently exposed in an $11.75 million False Claims Act settlement involving Lenox Hill Hospital. According to the government’s complaint, the hospital obtained increased outlier payments by falsely padding its costs, such that the reported charges “no longer reasonably reflected or approximated Lenox Hill’s actual costs.”

More information for whistleblowers is located at the Nolan & Auerbach, P.A. website.