HealthEast Reaches Settlement on Kyphoplasty Billing Investigation

ST. PAUL, MN--(Marketwire - May 21, 2009) - HealthEast Care System has finalized a settlement with the U.S. Attorney's Office Western District of New York regarding billing of kyphoplasty procedures performed at HealthEast hospitals from 2002 to 2007. This settlement is part of what is believed to be a national investigation of hospitals by the government regarding kyphoplasty billing practices. Under the agreement, HealthEast will pay Medicare $836,000 in addition to an earlier voluntary repayment of $1.45 million. There are no penalties to HealthEast.

Physicians on the medical staff at St. Joseph's, St. John's and Woodwinds hospitals performed kyphoplasty procedures from 2002 - 2007. Kyphoplasty is a minimally invasive spinal surgery procedure used to treat painful, progressive vertebral compression fractures.

In June 2007, HealthEast was contacted by the U.S. Attorney's Office which was investigating Kyphon. The government's investigation related to a lawsuit against Kyphon that alleged that Kyphon encouraged hospitals and physicians to perform kyphoplasty as an inpatient procedure, when patients might otherwise have been appropriately managed in the less costly outpatient setting. HealthEast cooperated fully with the government's investigation of Kyphon.

After becoming aware of the government's concerns in June 2007, HealthEast took immediate action to investigate its practices and promptly repaid Medicare, Medicaid and all other payers all amounts received for kyphoplasty procedures that HealthEast's internal review found did not meet criteria for inpatient admission.

"HealthEast is committed to following all Medicare and Medicaid regulations and has implemented new policies and procedures to avoid similar situations from occurring," stated Tim Hanson, HealthEast President and CEO.

"Both the U.S. Attorney's Office and the Office of Inspector General (OIG) were very complimentary of HealthEast's Compliance Program and our willingness to cooperate with the government's investigation," Hanson said. "And regardless of the inpatient or outpatient setting, HealthEast is confident that all patients who had kyphoplasty procedures performed at our hospitals received appropriate, medically necessary, safe, high quality care."

HealthEast Care System is a community-focused, non-profit health care organization that provides innovative technology, compassionate care and a full spectrum of family health services. HealthEast includes Bethesda Hospital, St. John's Hospital, St. Joseph's Hospital and Woodwinds Health Campus as well as outpatient services, clinics, home care, pharmacies and medical transportation services.

Practicing financial responsibility, HealthEast is the largest, locally-owned health care organization in the Twin Cities' East Metro with 7,300 employees, 1,200 volunteers and 1,400 physicians on staff.

Contact Information: For more information: Anne Sonnee HealthEast Marketing and Communications Phone: 651-232-5613 Pager: 651-864-2198 E-mail: