Nonprofit Hospital Chain to Pay $46-Million in Billing Suit

Sutter Health, one of California’s largest hospital networks, said Monday that it has agreed to pay $46-million to settle a whistle-blower lawsuit over what state insurance regulators termed double-billing for anesthesia services, reports The Sacramento Bee.

The nonprofit operator of about 20 Northern California hospitals agreed to introduce a flat fee for anesthesia and drop “chronometric” billing based on the time it takes to complete a procedure. Insurance Commissioner Dave Jones said the time-based charge was layered on top of additional fees, including the hospital’s bill for use of the operating room and a separate anesthesiologist’s fee.

The settlement payout will be shared by a billing auditor that filed the suit in 2009 and the state insurance department, which joined the case in 2011. Sutter denied any wrongdoing, saying its billing practices were legal and widespread in the industry, but an organization spokesman said the new method “will be clearer and more predictable to payers and consumers.”