CardioNet, Inc. (BEAT)

[mlkrborn]

BEAT $3.12 0n allegations:
CardioNet tumbles on Justice Department inquiry
CardioNet says Justice Department is looking into allegations it overcharged Medicare

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Companies:CardioNet, Inc.
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BEAT 3.17 -0.60

On Wednesday August 31, 2011, 12:11 pm
NEW YORK (AP) -- Shares of CardioNet Inc. plunged Wednesday after the heart device maker said the U.S. Department of Justice is investigating allegations CardioNet may have overcharged Medicare.

THE SPARK: CardioNet disclosed Tuesday that it received a civil investigative demand from the Justice Department. According to the company, the agency said it is looking into allegations CardioNet used inappropriate diagnostic codes when filing for reimbursement from the Medicare program. If the company used the wrong reimbursement codes, Medicare may have overpaid the company.

The Justice Department wants documents going back to January 2007. CardioNet said it will fully cooperate with the request and will begin providing the information.

THE BIG PICTURE: The Conshohocken, Pa., company makes wireless heart monitoring devices. Many of its patients are Medicare beneficiaries, meaning Medicare covers part of the cost of the devices. In 2009, Medicare cut its reimbursement rate for procedures CardioNet devices to $754 per service from $1,123 per service, and the company's stock price dropped by about half. In November, Medicare raised its payment rate to $800.

SHARE ACTION: CardioNet stock lost 65 cents, or 17 percent, to $3.12 in midday trading. Earlier the stock traded at a 52-week low of $3.01.