WakeMed admits to false Medicare billing in $8m settlement

Hospital agrees to an $8 million settlement with Medicare

ablythe@newsobserver.comDecember 19, 2012 

  • The case against WakeMed Prosecutors contend WakeMed routinely billed Medicare between 2000 and 2008 for inpatient stays for people who had gone to the Heart Center Observation Area, received treatment and been discharged the same day. Intake nurses often ignored physician orders for classifying the patients as “outpatients,” meaning they would not stay overnight. The hospital then submitted bills to Medicare for pricier overnight stays. Prosecutors contend two crimes occurred: making material false statements relating to health care matters, and aiding and abetting. Hospital officials described the procedures as technical billing errors that occurred because of the misinterpretation of complex Medicare guidelines.

— WakeMed has agreed to pay $8 million to settle an investigation into its practice of billing Medicare for expensive overnight care when the patients had been treated and discharged the same day.

The settlement came after a lengthy criminal investigation into Medicare billing procedures used by nurses at the private, not-for-profit hospital’s Heart Center Observation Area.

Nurses there, according to federal court documents, routinely ignored physicians’ orders for how a patient should be classified. Their actions resulted in the hospital receiving millions of unwarranted Medicare dollars for outpatients who were classified wrongly as inpatients.

Though some WakeMed managers were aware of the billing practices, according to court documents, investigators found no evidence of anyone personally benefiting from the system.

No one, according to WakeMed officials, lost their job or was disciplined because of the investigation.

In an interview Wednesday, Bill Atkinson, WakeMed’s president and CEO, wavered between accepting the charges – saying repeatedly “I don’t want to minimize it, and I don’t want you to hear me doing that” – and being adamant that the hospital’s actions were simply a misinterpretation of complicated federal Medicare guidelines.

Even though he endorsed a settlement agreement in which prosecutors contend two crimes occurred, Atkinson said he doesn’t believe the hospital’s actions were criminal.

“I don’t think so, but the federal government thinks they could certainly turn it that way,” he said. That description differs vastly from what prosecutors contend.“They’re not going to minimize the media effect,” Atkinson said.

Thomas Walker, the top federal prosecutor for the judicial district that includes Raleigh, announced the settlement Wednesday with a strong caution to other health care organizations.

“This case will serve as a reminder that hospitals, just like individual health care providers, will be held accountable for their actions,” Walker, the U.S. Attorney for the Eastern District of North Carolina, said in a statement. “Medicare is a program that relies upon its providers to only bill for services that are actually provided. Unfortunately, that system of trust carries with it the inherent potential for abuse.”

Medicare is the program that pays for medical treatment for Americans 65 and older. The current battle in Washington over the deficit has put Medicare, which represents approximately 15 percent of federal spending, under scrutiny.

The investigation of WakeMed stems from a 2007 audit done for federal regulators assigned to root out Medicare fraud. WakeMed had the highest rate in North Carolina and the seventh-highest rate in the country of “zero-day stay” billings, or bills to Medicare for inpatient hospital stays that lasted less than a day, according to the audit.

Federal prosecutors got involved after the auditors had difficulty reconciling the data with hospital admission policies and details provided by WakeMed managers in subsequent interviews. All the billing cases flagged by investigators were from WakeMed’s heart center, which has long served as the hospital’s big money maker.

Federal investigators subpoenaed hospital records and conducted further interviews as they worked to build a criminal case.

The investigators contend that WakeMed’s director of Patient Access oversaw and was responsible for a Patient Access staff that routinely ignored doctors’ orders about how to classify patients at the cardiac center. Sometimes doctors sent orders without classifying a patient, and nurses took it upon themselves to decide whether Medicare should be billed for the pricier inpatient services.

“The patient access staff was instructed to, and did in fact, ignore physician designations of status as ‘outpatient’ on written orders,” prosecutors contend in the deferred action settlement agreement. “Likewise, the nurses of the patient access staff were not instructed to, nor did they consult with the referring physician prior to admitting patients as ‘inpatients’ on WakeMed’s electronic database in contravention of a written order.”

Heidi McAfee, who retired earlier this year, was director of Patient Access during much of the period when the problematic billing occurred. Efforts to reach McAfee on Wednesday were unsuccessful, but Atkinson praised her years of work with WakeMed.

“Do I think anybody intentionally did anything wrong?” Atkinson said. “No, I don’t.”

He said WakeMed had not reported McAfee or any of the nurses to the N.C. Board of Nursing for ignoring doctor’s orders. He stressed that none of the decisions were about patient care.

“This is not a clinical care question,” Atkinson said. “This is a billing question.”

The hospital faces two criminal charges – making material false statements relating to health care matters and aiding and abetting, but under the settlement reached Wednesday, prosecution will be deferred. If the hospital complies with provisions in the settlement agreement, such as paying $8 million and allowing further monitoring, the charges will be dismissed in two years, according to court documents.

As part of the agreement, which has yet to be approved in court, Atkinson acknowledged the wrongdoing described by prosecutors. He further acknowledged that WakeMed was responsible for the acts of the health-care organization’s employees and officers.

WakeMed saw 110,000 Medicare patients in 2010. The 52-year old hospital has never been sanctioned by Medicare before.

WakeMed has paid more than $1.2 million to the Medicare program for some of the questionable claims. The hospital is to pay an additional $6.7 million by next week.

Both Atkinson and federal prosecutors said WakeMed took steps quickly to fix the billing problem.

Under the settlement agreement, WakeMed officials are prohibited from discussing how many cases were singled out by prosecutors, but Atkinson said it was a small percentage of the hospital’s overall business.

Staff Writer Mandy Locke contributed to this report.

Blythe: 919-836-4948

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