RALEIGH — Days before WakeMed goes before a federal judge for approval of an $8 million settlement of a Medicare fraud investigation, hospital officials attempted to clarify statements that might not jibe with the proposed agreement with prosecutors.
In late December, federal prosecutors announced that WakeMed faced criminal charges in relation to its practice of billing Medicare for expensive overnight care at the private, not-for-profit’s Heart Center Observation Area when the patients had been treated and released the same day.
Nurses at the heart center, according to federal court documents, routinely ignored physician’s orders for how a patient should be classified. Their actions resulted in the hospital receiving millions of unwarranted Medicare dollars for outpatients who wrongly were classified as inpatients.
In an interview on Dec. 19, 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 – making material false statements relating to health care matters and aiding and abetting – Atkinson said he didn’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,” Atkinson said in December.
That description differed vastly from what prosecutors contended, and it went against the grain of the proposed settlement agreement that a judge is to review Thursday afternoon in a federal courtroom.
Under the settlement proposal, prosecutors have agreed to defer prosecution against WakeMed for two years. No individuals have been charged in the case, but hospital officials acknowledge that the settlement proposal did not preclude the government from seeking charges against individuals.
Deb Laughery, a spokeswoman for the hospital, issued a clarification on Monday.
“In an abundance of caution, WakeMed confirms that it has agreed to a settlement with the United States as set forth in the Deferred Prosecution Agreement,” the statement said, adding further that statements of fact laid out in the agreement were “true and accurate.”
In the clarification, WakeMed officials acknowledged that the hospital formally faced federal criminal charges. The hospital also retracted any suggestions that the settlement only involved a small number of cases.
“To the extent any prior statements might be interpreted to indicate that WakeMed believes that there were only 150 cases that potentially involved the practice of admitting patients without orders, admitting patients in a way that conflicted with orders, or marking physician orders as inpatient admissions without prior consultation with the physician of record, WakeMed retracts any such statement,” the hospital’s clarification on Monday stated.
The investigation, according to WakeMed’s statement, was conducted by randomly sampling and analyzing claims from various time periods.
“[T]he universe of claims from which the samplings were drawn far exceeded 150 cases,” the hospital’s clarification states. “The settlement figure reached in this case was derived from, among other things, an extrapolation from findings resulting from the examination of approximately 150 cases.”
Atkinson in December said that he thought the number of problematic cases was small and that prosecutors were posturing for the media.
“They’re not going to minimize the media effect,” he said at the time. The settlement proposal also prohibits WakeMed from making disparaging remarks about the findings of prosecutors.
Audit raised questions
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 in the WakeMed case after the auditors had difficulty reconciling the data with hospital admission policies and details provided by managers there in subsequent interviews.
Federal investigators subpoenaed hospital records as they built a criminal case heralded by Thomas Walker, U.S. Attorney for the Eastern District of North Carolina, as a caution to others.
Prosecutors declined to comment Monday on the clarification. WakeMed officials didn’t return calls seeking additional comment.
The investigators contended that WakeMed’s director of patient access oversaw staff that routinely ignored doctor’s orders about how to classify a patient at the cardiac center.
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 since December have been unsuccessful.
Atkinson has praised McAfee’s work and said he did not think the longtime WakeMed employee intentionally did anything wrong.
Staff writer Joseph Neff contributed to this report.