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wakeMed enters into $8 million settlement to resolve investigation concerning outpatient hospital visits billed to medicare as inpatient hospital stays

FOR IMMEDIATE RELEASE
December 19, 2012

RALEIGH - United States Attorney Thomas G. Walker announced that WAKEMED, doing business as WAKEMED HEALTH AND HOSPITALS, has agreed to an $8 million settlement as part of a global resolution of an investigation by the United States Attorney’s Office for the Eastern District of North Carolina and the United States Department of Health and Human Services Office of the Inspector General. United States Attorney Walker stated, “This case will serve as a reminder that hospitals, just like individual health care providers, will be held accountable for their actions. Medicare is a program the 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. This office, along with the United States Department of Health and Human Services, will continue to monitor this matter over the coming years to ensure that the conduct that was the subject of this investigation does not occur again.”

“Improper inpatient hospital stays cost the taxpayers millions of dollars each year and drain the Medicare Trust Fund,” said Derrick Jackson, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General in Atlanta. “The OIG will continue to work aggressively to eliminate the financial bleeding of our health care system.”

As a part of the global settlement, WAKEMED admits that the wrongdoing set forth in a “Statement of Facts” in fact occurred, and that WAKEMED is responsible for the conduct of its officers and directors. Among other things, the Statement of Facts indicates that in 2007 WAKEMED was identified as the North Carolina provider with the largest percentage of “zero-day stay” billings, that is, claims billed to Medicare as inpatient hospital stays when, in fact, the Medicare patients did not remain in the hospital for even one day. A Medicare Program Safety Contractor obtained a random sampling of records for these zero-day hospital stays from WAKEMED and found that in many instances, patients visited WAKEMED’s Raleigh Campus for a scheduled cardiac procedure and were discharged home on the same day. WAKEMED billed Medicare for these hospital visits as inpatient hospital stays even though, in many instances, the physician of record had not ordered the patients to be admitted, and even though the patients never occupied an inpatient bed. Further investigation by the Department of Health and Human Services and the United States Attorney’s Office confirmed that instead of following physician orders regarding admission, WAKEMED admitted patients based upon a list of procedures disseminated by a WAKEMED director. WAKEMED also marked physician orders in a manner indicating that the patients were to be admitted, and then admitted the patients, without authorization from the physician of record. As a result of these actions, patients were routinely admitted to WAKEMED’s Raleigh Campus as inpatients without, or in contravention of, physician orders. WAKEMED billed Medicare for these hospital visits as inpatient hospital stays and, as a result, generally collected a higher rate of reimbursement from Medicare that would otherwise have been paid. The investigation has not revealed that any person individually benefitted from the wrongful conduct.

To resolve the investigation into the foregoing, WAKEMED entered into global settlement negotiations with the Criminal and Civil Divisions of the United States Attorney’s Office, and the United States Department of Health and Human Services Office of the Inspector General. As a part of the global settlement, WAKEMED has entered into three separate written agreements with the United States, including a Deferred Prosecution Agreement, a civil Settlement Agreement, and a Corporate Integrity Agreement. The Deferred Prosecution Agreement is subject to the approval of the United States District Court for the Eastern District of North Carolina.

Under the terms of the Deferred Prosecution Agreement, WAKEMED admits to the wrongdoing set forth in the Statement of Facts and acknowledges that it will be charged in a Criminal Information with Making Material False Statements Relating to Health Care Matters and Aiding and Abetting, in violation of Title 18, United States Code, Section 1035 and 2. WAKEMED further agrees to pay the United States the sum of $6,775,419.58 as detailed in the civil Settlement Agreement, and to be subject to independent and ongoing monitoring under the terms of the Corporate Integrity Agreement to ensure that the conduct described in the Statement of Facts does not occur again. If WAKEMED successfully completes a two-year period of monitoring and complies in all other respects with the Deferred Prosecution Agreement, then the Government will move to dismiss the Criminal Information. Regardless of the dismissal of the charge, WAKEMED will remain subject to monitoring by HHS for a further period of 3 years. All settlement documents are attached to this press release.

Investigation of this case was conducted by the United States Department of Health and Human Services, Office of the Inspector General. Assistant United States Attorney William M. Gilmore is the prosecutor assigned to this matter from the Economic Crimes Section of the United States Attorney’s Office. Assistant United States Attorney Neal Fowler represents the Civil Division of the United States Attorney’s Office. Senior Trial Counsel Marie Bonkowski represents the Fraud section of the Department of Justice.

If you suspect Medicare or Medicaid fraud please report it by phone at 1-800-447-8477 (1-800-HHS-TIPS), or E-Mail at HHSTips@oig.hhs.gov

(Deferred Prosecution Agreement)

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