WakeMed to seek judge's OK on deferred prosecution

North Carolina's WakeMed Health and Hospitals will ask a judge today to approve a settlement that includes an agreement to avoid prosecution, an extremely rare case of a health system charged criminally over Medicare claims.

But officials for the health system may have to convince the judge that they are truly admitting to the wrongdoing, a condition of the agreement.

Prosecutors in the U.S. attorney's office in Raleigh, N.C., filed a charge against Raleigh-based WakeMed in a criminal information document (Attachment A of the deferred prosecution agreement (PDF)) alleging the system treated cardiac patients in its outpatient heart center but then billed Medicare as though the patients had stayed in inpatient acute-care beds on its Raleigh campus. The information, filed Dec. 19, alleges that WakeMed staff then fabricated physician orders for inpatient care, and received higher reimbursements than it was entitled to between 2000 and 2008.

WakeMed also agreed to pay $6.8 million in a related civil settlement. Before the U.S. attorney's office began its investigation, WakeMed repaid $1.2 million in inappropriate payments indentified in an internal inquiry prompted when a CMS contractor noted anomalies in the claims.

Since Medicare pays higher rates for acute care than outpatient care, government auditors have been closely scrutinizing decisions to admit patients in recent years. But several healthcare legal experts interviewed said the WakeMed case appears to be the first time that a hospital faced criminal charges for short-stay upcoding, or for any Medicare billing issue.

The government charged WakeMed with one count of a crime known as “false statements in connection with Medicare benefits and aiding and abetting.” The deferred prosecution agreement calls for the Justice Department to drop the charge in two years if the system meets the terms of a corporate integrity agreement that requires independent monitoring of health system operations.

The agreement explicitly says the system admits its criminal conduct—falsifying patient records and submitting inflated bills—but statements attributed to President and CEO Bill Atkinson in the local media seemed to contradict that.

Atkinson told the Raleigh, N.C., News and Observer that he did not 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 a December interview, according to the newspaper.

The hospital retracted and corrected some public statements made by unspecified hospital officials days before U.S. District Judge Terrence Boyle was scheduled to review the agreement. For example, the system said it understood that many more than 150 patients were implicated in the case, and that the findings were only based on an analysis of a representative sample of that size.

“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 said in an e-mailed statement.

Raleigh U.S. attorney's office public information officer Don Connelly declined to comment on hospital officials' comments. “What's agreed upon in a deferred prosecution agreement is what the parties are bound by, and the judge has to accept the agreement,” Connelly said.

So the judge would be looking for people to adhere to what they agreed to before he would accept it.”