Raleigh, N.C. — WakeMed has agreed to pay $8 million to the federal government to settle an investigation into fraudulent Medicare billing practices, the U.S. Attorney's Office said Wednesday.

Investigators said WakeMed routinely billed Medicare for inpatient stays by people who had undergone cardiac treatments, even if they were discharged the same day as the treatment and never spent a night in the Raleigh hospital. Physician orders to discharge patients also were frequently overwritten so Medicare could be billed, according to federal court documents.

Some WakeMed managers were aware of the billing practices, officials said, but the investigation hasn't revealed that anybody personally benefited from the scheme.

"This case will serve as a reminder that hospitals, just like individual health care providers, will be held accountable for their actions," U.S. Attorney Thomas Walker 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."

The investigation started in 2007, when an auditor hired by federal regulators to root out Medicare fraud determined that WakeMed had the seventh-highest rate nationally of "zero-day stay" billings, or bills to Medicare for inpatient hospital stays lasting less than a day, officials said.

When the auditor was unable to reconcile the statistics with information gathered from interviews with WakeMed managers and a review of hospital policies regarding patient admissions, the U.S. Attorney's Office and the U.S. Department of Health and Humans Services stepped in. Investigators subpoenaed WakeMed records and interviewed numerous employees to build a case against the hospital.

Dr. Bill Atkinson, WakeMed president and chief executive, said there was never any intent to defraud the government, and no hospital employee was disciplined.

"We do not think it was intentional, and that is why nobody was prosecuted for it," Atkinson said, blaming the problem on complex Medicare regulations.

"The rules change – and they change frequently – but at the end of the day, we are responsible for how that works," he said. "You ask your clinical personnel to interpret this, and I think they give it their very best shot at doing the right things by patients. They do not always get the categories correct."

Fewer than 150 cases included questionable billing, he said.

Federal authorities charged WakeMed with making material false statements relating to health care matters
and with aiding and abetting, but the settlement will defer prosecution of the case. If the hospital complies with provisions set out in the settlement agreement for the next two years, the charges will be dismissed.

WakeMed has already paid more than $1.2 million to the Medicare program for some of the questionable claims and must pay the remaining $6.7 million to the government by next week.

Federal authorities noted in the settlement that the hospital also has already hired a firm to conduct independent compliance audits, has revised its billing policies and procedures and has reworked its executive and board structure to place more emphasis on reporting compliance.

"These are good people. It is understandable for us, how it happened," Atkinson said. "It doesn’t make it OK, and the education work we are doing hopefully will make sure this does not happen.”

Federal regulators will monitor WakeMed's practices regarding Medicare for five years as part of a corporate integrity agreement. The agreement spells out the hospital's conduct for submitting claims, training employees and reviewing policies and sets up a method for workers to disclose any future problems with Medicare billing.