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WakeMed News Releases

December 19, 2012
WakeMed is an organization of great integrity that seeks to comply with applicable billing requirements. Over the past two decades, healthcare rules and regulations regarding patient status and billing have become increasingly complex. As a result of this complexity, mistakes were made interpreting some Medicare billing rules. Between the years of 2003 and 2010, a number of patient stays were misclassified as inpatient versus outpatient in the absence of an appropriate physician order.

Why does the misclassification of inpatient or outpatient matter to hospitals?
Inpatients are generally expected by policymakers to require a greater expenditure of hospital resources. Therefore, hospitals receive a higher reimbursement rate for inpatient stays from Medicare than they do for outpatient stays. To be classified as an inpatient, it must be ordered by a physician, generally involve a staygreater than 24 hours and the medical record be determined by Medicare to support inpatient reimbursement. Many surgeries and procedures are now provided on an outpatient basis, so an overnight or even a multiple-day hospital stay can still sometimes be classified and billed as outpatient.

How does classification as an in- or outpatient impact the patient?
For the patient, there is no difference in the care delivered. Inpatient and outpatient are exclusively billing statuses and do not affect the care patients receive while they are in the hospital. The difference between inpatient and outpatient is how a patient’s stay is coded based on rules and regulations provided by Medicare, Medicaid and private insurers.

Inpatient or outpatient billing status can affect how much the patient pays for hospital services like X-rays, drugs, and lab tests and may also affect whether Medicare will cover care in a skilled nursing facility (SNF). Inpatient classification typically means services patients receive are reimbursed at a higher rate, so out-of-pocket fees and co-pays for the patient are lower. Inpatient classification also makes it more likely that care in a skilled nursing facility will be covered by Medicare.

What has been done to correct the issue?
WakeMed has taken many steps and devoted significant time and resources to improving its processes and preventing reoccurrence of these billing errors. The changes include revamping its admissions and registration processes and implementing new policies and procedures that spell out acceptable practices for obtaining patient status determinations from physicians in advance of scheduled procedures. WakeMed requires an order from physicians at the time of pre-admission/registration for all scheduled procedures that clearly states the patient status to be applied.

WakeMed is also devoting significant resources to providing training for its employees. Finally, WakeMed has worked closely with outside consultants to evaluate and strengthen its existing robust compliance plan and to obtain guidance on complicated Medicare billing requirements. While human error will always be a factor, WakeMed is committed to submitting accurate and compliant bills to Medicare, Medicaid, insurance companies and patients.

Have other hospitals had similar patient status billing errors?
Yes. Inpatient billing status classification has been the subject of many recent government investigations and settlements with hospitals throughout the country. Unfortunately, Medicare rules are not easy to apply. The difference between inpatient and outpatient classification for Medicare payments has been a source of similar patient billing status errors at other hospitals.

Did WakeMed bill Medicare for services that weren’t provided?
No. All the services for which WakeMed billed Medicare were provided to the patients. This matter involved how those bills were classified: as either inpatient charges or outpatient charges. The classification of the bill did not impact the type or quality of services provided to patients.

Were any Medicaid or private insurance bills impacted by these errors?
No. Medicare, Medicaid and private insurers all have their own unique criteria and rules for classifying a patient as inpatient instead of outpatient. The misapplication of the inpatient/outpatient status was exclusively a Medicare issue.

How were the errors identified?
The government has hired external contractors to review hospital claims and data looking for inconsistencies. WakeMed was found to have a high number of inpatient stays for certain procedures by these government contractors. Many inpatient stays were billed appropriately; unfortunately there were some cases that should have been billed as outpatient instead of inpatient.

What was the penalty for these errors?
WakeMed has fully supported its employees and taken full responsibility for these errors. As a result, WakeMed has agreed to a settlement paying the Federal Government $8 million, which includes any overpayments due to Medicare as well as civil monetary penalties. In addition, WakeMed has entered into a five-year corporate integrity agreement with the Federal Government and is in the process of contracting with an independent third party organization to provide audits and oversights to its billing process.

Will patients need to make any additional payments due to theseerrors?
For the cases involved in the settlement, patients will not be required to make any additional payments as a result of the re-classification.

Has WakeMed ever paid a civil monetary penalty to the government before?
No. This is the only time WakeMed has paid civil government penalties related to its billing.

Questions? Additional questions about settlement can be directed to WakeMed’s Corporate Compliance Department at (919)350-7401 or emailed to info@wakemed.org.
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