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Banner Health hit with $18 million settlement over treatment and billing allegations

Government alleged Banner Health hospitals intentionally overcharged Medicare patients, improperly rendered inpatient care.

Beth Jones Sanborn, Managing Editor

Arizona-based Banner Health will pay more than $18 million to settle allegations that 12 of its hospitals in Arizona and Colorado knowingly admitted patients for inpatient care who could have been treated on an outpatient basis, and then submitted false claims to Medicare for the services, the Justice Department announced 

Banner Health owns and operates 28 acute-care hospitals in multiple states.

[Also: Aetna, Banner Health launch joint venture health plan in Arizona]

The government alleged that 12 Banner Health hospitals intentionally overcharged Medicare patients. From November 1, 2007 through December 31, 2016, Banner Health allegedly billed Medicare for "short-stay, inpatient procedures" performed at the 12 hospitals that should have been billed on a less costly outpatient basis.  The government also alleged that Banner Health inflated in the number of hours for which patients received outpatient observation care in their reports to Medicare, the DOJ said.

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The whistleblower lawsuit was filed in the U.S. District Court for the District of Arizona by former Banner employee Cecilia Guardiola. Under the qui tam or whistleblower provisions of the False Claims Act relators are permitted to share in the recovery, and Guardiola will receive roughly $3.3 million.

[Also: Banner Health eliminates positions amid $65 million restructuring]

"Hospitals that bill Medicare for more expensive services than are necessary will be held accountable," said Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services Christian Schrank. "Medical decisions should be made based on patients' conditions and needs, not on providers' profits."

For its part, Banner Health entered into a corporate integrity agreement with the U.S. Department of Health and Human Services Office of Inspector General that requires the system to retain an independent review organization to evaluate the accuracy of the company's claims for services to federal healthcare program beneficiaries. 

"Banner Health is fully committed to adhering to all legal and regulatory requirements and providing patients with the highest quality of care. Although the rules that dictate when a hospital can accommodate a physician's request to admit a Medicare patient are complex and evolving, our policy has always been to make those decisions in accordance with government guidelines," said Becky Armendariz, senior director of marketing and public relations for Banner Health. "The settlement does not involve any finding of wrongdoing on Banner's part, and we are pleased to resolve this matter to avoid the disruption and expense of ongoing litigation." 

The case was handled by the U.S. Attorney's Office for the District of Arizona and the HHS-OIG.

Twitter: @BethJSanborn
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