Arizona-based Banner Health has agreed to an $18 million settlement over allegations the hospital company was overbilling Medicare for several years.

Banner Health owns 28 acute-care hospitals in a variety of states. Twelve hospitals in Arizona and Colorado allegedly knew they were submitting false Medicare claims by admitting patients who qualified to be treated on a less expensive outpatient basis.

Overbilling Medicare for inpatient services that were reportedly only outpatient procedures allegedly took place from Nov. 1, 2007 through Dec. 1, 2016. The $18 million settlement also resolves allegations that the hospitals falsely reported a greater number of observation hours for these patients than they actually received to Medicare as well.

Whistleblower to Receive $3.3 Million for Reporting Overbilling Medicare Allegations

Former Banner Health employee Cecilia G. will receive approximately $3.3 million under the qui tam or whistleblower provisions of the False Claims Act. The whistleblower portion of the False Claims Act encourages those with information regarding Medicare fraud, waste, or abuse to file a complaint with the U.S. Attorney’s office.

“Taxpayers should not bear the burden of inpatient services that patients do not need,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division.  “The Department will continue its efforts to stop abuses of the nation’s health care resources and to ensure that patients receive the most appropriate care.”

“This enforcement action is another example of this office’s commitment to protecting the Medicare program,” said Elizabeth A. Strange, First Assistant United States Attorney for the District of Arizona.  “The United States Attorney’s Office, working with our law enforcement partners, will continue to protect Medicare by aggressively pursuing False Claims Act allegations of wrongdoing in the health care industry.”

In addition to the monetary settlement, Banner Health also entered into a corporate integrity agreement with the U.S. Department of Health and Human Services, Office of Inspector General. The agreement requires the hospital company to participate in significant compliance efforts for the next five years, including requiring Banner to retain a non-affiliated review organization that can oversee the accuracy of Banner’s claims for services that are turned in to federal health care program beneficiaries. The review organization allegedly will ensure Banner does not face further accusations of overbilling Medicare.

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

The Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Arizona, and the U.S. Department of Health and Human Services, Office of Inspector General worked together on the settlement. The company admitted no wrongdoing, and the settlement resolves claims that are only allegations that Banner was overbilling Medicare.

Headquartered in Phoenix, Arizona, Banner Health operates in its home state and in Colorado, California, Nebraska, Nevada and Wyoming. According to the company’s website, Banner Health is the largest private employer in Arizona.