Aug. 20—Shands Healthcare in Gainesville, Fla., agreed to pay $26 million to resolve False Claims Act allegations that it overcharged Medicare and Medicaid.

The settlement, which came with no admission of liability, followed a 2008 whistleblower lawsuit filed that was disclosed this week, according to a health system release. The whistleblower, an independent consultant hired by Shands in 2006 and 2007 to conduct a routine audit of its billing practices, alleged inconsistent billing processes in 2006 and 2007. The lawsuit maintained that Shands overbilled Medicare and Medicaid for some patients’ short overnight inpatient admissions, instead of charging for less expensive outpatient or observation services. The patients received all care for which the programs were billed, according to hospital officials.

“The case in question does not involve the failure to provide high-quality patient care, but rather inconsistent billing processes,” Timothy M. Goldfarb, CEO, Shands HealthCare in Gainesville, said in the release. “We proactively initiated an independent audit that identified some opportunities to improve billing processes at Shands. We took immediate steps to make improvements.”

Shands officials fully cooperated with the state and federal investigation and negotiated a settlement agreement to avoid long and costly litigation, according to the hospital.

Shands HealthCare hospitals in Gainesville and Jacksonville will pay $25.2 million to the federal government for the Medicare program and $829,600 to Florida’s Medicaid program.

The health system highlighted some changes to its audit processes and procedures, including improvements to case management protocols and utilization review processes with a new “team approach” to accurately assess and code the care provided.

“We have conscientiously worked to create and operate an appropriate, fair, and accurate billing system for all payers,” Goldfarb added. “There was no intentional misconduct or callous disregard of these issues on our part.”

Publication Date: Tuesday, August 20, 2013