Banner Health agreed to pay the federal government $18 million to settle accusations that all 12 of its hospitals in Arizona and Colorado intentionally submitted false claims to Medicare and inflated the number of hours for which patients were given outpatient observation care.
According to the U.S. Department of Justice, the claims were for patients who could have been treated on outpatient basis at cheaper rates.
Banner Health operates 28 hospitals nationwide.
The wrongdoing allegedly occurred between Nov. 1, 2007, and Dec. 31, 2016.
"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, in a statement. "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."
As part of the settlement, Banner Health agreed to enter a corporate integrity agreement with the U.S. Department of Health and Human Services that will last five years. An independent review organization will examine Banner Health's business practices.