Wisconsin health system blames Cerner software for $16M in losses

Fond Du Lac, Wis.-based Agnesian Healthcare is suing Cerner, claiming issues with its revenue cycle management software caused the system to lose $16 million.

In its complaint, filed Sept. 15, Agnesian alleges it began experiencing "pervasive errors" in patient billing immediately after going live on Cerner's RCM system in August 2015. Agnesian says the problems caused it to spend time and money to manually process patient billing statements and resulted in a significant backlog of patient claims for reimbursement.

Although Cerner allegedly told Agnesian officials in 2016 that all major issues with the billing software were resolved, Agnesian claims it discovered additional coding errors this year, which resulted in a large amount of undetected write-offs. Cerner then determined the billing software needed to be rebuilt.

If Cerner is able to rebuild the software, Agnesian claims it will take "many months" for its billing and collections processes to return to normal. "In the interim, stale charges will be required to be written-off. Moreover, as a result of these flaws, Agnesian may not be able to meet federally-mandated billing requirements," the lawsuit states. 

Agnesian is suing Cerner for breach of warranty, negligent misrepresentation and fraud. The health system claims it has suffered at least $16 million in damages due to the problems with the billing software and continues to suffer damages of at least $200,000 per month.

In an emailed statement to the Kansas City Business Journal, a Cerner spokeswoman said the company "disagrees with the allegations and will aggressively defend the case."

On Sept. 21, Cerner asked the court to dismiss the case due to the existence of an arbitration agreement between the parties. If the court does not dismiss the lawsuit, Cerner requested the court transfer the case from U.S. District Court for the Eastern District of Wisconsin to U.S. District Court for the Western District of Missouri, which Cerner argues is the appropriate court to compel arbitration under the agreement with Agnesian.

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