Does a healthcare system violate the False Claims Act by paying physicians excessive compensation and violate the Anti-Kickback Statute and the Stark Law by paying physicians excessively and providing services at lower fees in order to increase profits for a physician owner of one of the related entities?
Compliance Perspective – False Claims:
The Compliance and Ethics Officer will review the facility’s policies and procedures with the Administrator regarding physicians’ referrals and kickbacks. Administrative staff will be educated regarding requirements that all financial arrangements between the facility and physicians comply with federal governing prohibitions on physician self-referrals. Education must include training on submitting all arrangements for payment to physicians to the Compliance and Ethics Officer prior to making such payments. An audit will be conducted regularly to ensure that all payments made to physicians are for approved services and are supported by an approved contract.
A Montana-based healthcare system along with six subsidiaries and related entities has agreed to pay $24 million to resolve allegations that they violated the False Claims Act by paying physicians more than fair market value. They are also charged with conspiring to enter into arrangements that improperly induced referrals, the Department of Justice announced.
The government alleged that the healthcare system had arrangements with referring physicians in violation of the Medicare physician self-referral prohibition, commonly known as the Stark Law, and other arrangements that also violated the Anti-Kickback Statute. The Stark Law prohibits a hospital from billing Medicare for certain services referred by physicians with whom the hospital has an improper compensation arrangement. The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs. Both the Anti-Kickback Statute and the Stark Law are intended to ensure that a physician’s medical judgment is not compromised by improper financial incentives and is instead based only on the best interests of the patient.
Between 2010 and 2018, the healthcare system allegedly violated the Stark Law by paying excessive full-time compensation to more than 60 physician specialists – many who worked far less than full-time. Additionally, other related entities allegedly conspired to violate the Anti-Kickback Statute by paying excessive compensation to physicians employed by the healthcare system and its subsidiaries to induce referrals, and by providing administrative services at below fair market value to reduce expenses and increase profits distributed to physician investors at an organization that owned one of the subsidiaries.
The settlement resolves allegations originally brought in two lawsuits filed by a former Chief Financial Officer for the healthcare system’s physicians’ network, under the qui tam provisions of the False Claims Act, which allow private parties to sue on behalf of the government and to share in any recovery.
