2021 Recap: Important Hospital Regulations Under the Misrepresentation Act | Bass, Berry & Sims APIs

Every year, the Department of Justice (DOJ) recoups millions of dollars through False Claims Act (FCA) settlements, and 2021 was no exception. Some of the largest or most notable settlements of 2021 involved hospitals and healthcare systems. We have summarized some of them below.

Many hospital systems have resolved bribery allegations

FCA allegations based on Anti-Kickback Act (AKS) and Stark Act violations continued to result in significant settlements in 2021, particularly claims related to compensation in excess of the fair market value.

In July, Akron General Health System agreed to pay $21.25 million to resolve FCA allegations that from 2010 to 2016 it compensated groups of local physicians beyond the fair market value in exchange for patient referrals, in violation of the AKS and Stark Law. The Cleveland Clinic Foundation acquired the hospital system in 2015. According to the DOJ press release, it raised concerns about how physicians were paid to the government and received cooperation credit as part of the settlement, noting the importance of proactively resolving compliance issues.

The settlement also settled related allegations made by a former director of internal audit in a who tam lawsuit filed in District Court for the Northern District of Ohio in December 2015. The parent alleged that Akron General and related entities used an “aggressive strategy” of buying medical practices and employing doctors, overpaying them to control referrals. The correspondent pointed to the fact that Akron General lost money on medical practices and employed physicians as evidence that the healthcare system intended to make downstream revenue from their referrals. The parent also alleged that each physician was treated as a cost center and Akron General tracked each physician’s “contribution margin.”

That same month, California-based Prime Healthcare Services, along with its CEO and a cardiologist, agreed to pay $33.725 million, $1.775 million, and $2 million, respectively, to resolve federal and state allegations of the FCA linked to multiple fraudulent schemes. The settlement settled the allegations raised in two who tam trials, in which the government refused to intervene. In one, a former Prime executive alleged that Prime paid above fair market value to buy the doctor’s office and affiliated surgical center to secure his referrals to one of his hospitals because he was a major competitor to the hospital’s heart center. The relative, who had been tasked with handling the finances of the acquisition, alleged he had calculated $8.7 million of ‘goodwill’ associated with the transaction, reflecting the difference between the price paid and the actual value of practice. The relative alleged that this bonus reflected the value of the procedures Prime expected the cardiologist to perform at the hospital. After the acquisition, the cardiologist – then employed – would also have been paid more than twice as much as other cardiologists at the hospital.

The settlement also resolved allegations that the hospital and cardiologist were using his billing number to submit claims to Medicare and Medi-Cal for services that were actually provided by a physician whose billing privileges they knew had been revoked and that system hospitals were submitting inflated bills for implantable medical equipment to Medi-Cal and other government payers.

At the end of the year, in December, Flower Mound Hospital Partners in Texas agreed to pay $18.2 million to resolve FCA allegations that it bought back shares from owner doctors aged 63 or more and resold the shares to junior doctors based on the volume and value of the doctors’ referrals, in violation of the AKS and Stark Law.

The parent in this who tam action, one of the hospital’s 63-year-old doctor owners, alleged that in determining which doctors would buy the redistributed shares and how much each would be able to buy, the hospital took into account the number of “contacts with patients” — especially those with high-income surgeries—every doctor had. The parent also alleged that when he tried to reduce ownership conditional on case volume, the hospital and some high-volume doctors retaliated by taking back his ownership shares.

Health system paid $90 million to resolve Medicare Advantage fraud allegations

California-based Sutter Health and its affiliated entities have agreed to pay $90 million to resolve FCA allegations that they submitted unsupported diagnostic codes for Medicare Advantage (MA) plan beneficiaries to receive inflated refunds. Under Medicare Part C, the government compensates MA plans on a funded basis to provide benefits to enrolled Medicare beneficiaries. Plans generally receive larger payouts for sicker beneficiaries based on a risk adjustment. Sutter Health has agreed to provide services to beneficiaries enrolled in certain MA plans in exchange for a portion of capitation payments. Partially intervene in a who tam In the complaint, the government alleged that Sutter Health submitted unsupported risk adjustment diagnostic codes to inflate the payments MA plans would receive and then pay to Sutter Health.

The government pointed to an alleged “aggressive campaign” to increase the number of risk adjustment diagnostic codes assigned to AD patients. This campaign included, among other things, rigorous monitoring of the diagnostic coding of physicians in the network; identify “physician champions” who “encouraged aggressive coding” as liaisons between the coding team and other physicians, and who were paid additionally for this role; schedule wellness exams for AD patients who did not have risk-adjustment diagnostic codes “to ensure capture of all possible codes that could increase CMS payouts;” allow coders to add risk adjustment diagnostic codes to medical records that were not identified by physicians during patient encounters; providing physicians with cheat sheets of common and lucrative diagnostic codes to encourage them to add these codes to patient records during encounters focused on other health issues; and later pre-populate the encounter with risk adjustment diagnosis codes. In addition to being notable for its high dollar value, this settlement underscores the government’s continued interest in investigating suspected fraud in the Medicare-run space.

The government continued to pursue the recovery of medically unnecessary and uncovered services

With eight-figure price tags in some regulations, it’s vital to note that the government has continued to investigate more typical allegations of charging for unnecessary or uncovered services.

In August, San Mateo County Medical Center and the county agreed to pay $11.4 million to resolve FCA allegations that they billed Medicare for hospitalization or observation admissions that were not reasonable or necessary, including “social admissions” – patients admitted or placed under observation for social reasons and the lack of safe and available placements after discharge, rather than, for example, referring such patients to shelters. the who tam relator, director of resource management at the county medical center, alleged that as a result, the county medical center was charging for uncovered services.

In November, Geisinger Community Health Services, located in central Pennsylvania, agreed to pay more than $18.5 million to resolve allegations that it submitted claims to Medicare for home health and care services. palliative care that violated rules and regulations regarding certification of terminal illnesses, election of palliative care patients. face-to-face care and meetings between physicians and patients at home. After discovering these issues and taking corrective action, Geisinger himself disclosed the issues to the U.S. Attorney’s Office for the Intermediate District of Pennsylvania.

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