By: Dave Davidson
The last few weeks have seen some significant examples of the federal government’s vigilance in policing the healthcare market. These events serve as a reminder of the highly regulated and scrutinized industry in which we work. They are also a reminder to physicians and other providers to make sure their practices and contractual arrangements can pass this scrutiny.
The most significant recent event is the $115 million settlement between the government and the Adventist Health System. This settlement resolved two whistleblower cases brought against the system by three employees. The lawsuits alleged that the Adventist Health System violated the Stark law, which generally prohibits payments to physicians for making referrals unless an exception to the law is met. The specific allegations against the Adventist Health System were that the compensation paid by the health system to some of its employed physicians exceeded fair market value; that the structure of the practice of the employed physicians did not meet the “group practice” exception; that physician compensation improperly included payment work not performed by the physicians; and that the physicians were paid for making referrals to the system.
The government and whistleblowers alleged that the Stark violations resulted in false claims being submitted to the government. This then allowed the government to seek civil damages in 1) the amount that was improperly paid 2) a penalty in an amount of up to three times the improper amount paid, and 3) a fine ranging from $5,500 to $11,000 for each improper claim submitted. Given the astronomically high damages these penalties can create, it is no wonder these types of cases are, more often than not, settled rather than tried. The whistleblowers are entitled to share in the proceeds, and their attorneys are entitled to a percentage of that amount, along with receiving their fees from the health system.
The government was involved in criminal prosecution as well. In April, the Department of Justice brought criminal charges against David Pon, M.D., a Central Florida ophthalmologist. The government alleged that Dr. Pon intentionally misdiagnosed approximately 500 patients as having wet macular degeneration, and then treated them non-therapeutically with lasers and dye injections. In September, a jury in Jacksonville convicted Dr. Pon of 20 counts of Medicare fraud, with damages to the government of $7 million. Each count could result in up to 10 years in prison. Dr. Pon remains in custody, and sentencing is scheduled for March 2016.
The regulatory agencies were also active. The Office of Inspector General of Health and Human Services (OIG) released several reports that will likely result in increased scrutiny of Medicare providers. Although the data examined was several years old, the OIG’s recommendations will impact the present.
The first report detailed findings of an audit of chiropractic services. The OIG called into question approximately $96 million of services provided to Medicare beneficiaries in 2013, determining that the treatment was not a covered service, or that there was no underlying diagnosis supporting the treatment. Interestingly, the OIG reports that only 2% of the 962 enrolled chiropractic providers were responsible for the bulk of the questioned services. Despite this small number, chiropractic providers should anticipate increased scrutiny across the board.
The government will also intensify its review of ambulance services. A report released the last week of September found that up to 21% of bills for ambulance services in 2012 were inappropriate. The Houston, Philadelphia, Los Angeles, and New York City markets were especially problematic. This resulted in a moratorium on new providers in Houston and Philadelphia, with a broader freeze for ambulance providers under consideration.
The government is the single largest payer for healthcare services in the United States. Physicians and other providers are the primary recipients of these government payments. Care must be therefore be taken in all aspects of a practice to ensure the propriety of the care rendered, the accuracy of the bills submitted, and the legitimacy of the entire practice.