Adventist Health System Admits Violations of U.S. Federal Law
by Monte Sahlin
By Adventist Today News Team, May 29, 2014
Adventist Health System (AHS), the nonprofit health ministry affiliated with the Seventh-day Adventist denomination in the United States, has admitted its financial arrangements with some physicians violated the Stark Law. The organization "is engaged in discussions and is fully cooperating with the [Federal] Department of Justice," a financial report states.
AHS operates hospitals in 44 locations across the southern and mid-western U.S., seven of them in central Florida. It is one of the largest nonprofit health care providers in the country.
The Stark Law prohibits agreements under which hospitals compensate physicians for referring patients for tests and procedures. The reason this is illegal is because it might tempt doctors to prescribe unneeded treatments that would both cause unnecessary cost to government programs like Medicare and health insurance plans and place patients at risk.
"Everything we are able to say about this is in our … statement," Kevin Edgerton, an AHS vice president, told the Orlando Sentinel. The newspaper reported that AHS "did not disclose the amount of improper payments, nor the fines it expects to pay [but] the report implied that management had a number in mind which the system could afford." The AHS statement also noted that "assurance cannot be given that the resolution of these matters will not affect the financial condition or operations of the system."
"As the Federal government aggressively prosecutes health care fraud, more providers are making voluntary disclosures to avoid getting slapped with a large penalty," The Daytona Beach News-Journal quoted Jack Mayer, a health economist with Health Management Associates, a consulting and research firm that advised the newspaper and is not affiliated with AHS. The newspaper also cited two examples of other hospitals involved in similar situations.
Tuomey Healthcare System in South Carolina was ordered by a judge to pay $237 million in fines last fall in a case which has received a lot of attention among health care organizations across the country. Halifax Health, a public hospital in Florida, spent more than $22 million in legal fees since a whistleblower lawsuit was filed against it in 2009 and agreed earlier this year to pay $85 million in fines.
"Part of what is going on with this kind of thing is the convulsive change that is taking place in the American health care system," a retired nonprofit executive told Adventist Today. "The Federal government is pushing very hard to try to reduce the overall cost of health care in the nation. Because the Adventist denomination is a big player in health, it is probably impossible to avoid getting caught up in this."
Is anyone surprised? A system driven totally by money, look at the administrativ salaries. Will administrators take a pay cut to help pay the fine? Was it poor legal work or administration working on the bottom line? The truth will never hit the light of day.
A "pay cut?"
Are you kidding? Those people will certainly get a nice promotion and an extra bonus at Christmas!!!
The last paragraph of the article above is of interest. "The Federal government is pushing very hard to try to reduce the overall costs of health care in the nation." This is a laudable goal. Healthcare per capita costs more in the U.S. than in any other country, and, by virtually any measurable standard, is not commensurably superior. The March 4, 2013 edition of TIME devoted an entire issue to this topic, featuring a 24,000 word article, "Bitter Pill: Why Medical Bills Are Killing Us," by Steven Brill. It is devastatingly informative and infuriating.
But then the above paragraph goes on: "Because the Adventist denomination is a big player in health, it is probably impossible to avoid getting caught up in this." While this may well be true, if AHS were not guilty of violating the Stark Law, it would have nothing to fear. Or does "Caesar's wife must be above approach" have no relevance? This news item seems to confirm the allegation that power corrupts, and that moral ambiguity is no less operative in SDA institutions than the world at large.
I recently had lab tests ordered by my physician and rather than paying the full amount, Medicare declined to pay for several tests and I was being billed. I immediately contested the charges as the lab report indicated that they were not ordered by the physician. I never heard back.
While this was a very small charge, it is certainly not small when MRI and CT scans and other expensive tests are done. Patients need to see and check their bills as they will end up paying for some of these when they are declined.
…"management had a number in mind which the system could afford." Because fines are built into the budget? Because they'll be passing the cost of this punishment on to patients? Or covering their costs with downsizing? Can any professedly moral institution 'afford' this kind of PR disaster?
Sweet…these monumental fines will help pay $71,000,000 the US pays Russia for each American astronaut lofted to the ISS on one of their rockets.
This is not the first time AHS has been caught up in these encounters with the federal government regarding the interplay between a host of medical corporations doing business together, each one dependent on the recommendations to or from others for services.
The medical industrial complex in this nation is more than four times larger than the military industrial complex that Eisenhower warrened against.
Let it be said that Congress is directly and continuingly to blame for maintaing the system so open to fraud at every level. That the feds go after the really large fish is also inevitable. It is a cost of doing business for any major medical player. And the feds do not even bother to use the courts. They just show up, declare their intent and offer immediate solutions that the health-care provider readily sees as in their best interest to agree to.
The only outfit that comes close to the feds power may have been old Al Capone, who it was noted after his career that he so 'owned' the Chicago Police department that it was quicker for him to hail a patrol car than a taxi.
The feds need hundreds of millions in fraud settlements to look like they are effective. And the fastest and easiest way to get there is to go after the really big outfits. As famous bank robber Willie Sutton explained, when asked why he robbed banks, 'It is where the money is.' Now for the kicker today. Use the quotes and Google "it is where the money is" … and the top ranked return is titled: "What makes U.S. Healthcare so over priced?" Case closed as they used to say, but never really opened so far.
Meanwhile the estimates of fraud in the medical industrial complex range from a low of 10% to as much as 50% of the total dollars spent on healthcare. I guess it depends on how one describes fraud. The total recovery by enforcement is $2.8 billion, http://oig.hhs.gov/publications/docs/hcfac/FY2013-hcfac.pdf on $2.8 trillion of total expendictures. This is at best 1 percent of the most conservative fraud estimates, which included penalties as a multiple of the actual fraud.
Let's not be assumptively critical of AHS here. A better medical system would make for better outcomes on all fronts and prevent fraud rather than give the feds the right to shake down medical providers without court action.
I just want to know who was fired!
Don't expect answers for all your questions… 🙂
1. Take a number, Andrew.
2. Don't hold your breath.
I have to confess a bit of schaedenfreude here. I remember when all this hospital switching from the church to a separate corporation was going on, we were assured that this was for the best. Church leaders couldn't handle the intricacies of hospital work. Maybe they couldn't, but this is worse than anything that went on before. Hospitals closing down, astronomical salaries, and now flagrant violations of the law. One of the justifications for these salaries was that this is what it costs to get "competent" administrators. Well so much for that myth. If White Memorial had to fork over $14+ million what will this cost the whole system?
I have worked on contracts purchasing medical groups by hospitals and vice versa. The Stark Laws are not so easy to understand and there is a lot of ambiguity that works in the feds favor. Even with a letter of approval from the feds, one can still be open to another department saying you are violating Stark. Stark is a well intended law with horrible unintended (hopefully although I have my doubts knowing how rabid Stark was) consequences. Jumping so quickly to blame hospitals and hospital administrators is not fair. And yes, going after the big fish is a lot less work than going after the little fish while also scaring all the little fish away.
Yvonne,
Critics of the Stark Law point to it as just another example of the government inserting itself into business in an attempt to eliminate "corruption" by extending control into more businesses. Does corruption exist just because someone makes a profit from that business transaction? Or, is it corrpution simply because government does not yet control it? Medicine is one of the most profitable businesses in the world so it is the natural target of those who want to extend government control over it. What are the results? AHS facing fines for violations of a law that can be administered at the whims of bureaucrats. Oh, and let's not forget what is happening in the Veterans Administration. That's government at work!
Ah, the "conspiracy theory" being used again to justify defense of those who behave like vulture in their demand to make money no matter what.
Sure, it's all the government's fault, no doubt about it. The rich would never do anything wrong that could possibly benefit them in detriment of others' economy. Oh no, not the 1%.
The Koch brothers? They just want people in general (especially the middle class) to prosper. The NRA? Oh my, how could their benevolent intents be misinterpreted? They just want people to be safe…
​Actually, to be consistent with the current attitude of one party, one should say, "It's obviously ALL Obama's fault"….
Oh, I forgot "Big Pharma" and the Food Industry, and how they unquestionably contribute to human health…
Both are also "Obama's fault"…
My experience with denominational business has been admittedly small, and anecdotal, but obeying Local, State & Federal Laws seemed to be winked at often. Rules were bent with abandon until whistle blowers lowered the boom. That's why I stayed out of it.
It is interesting – even frightening – to see so many seemingly good, decent folks, who have no informational basis upon which to opine or judge, nevertheless ignorantly apply regulations that they have neither read nor understand to turgidly condemn classes of individuals that they viscerally despise. The third paragraph of the news piece generally describes the subject matter of Stark Law as originally enacted. There is not one word in the news piece factually describing the transactions which ran afoul of Stark. But that doesn't deter the mob mentality of class warfare, which assumes guilt based on affiliation.
There are thousands of pages of arcane regulations and rulings implementing, interpreting, and carving out exceptions to Stark law – regulations which grow every year. Health care generally operates on very small margins of profit. Compare the margins of hospitals and health insurance companies to the margins of companies like Apple, Google, Walmart, or even large grocery chains. The government makes far more profit from Big Oil than the oil industry, just as it makes far more profit from cigarettes than the tobacco industry. Furthermore, the health care industry is beset by tens of thousands of pages of regulations that create unfunded mandates, compromise quality of care, and insure full employment for high-priced lawyers trying to navigate the regulations and find ways to stay within its exceptions, all the while trying to guess how regulations and "safe harbors," promulgated by unelected, unaccountable bureaucrats will be interpreted and applied.
How many of you drive at or under the speed limit? That's right. Most of you drive at the upper limit of what you think you can get away with, even if the state trooper's radar gun is focused on you. You know you won't get stopped for going 72 when the speed limit is 65. In other words, you know the speed limit isn't really 65. How frustrated would you be if day after day you drove the same route at 72 mph, just like all the other drivers on that road, with the same trooper ignoring you. Then one day he pulls you – only you – over for speeding, and also hands you 1000 tickets for the past five years he has measured your speed above 70 on that route. Or imagine, as a university professor, that you have submitted invoices for travel and expense reimbursement for the past five years – invoices which have been paid without question by your employer. Then you come to the office one morning to find a notice demanding repayment, fines and penalties of three times what you were reimbursed because you didn't dot the i's and cross the t's on your reimbursement claims. You hire a lawyer to read and interpret the 300 page booklet that governs reimbursement, and you find that you failed to take the cheapest mode of transportation available – red eye special – to your conference, and therefore you owe three times what you were reimbursed for the flight. Welcome to the wonderful, wacky world of compliance law, of which Stark is only a small part.
Most regulations, like speed limits, are not moral mandates. They infuse a well-intended statute with a life of its own that creates traps for the unwary and a potential unlimited source of revenue for a parasitic state. Nor do most regulations, on balance, protect the public. Potential fines and penalties are so prohibitively consequential that negotiated settlements must be made. Imagine if every crime carried with it the potential for the death penalty. Don't you think a lot of innocent people would plea bargain to stay alive?
I am not defending AHS. Nor am I suggesting the Stark Law does not have a sound moral basis. I am simply observing the reality that hospitals only survive by walking a fine line when it comes to balancing good patient care, preserving and expanding markets, and complying with self-perpetuating, confiscatory regulatory law. Regulations do not provide a clear, bright moral line, any more than a 65 mph speed limit is a moral line. Those who obsessively run their operations in order to stay under the radar screen, and avoid taking advantage of arguable exceptions, will come in last. And in the business world, that means they will not survive. The State knows that, and thus its enforcement goals are to take big bites of the health care industry, while making sure its food source stays alive. This process, to one degree or another, is replicated throughout the world of crony socialism, the fraternal twin of crony capitalism.