Corrected September 25, 2015: The largest Adventist health organization has agreed to pay $118.7 million to settle legal action based on accusations of paying kickbacks to doctors in exchange for referrals, reported Reuters. The case also included alleged over-billing of government health programs.
A statement from the United States Department of Justice stated that Adventist Health System (AHS), which operates 44 hospitals in 10 states in the South and Midwest, agreed to resolve allegations that it “submitted false claims to the Medicare and Medicaid programs for services rendered by employed physicians who received bonuses based on a formula that improperly took into account the value of the physicians’ referrals to Adventist hospitals.” This is against a law designed to protect patients from doctors making decisions to order tests or treatments because of financial gain.
Employees of Park Ridge Hospital in Hendersonville, North Carolina, first noticed the unlawful arrangements several years ago, according to a report in the Asheville Citizen-Times. Michael Payne was a risk manager; Melissa Church the executive director of physician services; and Gloria Payne a compliance officer for doctors offices owned by the hospital. Sherry Dorsey worked at the AHS offices in the Orland, Florida, area.
The unlawful arrangements were largely located in Florida hospitals run by AHS, the newspaper stated. The employees in North Carolina tried for several years to get executives of AHS to deal with the situation and finally became “whistle blowers,” reporting the illegal arrangements to authorities. Under the law, they could be awarded a limited percentage of the settlement for reporting the infractions.
AHS stated that the violations were “alleged and unintentional.” The statement said that “AHS voluntarily disclosed to the United States government in early 2013 [issues] involving its implementation of certain physician employment compensation models and highly technical physician billing and coding” procedures. “An AHS review did not identify any negative impacts on the quality, safety or individual cost of patient care at AHS hospitals or clinics.”
“Adventist Health System regrets these oversights,” the statement continued. “While some of the hospitals had no violations, the organization has improved monitoring and business practices system-wide as a result of lessons learned from this experience so that it can continue to uphold the highest standards of compliance with regulations.”
“A large part of the settlement is based on allegations involving Florida Hospital Medical Group,” according to the Tampa Bay Business Journal. The hospitals where these doctors practice include Florida Hospital Altamonte, Florida Hospital Apopka, Florida Hospital Celebration Health, Florida Hospital Kissimmee, Florida Hospital Orlando, Florida Hospital Waterman, Florida Hospital for Children and Winter Park Memorial Hospital.
The agreement is that AHS will pay the U.S. government $115 million and $3.8 million to the State of Florida, $189,453 to the State of North Carolina, $66,897 to the State of Tennessee, and $4,711 to the State of Texas, according to a report in the Asheville Citizen-Times. The agreement includes no determination of liability but resolves the legal case, stated the trade journal Health Care Finance News.
This case is part of an ongoing crackdown by authorities to reduce the cost of health care in the U.S. “Since 2009 when it was formed, the Health Care Fraud Prevention and Enforcement Action Team has recovered more than $15.2 billion in cases of alleged healthcare fraud,” stated the trade journal.
AHS is one of the largest hospital systems in the country. Its total operating revenue was nearly $8.4 billion in 2014, according to the professional journal Modern Healthcare. AHS is a nonprofit health ministry under the control of the Seventh-day Adventist denomination, although the majority of its employees and the physicians who practice at its hospitals are not Adventists.
The specific law involved is called the Stark Law. It “has been widely criticized for its complexity,” reported Modern Healthcare. And “earlier this year … proposed regulatory changes” were put forward by the government “that experts say seem aimed at easing the law’s technical burdens.”