On Monday, August 4, 2014, The Department of Justice announced that Community Health Systems (“CHS”), the nation’s largest operator of acute care hospitals, agreed to pay $98.15 million to settle nine whistleblower lawsuits alleging that the company violated the False Claims Act between January 2005 and December 2010. The whistleblowers alleged that CHS knowingly billed Medicare, Medicaid, and TRICARE for medically unnecessary inpatient admissions rather than the lower outpatient or observation rates at 119 hospitals. Additionally, allegations were made that services were rendered to patients at one of CHS’s hospitals in Laredo, Texas by a physician who was offered a medical directorship in violation of the physician self-referral law, known as the Stark Law.
Under the settlement, CHS entered into a five-year Corporate Integrity Agreement requiring it to retain independent review organizations to review the accuracy of the claims for inpatient services under federal health care programs, and to engage in significant compliance efforts over the next five years.
The allegations against CHS are particularly notable in light of new regulations such as the two-midnight rule, which took effect October 1, 2013. The two-midnight rule requires that physicians deem a patient’s condition as serious enough to require at least two overnight stays in order to qualify for Medicare reimbursement under inpatient rates. Patients who aren’t formally admitted may remain under outpatient or observation status. Emergency and internal medicine physicians often struggle to get the right designation and status for the patient. The federal government has delayed enforcement of the rule until March 31, 2015 at which time hospitals may face financial penalties if auditors determine the hospital could have met the patient’s needs in an outpatient setting.
For more information on the CHS settlement, the two-midnight rule, the Stark Law, the Anti-Kickback Statute, or related fraud and abuse issues, please feel free to contact Daniel Meier or any member of our health care practice group for a further discussion.
You can find a more extensive discussion about the CHS settlement, the impact of observation status on patients and the two-midnight rule in the following Client Bulletin.
Posted in Acute Care, Administration on Aging, Anti-Kickback, Compliance Programs, Corporate Integrity Agreements, DHHS, Fraud and Abuse, Health & Human Services, Health Care, Health Care Providers, Long Term Care, Medicaid, Medicare, Nursing Facility, OIG, Out-Patient Care, Regulatory Compliance, Self-Referral, Settlements, Tennessee
Tagged Admission, Investigation, Observation, Two Midnight Rule
The Department of Justice (“DOJ”) announced another multi-million dollar settlement of alleged False Claims Act violations on March 11, 2014. Specifically, Halifax Hospital Medical Center and Halifax Staffing, Inc. agreed to settle various issues with the DOJ for $85 million in order to resolve allegations that they violated the False Claims Act (“FCA”) by submitting claims to Medicare that violated the federal prohibition on physician self-referrals, 42 USC §1395nn (the “Stark Law”). United States ex rel. Baklid-Kunz v. Halifax Hospital Medical Center, et al., No. 09-cv-1002 (M.D. Fla.).
The Stark Law and the Bona Fide Employment Exception
The Stark Law prohibits a physician from referring a patient for certain designated health services (“DHS”) to an entity in which the physician, or an immediate family member, has a financial interest, such as an ownership or investment interest in the entity or a compensation arrangement with the entity. Certain exceptions for arrangements are permitted under Stark. However, because the Stark Law is a strict liability statute, the arrangement must fit completely within the criteria of the exception in order not to violate the statute. At issue in Halifax, as explained below, is the bona fide employment exception, Continue reading
Posted in Acute Care, Civil Litigation, Corporate Integrity Agreements, DHHS, Florida, Fraud and Abuse, Health Care, Health Care Providers, Hospital, Medicare, OIG, Physicians, Regulatory Compliance, Reimbursement, Self-Referral, Settlements
Tagged Neurosurgery, Oncology, Stark Law
A company operating diagnostic testing facilities in New York has agreed to pay $13.65 million to the federal government and $1.85 million to New York and New Jersey for a total of $15.5 million in penalties to settle claims it falsely billed federal and state health care programs for tests that were not performed or not medically necessary and for paying kickbacks to physicians. The company denies liability for the allegations that are part of the settlement.
The settlement resolves allegations that between 1999 and 2010 the radiology group submitted false claims to Medicare and state Medicaid programs in New Jersey and New York for Three Dimensional reconstructions of CT scans that, according to the complaint, were medically unnecessary, were not ordered by the treating physicians, and in some cases were never actually performed or interpreted. These scans are often used in orthopedic, cardiovascular and neurologic imaging, including to visualize complex fractures, tumors in the lungs or soft tissues, and cardiac issues. In addition, the group allegedly submitted false billings for expensive imaging services, including retroperitoneal ultrasounds, Doppler scans, transrectal ultrasounds and pelvic x-rays. These imaging services allegedly resulted in a total of more than 40,000 false claims made to the New York Medicaid program. Continue reading
Posted in Acute Care, Anti-Kickback, Compliance Programs, Corporate Integrity Agreements, DHHS, Diagnostic Testing, Florida, Fraud and Abuse, General, Health & Human Services, Health Care, Health Care Providers, Medicaid, Medicare, New Jersey, New York, OIG, Physicians, Reimbursement, Self-Referral, Settlements
Tagged Ancillary Arrangements, False Claims Act, Medical Necessity, Radiology, Stark
Recent trends across the country have health systems buying out private physician practices and reclassifying them as hospital-outpatient departments. There are a number of motivations behind these transactions, the greatest being managed care contracting. Typically, the physician practice will reassign its Medicare NPI Number to the Hospital and the Hospital will then bill exclusively under that NPI number. The Hospital will also submit claims to the third party payor and receive payments based on the hospital’s negotiated contract rates and fee schedule.
Critics, including a number of insurers, have claimed that this practice allows the hospital to bill higher rates for the same service at the same location. For this reason, on February 26, 2014, Highmark, a Blue Cross Blue Shield company based in Pittsburgh, stated that it would stop reimbursing health systems at higher hospital-outpatient rates for cancer treatment performed in physician offices. Highmark explained that this move would save patients’ money by reducing out-of-pocket costs for deductibles and co-insurance. Continue reading
Posted in Acute Care, DHHS, Health Care, Health Care Providers, Hospital, Integration, Medicaid, Medicare, New Jersey, New York, Pennsylvania, Physicians, Post Acute Care, Reimbursement
Tagged Cancer Centers, Managed Care Companies, Managed Care Contracting, Unwinding