Tennessee Health System Accused of Illegal Physician Referral Scheme to Boost Profits

Conceitos Básicos

Erlanger Health System in Tennessee allegedly paid physicians excessive salaries in exchange for patient referrals, violating the Stark Law and leading to improper Medicare claims.

Resumo

The content describes a federal lawsuit filed against Erlanger Health System in Tennessee, alleging that the health system illegally paid physicians excessive salaries in exchange for patient referrals, violating the Stark Law.

The key points are:

• Erlanger changed its compensation model to entice revenue-generating doctors, paying some two to three times the median salary for their specialty.
• In return, the physicians referred numerous patients to Erlanger, and the health system submitted claims to Medicare for the referred services, which is a violation of the Stark Law.
• Erlanger's financial troubles allegedly started after a previous run-in with the US government over false claims, leading the health system to implement a strategy to increase profits by employing more physicians, particularly specialists from competing hospitals.
• Erlanger paid some physicians exorbitant salaries, including an electrophysiologist with an annual clinical salary of $816,701, a medical director salary of $101,080, and an academic salary of $59,322, as well as a neurosurgeon with a base salary of $654,735 and $500,000 in excess call payments.
• The government claims Erlanger ignored patient safety concerns about some of its high revenue-generating physicians and disregarded warnings from consultants about overpaying salaries and handing out bonuses based on measures that overstated the work physicians were performing.
• The case serves as a warning to health care providers about the risks of improper financial arrangements with referring physicians and the importance for physicians to consult their own legal and compliance experts when considering such arrangements.

Estatísticas

Erlanger Health System agreed to pay the government $40 million in 2005 to resolve allegations that it knowingly submitted false claims to Medicare.
Over the next 3 years, Erlanger lost nearly $32 million and in fiscal year 2013, had only 65 days of cash on hand.
CMS paid Erlanger about $27.8 million for claims stemming from the improper financial arrangements.

Citações

"Erlanger paid physicians based on amounts that outside experts advised was fair market value. Erlanger did not pay for referrals. A complete picture of the facts will demonstrate that the allegations lack merit and tell a very different story than what the government now claims."
"There is a tendency by physicians when contracting…to rely on [hospitals'] perceived compliance and legal expertise. This case illustrates the risks in doing so. Sometimes bigger doesn't translate into more sophisticated or more effective from a compliance perspective."

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Perguntas Mais Profundas

What steps can health systems take to ensure their physician compensation arrangements are compliant with the Stark Law and do not compromise patient care?

Health systems can take several steps to ensure compliance with the Stark Law and prevent compromising patient care. Firstly, they should establish clear and transparent compensation models based on fair market value assessments conducted by independent experts. It is crucial to avoid paying physicians excessive salaries or bonuses that are tied to referrals, as this can lead to violations of the Stark Law. Health systems should also implement robust oversight and controls on physician compensation, involving compliance officers in the review and approval process to ensure adherence to regulations. Regular audits and monitoring of financial arrangements with physicians can help identify any potential issues early on and address them promptly to maintain compliance and uphold patient care standards.

How can the government better monitor and prevent such illegal financial arrangements between health systems and physicians?

The government can enhance monitoring and prevention of illegal financial arrangements between health systems and physicians through increased scrutiny and enforcement actions. Implementing stricter regulations and guidelines, along with conducting regular audits and investigations, can deter healthcare providers from engaging in fraudulent practices. Collaboration between government agencies such as the Department of Health and Human Services (HHS) Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS) can improve oversight and coordination in detecting and addressing violations of laws like the Stark Law. Additionally, promoting whistleblower protections and incentivizing individuals to report unlawful activities can help uncover illegal financial arrangements and hold accountable those involved in fraudulent schemes.

What are the broader implications of this case for the healthcare industry's efforts to improve transparency and accountability in physician-hospital relationships?

This case involving Erlanger Health System highlights the importance of transparency and accountability in physician-hospital relationships within the healthcare industry. It serves as a cautionary tale for health systems and physicians regarding the risks associated with improper financial arrangements that can compromise patient care and violate regulatory laws like the Stark Law. The case underscores the need for healthcare providers to prioritize ethical practices, fair compensation, and compliance with regulations to maintain trust and integrity in their relationships with physicians. By promoting transparency in financial dealings, implementing effective compliance programs, and fostering a culture of ethical conduct, the healthcare industry can work towards enhancing accountability and rebuilding public trust in the healthcare system.