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Physician Contracting, the OIG, and the DOJ: 2017 Review

The 2017 political landscape changes were epic. As the year draws to a close, we’re looking back to see if change was reflected in OIG and DOJ actions over the year.

The Yates Memo

In September 2015, Sally Yates wrote a memo stating that the DOJ was going to hold individuals accountable in corporate wrongdoing cases. Yates became famous as one of the first people fired by the new administration. Did her departure change anything for health care?

Since its release, the Yates memo has been one of the hottest topics in health care compliance. In 2016, we witnessed the first notable case where the former CEO of Tuomey Healthcare was fined $1 million for his role in the system’s Stark violations. He was also excluded from any organization participating in federal programs for the next four years.

Since then, doctors and executives have continued to face steep fines, program exclusions and even jail time for violations of Stark, AKS, and the False Claims Act. It is a safe bet that these personal liability fines aren’t going away in 2018. Yet, it seems that some individuals including physicians, hospital executives, and those involved with physician contracting may not be paying attention to how their actions could be perceived in any government investigation. Individuals can no longer assume the organization alone will take the blame.

Major Settlements and Legal Action

2017 saw several major settlements regarding improper payments to physicians, including:

Pacific Alliance Medical Center: $42 million

The DOJ charged Pacific Alliance Medical Center (PAMC) with paying kickbacks in exchange for physician referrals. The settlement resolves whistleblower allegations that PAMC made above market arrangements with physicians and provided services that brought undue value to the physician practices. “This settlement is a warning to health care companies that think they can boost profits by entering into improper financial arrangements with referring physicians,” said Special Agent in Charge Christian J. Schrank of the Department of Health and Human Services, Office of Inspector General (HHS-OIG).

Read more about this case here.

Mercy Hospital Springfield: $34 million

This case centers around physicians whose compensation formula included terms that took into account the volume of referrals made to a hospital-owned infusion center. The DOJ stated that these kinds of arrangements are illegal because they encourage overuse of medical resources and may cloud a physician’s medical judgement.

Read more about this case here.

Dr. Miguel Burgos and Yosbel Marimon: $9.8 million

Both a physician and the owner of an infusion clinic were sentenced to 64 and 90 months in prison, respectively. Plus, they were ordered to pay $9.8 million in restitution to Medicare and insurance companies improperly billing for costly infusion therapies that were never purchased, provided, or medically necessary. This is a reminder that both physicians and facility owners are at risk for improper billing and medical orders.

Read more about this case here.

The Stakes are Higher: Penalties Increase

The Bipartisan Budget Act of 2015 mandated that federal agencies make inflation adjustments to the amounts of civil monetary penalties. The Budget Act allowed agencies to make “catch-up” adjustments. The fines for False Claims Act violations in 2017 are $10,781 at the minimum and $21,563 at the maximum. Stark Law fines increased from $15,000 in 2016 to $23,863 in 2017 per violation and Anti-Kickback Statute fines increased from $50,000 in 2016 to $73,588 in 2017. At the time of publication, 2018 fines had not been announced, but we expect to see only a minor uptick in fines to account for inflation.

Healthcare organizations with violations face much bigger fines than in years past with these increases. Settlement fees, and the negative publicity, can be crippling. Despite a less regulation-focused administration, we expect a continuing focus on investigations resulting from whistleblowers and government investigations in 2018. In October 2017, Deputy U.S. Attorney General Rod J. Rosenstein made a speech which hinted at a “soft repeal” of the Yates Memo. All indications show that any changes will not adjust the focus on holding individuals responsible in corporate wrongdoing.

New Resource Guide from the OIG

Measuring Compliance Program Effectiveness: A Resource Guide was developed at the HCCA‐OIG Compliance Effectiveness Roundtable. The Guide provides a long list of compliance program metrics within each of the seven Compliance Program Elements defined by the Certified in Healthcare Compliance Candidate Handbook. The list is meant to provide many ideas for areas health organizations can measure, though it explicitly is not intended as a set of measures that are needed for every organization.

Check out the guide here.

Happy New Year!

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