by Ben Vernia | November 6th, 2012
On November 5, the Department of Justice announced that a Missouri hospital company agreed to pay $9.3 million to resolve False Claims Act allegations arising from incentive payments it had made to physicians. The hospital self-disclosed the conduct, leading to the government’s investigation. According to DOJ’s press release:
Freeman Health System, a healthcare provider and hospital system located in Joplin, Mo., has agreed to pay $9,316,139 to resolve allegations that it violated the Stark Law and the False Claims Act by knowingly providing incentive pay to physicians in a manner that violated federal law, the Justice Department announced today.
The Stark Law forbids a hospital from billing Medicare for certain services referred by physicians that have a financial relationship with the hospital. A prohibited financial relationship includes an agreement between a hospital and a physician to compensate a physician based on the volume of the physician’s referrals or the revenue realized through those referrals.
Freeman disclosed to the U.S. Attorney for the Western District of Missouri that a number of its physicians were eligible for incentive compensation that may have taken into account the value and volume of their referrals. Based on its investigation of Freeman’s disclosures, the United States alleged that Freeman knowingly compensated some of its physicians in a manner that violated the Stark Law. Specifically, the United States alleged that Freeman provided incentive pay to 70 physicians employed at clinics operated by the health system based on the revenue generated by the physicians’ referrals for certain diagnostic testing and other services performed at the clinic, and that this financial arrangement created an incentive to refer patients for such procedures.
