The Federal government has become involved in a number of False Claims Act (FCA) lawsuits against Health Management Associates Inc. (HMA), alleging that HMA billed federal health care programs for medically unnecessary inpatient admissions from the emergency departments at HMA hospitals and paid remuneration to physicians in exchange for patient referrals. The government has also leveled allegations against HMA’s former CEO, that HMA systematically pressured emergency department physicians to increase inpatient admission rates, regardless of medical necessity. The allegations further allege that patients were admitted as inpatients despite the fact that many could have been placed in observation units, treated as outpatients or discharged. Patients were also admitted for scheduled surgical procedures that should have been done on an outpatient or ambulatory basis. Physician groups staffing HMA emergency departments are accused of being paid kickbacks, in the form of bonuses and contract awards, to induce physicians to admit patients unnecessarily.
In addition to the kickbacks paid for inappropriate admissions, the lawsuits allege that HMA paid kickbacks to other physician groups, (i) through the provision of free office space and staffing; (ii) by paying inflated prices for physician-owned assets; (iii) by providing sham medical directorship contracts; and (iv) by selling assets to physicians for below fair market value. These arrangements are alleged to violate AKS and/or Stark or both.
The Federal government’s actions illustrate the emphasis the government is placing on pursuing providers who receive payments for referrals disguised as payment for legitimate items. In 2009, the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative was established as a joint effort by the Department of Justice and Health and Human Services to combat waste, fraud, and abuse in the Medicare, Medicaid, and other federally funded healthcare programs. Since January 2009, the Justice Department has recovered a total of more than $12.2 billion in cases involving fraud against federal health care programs.
Hospitals, physicians, and physician groups contemplating financial relationships by and among referral sources (“Arrangements”) must make sure that the Arrangements do not violate AKS or Stark. Crafting Arrangements that comport with one of the applicable “Safe Harbors” is one of the best methods that providers can employ to protect against government scrutiny. Safe Harbors are regulations promulgated by the Office of the Inspector General of Health and Human Services (OIG), and describe various payment and business arrangements that, although technically in violation of AKS, are not considered offenses by the OIG. To receive Safe Harbor protection, an Arrangement must meet all of the elements of the Safe Harbor, which are set forth by the OIG in the Federal Register. Providers are strongly advised to seek the counsel of a qualified healthcare attorney when structuring an Arrangement. Contact Frier Levitt today to speak to an attorney.
