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Journal of ASPR - Summer 2013 - Healthcare organization pays $25.5 million to settle Stark case
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Healthcare organization pays $25.5 million to settle Stark case

By Joe Carlson, Modern Healthcare. Posted April 3, 2013. Reprinted with permission of the publisher.

Intermountain Healthcare agreed to pay more than $25 million to resolve self-disclosed allegations that it paid more than 200 doctors illegally over the course of more than a decade.

Intermountain, the largest health system in Utah, told federal officials in 2009 that the system may have illegally paid bonuses to 37 doctors based on how much the system earned from their patient referrals—which would be a violation of the Stark law prohibition on paying doctors in ways that would influence their referrals.

In addition, the Salt Lake City-based system disclosed that more than 170 doctors were compensated without written contracts in various ways, including the rental of office space in the Cassia Regional Medical Center, Burley, ID, and the Sevier Valley Medical Center in Richfield, UT, without written valid leases between 2000 and 2009. “As hospitals are employing more and more physicians, this settlement draws focus to how hospitals are compensating their physicians,” said healthcare attorney Brian Roark of Bass Berry & Sims in Nashville.

All told, the alleged violations involved 209 physicians. System officials noted that the appearance of the physicians’ names in the settlement should not be taken to suggest they committed any wrongdoing.

The disclosures triggered potential False Claims Act liability leading to the $25.5 million settlement —one of the larger recent hospital settlements with the Justice Department.

Intermountain Chief Medical Officer Dr. Brent Wallace said in a statement that the system uncovered the issues through its “regular review process,” and that it reported them to the government in 2009. “Intermountain’s management recognized that potential penalties could be significant, but at no time was there ever any consideration given to not self-disclosing the issues,” Wallace said. Intermountain did not admit wrongdoing in the settlement agreement.

The system characterized the violations as “technical in nature” and said they arose partly because of the 300 pages of federal regulations and commentary that govern financial relationships between hospitals and physicians.

“Intermountain should have monitored this situation more closely. We are embarrassed that these issues occurred and regret that our controls at the time were inadequate to properly monitor these matters,” Wallace said in the statement.

Roark said self-disclosed allegations like Intermountain’s and a similar $9.3 million settlement paid by Freeman Health System, Joplin, MO, in November 2012 show that complying with complex Stark regulations can indeed be difficult.

“Trying to make sure that you are complying with 300 pages of statutes and regulations can be a challenge,” Roark said.

Intermountain officials say they have a reputation for the quality and efficiency of their care. In 1996 the system became the third healthcare provider ever to win the National Quality Healthcare Award from the National Quality Forum.

Journal of ASPR - Summer 2013

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