Intermountain Healthcare will pay the federal government $25.5 million to resolve self-reported Stark Law and False Claims Act violations for improper financial relationships with referring physicians, the U.S. Department of Justice said Wednesday.
Federal officials said in a media release that Intermountain's Stark violations centered on employment agreements that paid physicians bonuses that improperly considered the value of patient referrals, and on improper office leases and other compensation arrangements between Intermountain and referring physicians.
"The Department of Justice has longstanding concerns about improper financial relationships between healthcare providers and their referral sources, because such relationships can corrupt a physician's judgment about the patient's true healthcare needs," Stuart F. Delery, Acting Assistant Attorney General for the Department's Civil Division, said in prepared remarks.
"In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make healthcare more affordable for patients."
Intermountain CMO Brent Wallace, MD, said in prepared remarks that the Salt Lake City-based provider and the largest health system in Utah discovered the possible violations in 2009 during its "regular review process" and immediately voluntarily disclosed them to the U.S. Attorney's Office in Utah for review.
"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. "These issues were primarily technical in nature and involved things such as lack of proper paperwork involving leases of physician offices and service agreements. That individual physicians are listed in the attachments to the agreement does not mean that a physician committed any wrongdoing of any kind."
Wallace said all of the issues detailed in the 2009 self-disclosure have been corrected and that "none of these issues adversely affected in any way the quality, appropriateness, or cost of patient care at Intermountain hospitals and clinics."
Wallace said some of the blame for the violations were "due to the complexity of nearly 300 pages of federal regulations and commentary governing relationships between hospitals and physicians that have evolved and changed over time and were modified in 2007."
"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.
"Since discovering these concerns Intermountain has improved its controls by implementing a rigorous centralized process to track all physician agreements. Intermountain added additional staff, implemented advanced tracking software, created oversight councils, and put additional training in place to assure compliance with all relevant regulations. Intermountain will continue the practice of regularly evaluating and monitoring all business practices to ensure legal and regulatory compliance. We have learned from this experience and are a better company as a result."
Federal prosecutors said that they have used the False Claims Act to recover more than $10.2 billion since January 2009 in cases involving fraud against federal healthcare programs.
John Commins is the news editor for HealthLeaders.