The Office of Inspector General (OIG) for the U.S. Department of Health and Human Services (HHS) continues to offer valuable insights to the healthcare industry as to how best to approach increasingly complex healthcare fraud and abuse issues. Bass, Berry & Sims is pleased to share this HHS-OIG Year In Review (HHS-OIG YIR) that highlights key guidance OIG issued in 2022, as well as other items of import involving the agency.
Bass Berry & Sims recently secured dismissals on behalf of healthcare providers in three separate False Claims Act (FCA) qui tam lawsuits in a matter of a week’s time.
On December 20, 2019, the U.S. Court of Appeals for the Third Circuit granted in part a petition for rehearing filed by the University of Pittsburgh Medical Center (UPMC) in a False Claims Act (FCA) case that has generated considerable attention among hospitals and health systems due to its treatment of commonplace, productivity-based physician compensation models. Ultimately, the Third Circuit vacated its original September 17, 2019 decision and issued a revised opinion reversing its holding that the relators could establish a problematic indirect compensation arrangement simply by alleging the employed neurosurgeons’ pay for personally performed services correlated with the volume or value of their referrals to UPMC’s facilities for the corresponding hospital services.
As discussed in our October 14 post, U.S. ex rel. Bookwalter v. UPMC involved employment arrangements between UPMC’s subsidiary physician practice entities and various neurosurgeons pursuant to which the physicians earned base salaries and potential incentive bonuses tied to their personally performed work relative value units (wRVUs). The Third Circuit previously held – in reliance on a controversial construction of the Stark Law’s “volume or value” test – that the relators pleaded facts sufficient to demonstrate the surgeons’ compensation both varied with and took into account the volume or value of their designated health service referrals to UPMC’s hospitals, thereby creating an impermissible indirect compensation arrangement.
The U.S. Court of Appeals for the Third Circuit recently issued a False Claims Act (FCA) decision calling into question productivity-based physician compensation structures under the Stark Law, in reliance on a controversial interpretation of the Stark Law’s “volume or value” standard.
The case, U.S. ex rel. Bookwalter v. UPMC, involved employment arrangements between the University of Pittsburgh Medical Center’s (UPMC) subsidiary physician practice entities and neurosurgeons who performed procedures at UPMC’s affiliated hospitals. The decision is significant for hospitals and health systems in that the Third Circuit’s holding is contrary to guidance promulgated by the Centers for Medicare & Medicaid (CMS) and appears to call into question a common compensation methodology used by health systems to compensate physicians.
On July 28, 2016, the Department of Justice announced a $17 million settlement in the matter of United States ex rel. Hammett v. Lexington County Health Services District, Case No. 3:14-cv-03653 (D. S.C.).1 The lawsuit resolved allegations that Lexington County Health Services District, Inc. d/b/a Lexington Medical Center (“LMC”) in West Columbia, SC violated the Stark Law and False Claims Act by acquiring physician practices or employing twenty-eight (28) physicians on terms that were in excess of fair market value and on terms that were not commercially reasonable.
The case was filed on September 15, 2014, and DOJ declined to intervene on September 16, 2015. Relator then continued with the case, resulting in the recently announced settlement. As part of the settlement, LMC also entered into a Corporate Integrity Agreement with the Department of Health and Human Services-Office of the Inspector General.
What do the recent multimillion dollar FCA settlements tell healthcare providers about physician compensation arrangements? Standing alone, these settlements are cautionary examples of arrangements that may subject hospitals and physicians to increased scrutiny. These settlements, however, come on the heels of the recent OIG fraud alert – “Physician Compensation Arrangements May Result in Significant Liability,”
Among the many changes under the Affordable Care Act (ACA), few have generated as much discussion as Section 6402(d), requiring healthcare providers to report and return any overpayment within 60 days of the date the overpayment is “identified” or risk liability under the FCA for a “reverse” false claim. Providers have grappled with how and