Recently the Department of Justice disclosed a settlement between MedStar Health and its affiliated hospitals (“MedStar”) regarding allegations of kickbacks to a cardiology group. The arrangements ultimately resulted in MedStar settling for $35 million. However, the unique aspects of this investigation should have hospitals and health systems on notice.
First, the case evolves around allegations of violation of the Anti-Kickback Statute. This is particularly troubling for any organization or individual because the penalty under the statute is not only significant fines, but also possible criminal penalties. In other words, individuals can go to jail. The primary method of violating the Anti-Kickback Statute is paying something of value with the intent to induce referrals to your organization.
Second, the allegations evolve around various professional services agreements between hospitals and a private practice cardiology group. Without getting into specifics of this arrangement, these types of agreements could have been for call coverage or some other clinical activity. However, to bring claims under the Statute, the allegations would have to be that the agreements were not necessary or reasonable.
Finally, the entire settlement evolved around a separate private practice making allegations that the agreements violated Federal law. Specifically, a group of cardiac surgeons were the individuals who brought forth the allegations of kickbacks with the cardiology group. In addition, those individuals will share in this settlement with the Federal government.
The key takeaway points from this type of settlement are numerous. However, I will do my best to limit the perspective. First, any high referral group (employed or not) should be viewed with particular scrutiny. Why? Within most organizations, individuals and leaders are aware of who makes or contributes the most from a revenue perspective. Cardiology being an obvious specialty. Close scrutiny should include analyzing what they are doing, what organizations are paying for, and whether it makes sense. Just because someone thinks an arrangement makes sense does not mean it is legal. Second, favoritism in healthcare can lead to significant risk from others not so favored. In this case, without knowing the specifics, another group brought forth the violations. Within your own organizations, it is important to understand favoritism, analyze it, and above all, mitigate that from a benefit standpoint.