Mercy Springfield to pay millions to settle claims of improper financial referral deals for docs
Mercy Springfield Communities and its associated clinic system have agreed to pay the federal government $5.5 million to settle allegations that the entities violated the False Claims Act by engaging in improper financial relationships with referring physicians.
The allegations arose from a lawsuit filed by a Mercy Springfield physician, to whom the Justice Department referred as a whistleblower. The False Claims Act is a federal law that imposes liability on companies that defraud governmental programs.
“Financial relationships between heath care providers and their referral sources must be structured to comply with all applicable laws,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the U.S. Justice Department’s Civil Division, said in a news release announcing the settlement Thursday.
“When physicians are rewarded financially for referring patients to hospitals or other health care providers, it can affect their medical judgment, resulting in overutilization of services that drives up health care costs for everyone. In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable,” Mizer said.
Specifically, the settlement resolved allegations that Mercy Springfield submitted false claims to the Medicare program for services rendered to patients referred by physicians who received bonuses based on a formula that improperly took into account the value of the physicians’ referrals of patients to the clinic, according to the release. Federal law restricts the financial relationships that hospitals and clinics may have with doctors who refer patients to them. The claims settled by the agreement are allegations only; there has been no determination of liability, the release said.
“This settlement protects patients and the public by enforcing the federal protections against illegal profit incentives for physicians,” U.S. Attorney Tammy Dickinson of the Western District of Missouri, said in the release. “A bonus structure that rewards physicians based on the value of their referrals is detrimental to both the quality and the cost of health care. Patients deserve assurances that they are receiving appropriate medical care, unbiased by hidden incentives. And taxpayers deserve assurances that the cost of public health care programs is not inflated by unnecessary procedures and services.”
Mercy Springfield said in a statement released Thursday afternoon that the settlement “focuses on a very technical and constantly changing area of federal billing regulations” and that “all patients were billed correctly for services received and those services were medically necessary and delivered appropriately.” The health system said it cooperated with the Justice Department’s investigation. Mercy Springfield is part of Chesterfield-based Mercy Health.
Under the False Claims Act, private citizens can bring suit on behalf of the government for false claims and share in any recovery. Dr. Jean Moore, who filed the lawsuit that prompted the allegations, will receive $825,000 from the settlement.
The original lawsuit filed by Moore states that she is a pediatrician who became employed by Mercy, then known as St. John’s, in 1999.
“Health care organizations paying physicians based on referrals — as alleged in this case — undermines public trust in medical institutions and the financial integrity of federal health care programs,” Special Agent in Charge Gerald T. Roy of the U.S. Department of Health and Human Services Office of Inspector General said in the Justice Department release. “We will aggressively pursue organizations that engage in conduct detrimental to taxpayers and government health programs.”
Since January 2009, the Justice Department has recovered a total of more than $24.9 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs, according to the release.
Full Mercy Springfield statement on settlement
“This settlement focuses on a very technical and constantly changing area of federal billing regulations. All patients were billed correctly for services received and those services were medically necessary and delivered appropriately. Mercy fully cooperated with the Justice Department throughout its investigation and we were able to reach a settlement in order to move forward in delivering the best quality health care. We have and will continue to update our billing procedures to comply with federal billing regulations.
It is important to note that during this same time, Mercy Springfield Communities was actively working to save the government money. It was one of a handful of health systems involved in the Medicare Physician Group Practice Demonstration Project (PGP). The pilot program, through the Centers for Medicare and Medicaid Services, aimed to better coordinate care and improve health outcomes for patients while saving the government money. In the seven years of that project, Mercy Springfield Communities saved the government more than $33 million. Mercy has since become an Affordable Care Organization (ACO) both in Springfield Communities as well as throughout Missouri, Arkansas and Oklahoma. Just as in the PGP project, ACOs work to keep patients healthier while eliminating unnecessary expenses for Medicare.”