Overpayment Rule Sets 6 Year Lookback

Nearly 6 years after the passage of the Affordable Care Act, CMS published the final 60 day rule for Medicare Parts A and B overpayments. The rule requires a person who has received an overpayment to report and return the overpayment to HHS, the State, an intermediary, a carrier or a contractor within 60 days after the date the overpayment was identified or the due date of any corresponding cost report, as applicable. The final rule is codified at 42 CFR 401.301 – 305; 401.607. Failure to properly identify and return overpayments may lead to liability under the False Claims Act.

The Final Rule sets a 6 year lookback period and clarifies what it means to identify an Overpayment. Prior to publication of the Final Rule, CMS previously published final rules for Medicare Parts C and D. As we previously reported, the New York District Court considered the “identification issue” in Kane v. Healthfirst, Inc. Unlike the Final Rule, the Court in Kane did not allow for quantification of an overpayment prior to commencement of the 60 day clock.

A. Ten Year Lookback Burden ‘Reduced’ to Six Years.

As we described in a February 2012, blog post, CMS initially proposed a ten year lookback period. The final rule eases this burden and requires that an overpayment be reported and returned within six years of receipt of the overpayment. In CMS’s view, “[c]reating this limitation for how far back a provider or supplier must look when identifying an overpayment is necessary in order to avoid imposing unreasonable additional burden or cost on providers and suppliers. Yes, 6 years is better than 10, but CMS declined to adopt a 4 year lookback as contained in the current reopening rules at 42 CFR 405.980. In reaching the 6 year rule, it appears that CMS contemplated burden, statutes of limitation in enforcement statutes, and state law record retention rules that require providers to retain records for 6 or 7 years.

B. Clarification of Meaning of ‘Identification’ of An Overpayment.

When does the 60 day clock start? The ACA provides that an overpayment must be reported and returned by the later of (i) the date which is 60 days after the date on which the overpayment was identified; or (ii) the date any corresponding cost report is due, if applicable. The Final Rule clarifies that “a person has identified an overpayment when the person has, or should have through the exercise of reasonable diligence, determined that the person has received an overpayment and quantified the amount of the overpayment.” 81 Fed. Reg. 7654. Conversely, the Final Rule provides that “a person should have determined that the person received an overpayment and quantified the overpayment if the person fails to exercise reasonable diligence and the person in fact received an overpayment.” 81 Fed. Reg. 7661, 7683. Moreover, it identifies specific examples of where an overpayment may be identified. 81 Fed. Reg. 7659.

1. Reasonable Diligence in Quantifying an Overpayment – The commentary to the Final Rule provides guidance on what constitutes reasonable diligence. In terms of quantifying an overpayment, reasonable diligence is demonstrated “through the timely, good faith investigation of credible information, which is at most 6 months from receipt of the credible information, except in extraordinary circumstances.” Extraordinary circumstances are fact specific but may include unusually complex matters. Reasonable diligence in the Final Rule replaced the concept of “all deliberate speed” in the proposed rule.

2. Reasonable Diligence Through Compliance Activities – Under the Final Rule, reasonable diligence includes both proactive compliance activities conducted in good faith by qualified individuals to monitor for the receipt of overpayments and investigations conducted in good faith in a timely manner by qualified individuals in response to obtaining credible information of a potential overpayment. The Final Rule admonishes the provider and supplier community to engage in meaningful compliance activities:

We believe that undertaking no or minimal compliance activities to monitor the accuracy and appropriateness of a provider or supplier’s Medicare claims would expose a provider or supplier to liability under the identified standard articulated in this rule based on the failure to exercise reasonable diligence if the provider or supplier received an overpayment.

81 Fed. Reg. 7661.

C. Reporting.

A person will satisfy the reporting obligations by making a disclosure under the OIG’s Self-Disclosure Protocol or the CMS Voluntary Self-Referral Disclosure Protocol. Otherwise, providers are required to use “an applicable claims adjustment, credit balance, self-reported refund, or other reporting process set forth by the Medicare contractor to report an overpayment.” Those SRDPs submitted prior to the effective date of the Final Rule will still be governed by the 4-year lookback period. Going forward the 6-year look back period will apply, though CMS still needs to modify this period with the OMB with regard to the financial analysis they are allowed to collect under the Paperwork Reduction Act. Therefore, at this point providers may voluntarily provide information for the 5th and 6th year. 81 Fed. Reg. 7673.

D. Conclusion.

In light of the Final Rule, providers should evaluate their compliance and auditing activities and evaluate the extent to which they could demonstrate “reasonable diligence.” In general, providers should work diligently to quantify and report overpayments by no later than 8 months (6 months to quantify, 2 months to report).

Adam Snyder is Chair of the Ogden Murphy Wallace Business Department and is a Part-time/Adjunct Faculty member of the University of Washington School of Law. For additional information regarding the Medicare 60 Day Overpayment Rule, Corporate Compliance, or internal investigations, please contact Adam Snyder.

CMS Issues Stark Law Changes

CMS issued last week its final rule modifying the Physician Self-Referral Law aka the Stark Law putting into place most of what it proposed to modify this summer. The majority of the new modifications become effective on January 1, 2016, though CMS indicates that many of the changes are just clarifications of existing application of the Stark Law.

Highlights of Some Proposed Revisions

The below list is not an all-inclusive list of the revisions to the Stark Law, but highlights some of the more substantial changes.

Temporary Noncompliance with Signature. Following the confusion between what was considered inadvertent and not inadvertent, CMS has modified this rule to allow the temporary noncompliance with the signature requirements for up to 90 days following the date of noncompliance regardless of the parties’ intention for not signing earlier.

Remuneration. The definition of remuneration has been revised to more clearly specify that certain items, devices, or supplies related to the collection, transportation, etc. of specimens are excluded from the definition of remuneration if used solely for one or more of such testing/specimen collection purposes.

Arrangement vs. Agreement. CMS clarifies in several of the exceptions (i.e personal services, leases, physician recruitment, etc.) that the requirement that the arrangement be set out in writing does not require a single formal contract but rather that several documents may establish sufficient documentation to satisfy the writing requirements. Examples of supplementary contemporaneous documents may include communications between the parties, check requests or invoices, time sheets, and call coverage schedules. Further examples are described within the final rule.

Holdover Provision. Prior to this final rule, the personal service arrangement, rental of office space and rental of equipment exceptions permitted a holdover arrangement for up to 6 months. CMS has modified these provisions to permit indefinite holdovers, provided that the arrangement continues on the same terms and conditions as the original arrangement.

Recruitment of Non-Physician Practitioners. CMS has added a new exception allowing a hospital (FQHC and RHC) to provide remuneration to a physician to compensate for non-physician practitioners if certain conditions are met (including cap of 50% of remuneration paid to non-physician practitioner and restriction on using the exception with the same referring physician only once every 3 years). Such non-physician practitioners include clinical psychologists and social workers, physician assistants, nurse practitioners, clinical nurse specialists and certified nurse midwives.

Timeshare Arrangements. CMS created a new exception for timeshare lease arrangements, which includes both space and equipment (supplies, items, services, etc.). The space/equipment must be predominately used for E/M services and remain on the same schedule. The equipment in the space must also be located in the same building as where the E/M services are furnished, not used to furnish DHS other than those incidental to E/M services furnished at the time of the patient’s visit and not include advanced imaging equipment, radiation therapy equipment or clinical & pathology lab equipment (other than CLIA waived tests).

The changes that relax some of the signature, holdover and writing requirements are consistent with CMS’ experience with SRDP submissions. Further the new exceptions recognize some of the changes in the delivery of patient care (such as non-physician providers and timeshare arrangements).  If you have questions about any of these modifications or the Stark Law in general please contact Elana Zana.

 

 

 

Naughty or Nice – 60 Day Overpayment Reporting Rule

According to a recent New York District Court decision, whether providers are subjected to an enforcement action under the False Claims Act for failing to report and return an overpayment within the sixty-day window should turn on whether they have been naughty or nice after learning of the potential of an overpayment.  In this case, at least at the motion to dismiss stage, the court concluded that the providers had been naughty, which, based on the factual recitations seemed a pretty easy call.  Essentially, the providers were alerted to the potential of substantial overpayments by an employee tasked with examining an overpayment issue.  Four days after providing his employer with a spreadsheet detailing the overpayments, the employee was fired and his spreadsheet “filed”.  A couple months later, the employee filed his qui tam action in which the United States and the state of New York eventually intervened.

 

Naughty or nice became important because of the court’s analysis of what constitutes “identification” of an overpayment for purposes of triggering the 60 day report and return obligation.  In this regard, according to the decision, at least one thing is certain.  The answer is not when the amount of the overpayment is finally calculated with certainty.  In response to this argument by the defendants, the court observed this would create ” . . . a perverse incentive to delay learning the amount due . . . relegating the sixty-day period to merely the time within which they would have to cut the check.”

 

The Government took the position that an overpayment is identified when the recipient is put on notice that a certain claim may have been overpaid.  The court agreed that defining “identified”  ” . . . such that the sixty day clock begins ticking when a provider is put on notice of a potential overpayment , rather than when the overpayment is conclusively ascertained, is compatible with the legislative history of the FCA and the FERA highlighted by the Government.”

 

The court characterized the rule derived from a review of legislative history as “unforgiving”, noting that it provides no leeway for the recipient of an overpayment who ” . . . struggles to conduct an internal audit, and reports its efforts to the Government within the sixty-day window, but has yet to isolate and return all overpayments sixty-one days after being put on notice of potential overpayments.”  ”  . . .it nowhere requires the Government to grant more leeway or more time to a provider who fails timely to return an overpayment but acts with reasonable diligence in an attempt to do so.”  Any relief for the provider that is diligently attempting to determine whether the potential overpayment is factually and legally an actual overpayment and, if so, the amount of the overpayment to be returned rests with prosecutorial discretion, which according to the court, ” . . . would counsel against the institution of enforcement actions aimed at well-intentioned health care providers working with reasonable haste to address erroneous overpayments” because in such a  situation the provider would not have acted with reckless disregard, deliberate ignorance or actual knowledge of the overpayment, a requirement of a FCA claim.

 

In fact, in comments to the court in this case, the Government made clear that this was not a case of a provider working diligently on the claims and on the sixty-first day is still scrambling with its spreadsheets.  “You know, the Government wouldn’t be bringing that kind of claim.”

So the moral of the story is if a messenger notifies you of a potential overpayment, be nice, act with diligence to investigate and quantify any overpayment, and for goodness sake don’t shoot the messenger.

To learn more about refunding overpayments please contact Greg Montgomery or Adam Snyder.

 

Key Lessons Related to Stark Compliant EHR Donation Arrangements

Is your entity thinking about engaging in a Stark/AKS Compliant EHR Donation Arrangement?  If so, check out this list of top 5 issues to consider as you are assessing your options and your health IT alignment strategy.

1.  An EHR donation arrangement is an effective way for hospitals to align with their physicians.

In the world of health information exchange, having the technological ability to seamlessly communicate with a hospital or referring physician is crucial to effective patient care.  It enables physicians and hospitals alike to efficiently obtain patient information and to exchange this information as needed to ensure quality patient care.

2.  There are specific rules – and significant consequences for breaking those rules.

Be careful not to run afoul of the Stark or Anti-Kickback rules.  Ensure that your contracts are compliant with both Stark and Anti-Kickback and that the arrangement is not designed at rewarding referring physicians.  

3.  What is the hospital taking on when it becomes an EHR vendor?  

What are the consequences for a physician practice if the local hospital is also its EHR vendor?  In many arrangements the hospital is the contracting party with the EHR software vendor (i.e. Epic, Cerner, etc.) and owns the relationship.  Physician groups will look to the hospital to obtain necessary service, updates, modules and when the system malfunctions.  The hospital should evaluate if it is able to take on this role.

4.  Physicians need to know what to expect as recipients of an EHR donation.

Often times the physician group is giving up its autonomy in choosing the EHR vendor, configuration or customization and must often defer to the hospital to make appropriate purchase, upgrade and service decisions.  In addition, even though the hospital may be picking up the majority of the costs (no more than 85%) the investment may still be expensive (and will likely exceed the meaningful use incentive dollars).  Items such as hardware, storage, and operating system software are excluded from the donation.    

5.  Before you align, be clear about who will get the “record collection” if things don’t turn out.

Before entering into a donation arrangement the parties should have a clear understanding of what happens if the relationship goes awry.  How will the records be divided, extracted, or migrated into a new system?  Will the physician group be able to maintain a relationship with the software vendor independently?  What are the ramifications of changing vendors and separating from the hospital EHR?

Special thanks to ECG’s Michelle Holmes and OMW attorney David Schoolcraft for composing this list based on their HIMSS14 presentation “Using Stark/Anti-Kickback to Support Hospital/Physician IT Alignment Strategies.

For more information on designing Stark/Anti-Kickback compliant donation arrangements please see the previous posts describing the exception requirements and the 2013 updates.  For assistance in creating a donation arrangement please contact Elana ZanaMichelle Holmes or David Schoolcraft.

 

Understanding Stark/Anti-Kickback Compliant EHR Donation Arrangements

In 2006 and extended in December 2013, CMS issued Stark and Anti-Kickback exceptions/safe harbors permitting EHR technology donation arrangements between hospitals (and other organizations) and physician groups.  This exception permitted hospitals to aid physician groups, who may be referral sources, in acquiring and implementing EHR and other health information technology.  Originally, hospitals had a seven-year window in which to engage in these donation arrangements, though in December 2013 CMS extended the donation arrangements for an additional 7 years through December 31, 2021.

The arrangement may include the non-monetary donation of “items or services in the form of software or information technology and training services.”  Key components of the exception/safe harbor include:

  • The donation is provided from an entity to a physician.
    • Change in 2013 rules, this entity cannot be a lab.
  • The software is interoperable
    • Change in  2013 rules, software is deemed interoperable if it has been certified as “certified EHR technology” as that term is used by the ONC for the meaningful use/EHR Incentive Program.
  • Donor cannot restrict or limit the use or interoperability of the technology with other eRx or EHR systems.
    • Change in 2013 rules, CMS interprets this rule more broadly by providing a non-exclusive list of the types of technologies that are included in this restriction: “health information technology applications, products, or services.”
  • Physician must pay at least 15% of the costs for the technology (which amount cannot be financed by the hospital).
  • Neither the physician nor the physician’s practice makes the receipt of the technology a condition of doing business with the donor.
  • Neither eligibility of the physician nor the amount or nature of the donation is determined in a manner that takes into account the volume or value of referrals or other business generated between the parties.
  • The donation is set forth in writing, signed by the parties, specifies the items to be provided, the donor’s costs and the physician’s contribution, and covers all EHR items and services to be provided by the donor.
  • The donor cannot have knowledge of or disregard the fact that the physician already possesses equivalent items or services.
  • The donor cannot restrict or limit the physician’s right to use the software for any patient.
  • The donation cannot include staffing of physician offices and cannot be used to primarily conduct personal business or business unrelated to the physician’s medical practice.
    • Note the donation may also include other “software and functionality directly related to the care and treatment of individual patients (for example, patient administration, scheduling functions, billing, clinical support software, etc.” (71 FR 45152).
  • The donation arrangement does not violate the Anti-Kickback statute.
  • The exception expires December 31, 2021.

Beyond crafting a donation arrangement that satisfies both the Stark law exception and Anti-Kickback safe harbor, hospitals and physicians should assess overall technology alignment strategies and the goals and framework for such donation arrangements.  Making sure that clear expectations are set in advance, including understanding implementation, roll out and support, data ownership and extraction, and utilizing the EHR technology for government incentive programs, such as meaningful use, are important topics that should be addressed by the arrangement.

For those interested in learning more about this topic and are currently attending HIMSS14, David Schoolcraft, attorney at Ogden Murphy Wallace, and Michelle Holmes, principal at ECG Management Consultants, are presenting on Wednesday at 10 AM on Using Stark/Anti-Kickback To Support Hospital/Physician IT Alignment Strategies.  For further information about designing a compliant arrangement please contact Elana Zana or Dave Schoolcraft.

 

OIG Issues Unfavorable Advisory Opinion Related to Fee Arrangement

Earlier this week the OIG issued an unfavorable Advisory Opinion concerning the relationship between an Anesthesiology Group (defined as the “Requester” in the OIG opinion), a Psychiatry Group and a Hospital.  The Psychiatry Group performed electroconvulsive therapy (ECT) services at the Hospital, requiring related anesthesia services.  The Requester had an exclusive contract with the Hospital for the provision of anesthesia services.  The specific arrangements reviewed by the OIG dealt with the Hospital’s pressure on the Requester to carve out exceptions to its exclusive contract that would have the effect of allowing the Psychiatry Group to have access to a new anesthesia revenue stream.  Ultimately, the OIG determined that the Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute.

The Proposed Arrangement stemmed from negotiations between the Hospital and the Anesthesiology Group, which had held an 18 year exclusive relationship with the Hospital until 2011.  In late 2010 the Psychiatry Group relocated its practice, which centers around ECT services, to the Hospital; a member of the Psychiatry Group included an anesthesiologist.  In 2011 negotiations with the Anesthesia Group, the Hospital modified the exclusive relationship to allow the Psychiatry Group’s anesthesiologist to perform ECT anesthesia services, and to request the Anesthesiology Group’s coverage while he was not available.  In 2012, the Psychiatry Group requested a provision allowing it to bring in a part time anesthesiologist if the Psychiatry Group and the Anesthesiology Group could not agree on terms for those additional services.  After the 2012 contract went into effect, the Psychiatry Group notified the Anesthesiology Group that it wanted to bring in the additional anesthesiologist and asked the Anesthesiology Group to enter into the Proposed Arrangement.

The Proposed Arrangement provided that the Anesthesiology Group would provide the ECT anesthesia coverage services that were needed and would reassign all billing rights to Psychiatry Group.  In exchange the Anesthesiology Group would receive a per diem rate which the Anesthesiology Group asserts was less than fair market value and below what it would receive if it billed directly for the anesthesia services.  The Psychiatry Group would retain the difference between the amount collected and the per diem rate.  The OIG unequivocally rejected this Proposed Arrangement, finding that the per diem payment made to the Anesthesiology Group did not fall under the personal services and management contract safe harbor of the anti-kickback statute because it was not set in advance nor consistent with fair market value.  Further, the OIG determined that the fee generated for the Psychiatry Group was a door to solicit compensation for its patient referrals for ECT services:

 “The Proposed Arrangement appears to be designed to permit the Psychiatry Group to do indirectly what it cannot do directly; that is, to receive compensation, in the form of a portion of Requestor’s anesthesia services revenues, in return for the Psychiatry Group’s referrals of ECT patients to Requestor for anesthesia services. The Additional Anesthesiologist Provision gave the Psychiatry Group the ability to solicit this remuneration for its ECT patient referrals by allowing the Psychiatry Group to contract with an anesthesiologist other than Requestor if Requestor and the Psychiatry Group were not successful in negotiating the terms of an agreement for Requestor to provide ECT anesthesia services. The Proposed Arrangement therefore presents the significant risk that the remuneration Requestor would provide to the Psychiatry Group—i.e., the opportunity to generate a fee equal to the difference between the amounts the Psychiatry Group would bill and collect for Requestor’s anesthesia services, and the per diem amounts the Psychiatry Group would pay to Requestor—would be in return for the Psychiatry Group’s anesthesia referrals to Requestor. We discern no safeguards in the Proposed Arrangement that would minimize this risk.”

What perhaps might be the most interesting part of the opinion, are the OIG’s comments in concluding the opinion. Although not asked to opine on the Hospital’s relationships with the Psychiatry Group and Requester, the OIG commented in a footnote about the potential improprieties of the Hospital’s relationship with those parties:

“Although we have not been asked to opine on, and express no opinion regarding, any aspect of Requestor’s relationship with the Hospital, including the 2012 Contract or the Additional Anesthesiologist Provision, we cannot exclude the possibility that: (i) the Hospital agreed to negotiate for the Additional Anesthesiologist Provision in exchange for, or to reward, the Psychiatry Group’s continued referral of patients to the Hospital for ECT procedures; (ii) the Hospital leveraged its control over its large base of anesthesia referrals to induce Requestor to agree to the Additional Anesthesiologist Provision; and (iii) Requestor agreed to the Additional Anesthesiologist Provision in exchange for access to the Hospital’s stream of anesthesia referrals.”

This OIG opinion highlights the OIG’s continued concern regarding arrangements that allow referring providers access to new revenue streams in a manner that may be connected to the providers referrals.  Parties desiring to enter into these types of arrangements should take care to include as many safeguards (using the OIG’s language) to ensure that the payments are not related to referrals.  In the absence of such safeguards, it is pretty clear that the OIG will not look favorably upon the arrangement.

For more information about this particular OIG Opinion or the anti-kickback statute in general please contact Elana Zana or Don Black.

 

OIG Okays Provision of Free Services to Uninsured and Underinsured Patients

On October 15, 2013, the Office of Inspector General (OIG) released an Advisory Opinion concerning a community health services organization’s provision of free dental care to financially needy uninsured and underinsured patients that are not covered by Medicaid.

The organization was concerned that the free services violated two aspects of the Medicaid law: (1) the Social Security Act prohibits providers from billing Medicaid charges for items or services substantially in excess of the provider’s “usual charges,” and (2) the Anti-Kickback Statute prohibits providers from offering remuneration to Medicaid patients to induce them to receive services from the provider.

In the Advisory Opinion, the OIG stated that when a provider calculates its “usual charges,” it need not consider free or substantially reduced charges to uninsured or underinsured patients with financial need.  Therefore, the OIG would not seek to exclude a provider from the Medicaid program for providing discounts to financially needy uninsured and underinsured patients.

The OIG also stated that the organization’s provision of free services to financially needy uninsured or underinsured patients does not violate the Anti-Kickback Statute because the free services will not be provided to Medicaid patients.  The Anti-Kickback Statute would only be implicated if a provider used the free services as a means to induce Medicaid patients to order additional services that could be billed to the Medicaid program.

The bottom line is that providers may offer free services to uninsured or underinsured patients with financial hardship.  With that said, it is critical that providers have uniform eligibility criteria to determine whether such patients actually are financially needy.  In separate guidance released in 2004  the OIG outlined factors that providers should consider in determining financial need, including:

  • The local cost of living;
  • A patient’s income, assets, and expenses;
  • A patient’s family size; and
  • The scope and extent of a patient’s medical bills.

By applying these factors uniformly at all times, providers can ensure that their provision of free or discounted services meets OIG requirements.

If you would like more information please contact Casey Moriarty.

OIG Approves Venture Spawned by CMS Hospital Readmission Penalties

In a recent Advisory Opinion, the OIG approved a business venture intended to reduce preventable hospital readmissions by providing post-discharge services to patients.  The venture would sell a package of services to hospitals intended to better coordinate post-discharge care and to help patients adhere to their post-discharge plans of care.  The focus would initially be on those conditions CMS has identified as potentially triggering readmission payment penalties.

Hospitals would be charged a flat annual “set-up” fee and an additional “per patient” fee. Patients would have to elect to receive the services.  Under the service, the patient would have access to assistance 24 hours a day, seven days a week, either through a Patient Liaison or through a nurse hotline.

The OIG found a low risk of fraud or abuse under the anti-kickback law because, among other things, the program could potentially save federal money by decreasing excessive hospital readmissions.  The proposed program also was unlikely to interfere with clinical decision making since its purpose was to ensure such decision making was implemented for the benefit of the patient.

The OIG also found a low risk of any Civil Monetary Penalty violation.  The proposed program appeared to be intended to assist patients in the post-discharge period without influencing or limiting a patient’s choice of providers or suppliers.  If you have questions regarding this opinion please contact Greg Montgomery.

SRDP Settlement: Improper EHR Donation Arrangement Among Violations

Last month CMS settled several violations of the self-referral statute (aka Stark Law) with an Ohio hospital, including a failure to appropriately structure a donation arrangement for electronic health records (EHR) .  The hospital disclosed under the Self-Referral Disclosure Protocol that it may have violated the Stark Law with regard to several arrangements with certain physicians, including arrangements for EKG interpretations, medical director services, Vice-Chief of Staff services, and hospital services (no specifics provided in CMS release).  The settlement was for $265,565.  The SRDP, which was included in the ACA, was created as a mechanism for providers to self-report potential Stark law violations.

The EHR donation arrangement to the Stark and Anti-Kickback laws permits hospitals to enter into certain arrangements with physicians for the donation of EHR related software and services.  The donation arrangement exception is scheduled to expire on December 31, 2013, however CMS has proposed extending the exception through 2016.  If CMS does not extend the exception, existing donation arrangements will have to convert to fair market value for shared technology and services.

If you have questions regarding the SRDP or structuring a EHR donation arrangement please contact Elana Zana.

US Intervenes In Whistleblower False Claims Act Lawsuit Alleging Submission of More Than $500 Million in Improper Claims

After the United States decided to intervene, a whistleblower lawsuit under the federal false claims act was unsealed.  The Amended Complaint alleges that over the period 2004 to 2010, the defendants submitted over $500 million in claims to Medicare, Tricare, and Medicaid that were the result of physician compensation schemes in violation of Stark and Anti-Kickback laws.

According to the Amended Complaint, a seventy-one (71) member physician group provided outpatient care and treatment for clinic patients under a services contract with the clinic.  Under the contract, the clinic billed and collected for the physician services and split the net proceeds with the physician group.

The Amended Complaint alleges that the physician group received two additional components of compensation intended to induce referrals to the clinic and increase the tests ordered at the clinic.  According to the Amended Complaint, the clinic furnished the physician group with office space, equipment, and a variety of services at below fair market value.  In addition the physicians in the group were allegedly paid a percentage of the technical fees charged and collected by the clinic for tests they ordered.

The whistleblower is an interventional cardiologist who was employed by the physician group from 2003 until he was fired in 2011.