Despite changes in many priorities, the federal government’s scrutiny of relationships between hospitals and physicians continues well into 2025. Last month, Community Health System (CHS) in California and its affiliate, Physician Network Advantage Inc. (PNA), agreed to pay $31.5 million to resolve alleged false claims act violations.
PNA is a health care technology business formed by CHS to support local physicians’ adoption of the electronic medical record platform used by CHS. The federal government claimed PNA’s actual role extended to unlawfully securing business for CHS by allowing physicians access to a fancy lounge at PNA’s offices, complete with wine, liquor, cigars and food, all with the knowledge of CHS. The government also alleged that CHS and PNA provided improper financial subsidies to physicians for adoption of the electronic medical record technology in exchange for patient referrals to CHS, and CHS paid bonuses to physicians for referrals, disguising such payments as bonuses for clinical integration activities.
The government argued these benefits violated the Anti-Kickback Statute, as well as the Stark law, as the relevant Anti-Kickback safe harbors and Stark exceptions were not met. In addition to the $31.5 million payment, CHS entered into a five-year corporate integrity agreement with the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) that required the implementation of a risk assessment and internal review process designed to identify compliance risks, and the hiring of an independent review organization to assess policies and systems to track arrangements with referral sources. Notably, Robb R. Breeden, Acting Special Agent in Charge of the HHS-OIG, was quoted as stating that “[k]ickback arrangements aimed at improperly influencing medical decisions will remain a top investigative priority for our agency.”
Department of Justice Prioritizes Health Care Fraud
Also in mid-May, the Head of the U.S. Department of Justice’s (DOJ) Criminal Division, Matthew R. Galeotti (“Galeotti”), released a memorandum titled “Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime,” which sets forth enforcement priorities for the DOJ. While the memo includes discussion of conduct involving cartels, and threats to national security and child safety, among other very serious conduct, the first enforcement priority cited in the memo pertains to investigating and prosecuting “waste, fraud, and abuse, including healthcare fraud and federal program… fraud.”
Clearly, health care-based fraud and abuse is at or near the top of the radar for the federal government. Health care providers should take this opportunity to revisit their compliance programs and their staff’s adherence to such programs in an effort to be proactive in their compliance efforts.
