Hospital self-disclosure results in 8.5 million dollar of settlement

ProMedica Memorial Hospital in Fremont will pay $8.5 million to settle claims that it engaged in improper financial relationships with referring physicians, according to a news release from the U.S. Department of Justice.

http://www.justice.gov/opa/pr/2014/March/14-civ-270.html

Details on the allegations and settlement were sparse. The justice department said the settlement covers activities related to a joint venture the hospital had with a pain management doctor and a separate arrangement with an ophthalmologist who purchased intraocular lenses — eye implants that correct vision — and then resold them to Memorial Hospital at higher prices. The hospital voluntarily disclosed these issues to the government, according to the release.

“Physician referrals should be made exclusively based on what’s best for the patient, not on financial relationships,” said U.S. Attorney for the Northern District of Ohio Steven M. Dettelbach. “We hope that this settlement will once again help drive that message home. ”

In response to questions from The News-Messenger, ProMedica, the regional nonprofit hospital chain that took over Memorial Hospital on the first of the year, provided a statement indicating that the hospital discovered the discrepancies in a 2012 internal audit, prior to joining ProMedica. The alleged compliance failures were operational and did not cross over into patient care, according to the statement.

“All of the services provided to patients were reasonable and necessary,” the ProMedica statement reads.

The allegations would have violated the False Claims Act, which involves defrauding the federal government, the Anti-Kickback Statute and the Stark Statute, both of which restrict the financial relationships that hospitals may have with doctors who refer patients to them, according to the justice department. The claims will remain only allegations, however, as the investigation will be closed and the hospital will not be required to admit culpability.

The state of Ohio will receive about $600,000 in the settlement because some of the claims included Medicaid patients, and the state covers some of those costs.

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Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.