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WASHINGTON — Community Health Network Inc. of Indianapolis has agreed to pay the United States $345 million dollars to resolve accusations that it violated the False Claims Act by knowingly submitting Medicare claims that were in violation of the Stark Law.
In the United States Complaint they claim that beginning in 2008 senior management at Community would recruit physicians for employment with the intent of gathering “downstream referrals.” Community recruited hundreds of local physicians by paying them salaries that were significantly higher, sometimes double, what they would make in their private practices.
Stark Law prohibits a hospital from billing for certain services referred by physicians that the hospital has a financial relationship with. The lawsuit claims that the compensation paid to Community’s cardiologists, cardiothoracic surgeons, vascular surgeons, neurosurgeons, and breast surgeons was well above the fair market value. It also says that community awarded bonuses to physicians that were tied to the number of their referrals. Community then submitted claims to Medicare for services that resulted from the referrals.
The complaint also claims that Community ignored multiple warnings, from a valuation firm they hired, about the legality of overpaying physicians and that they provided the firm with false compensation figures.
In addition to the $345 million settlement, Community will also have a five-year Corporate Integrity Agreement with the Office of Inspector General Department of Health and Human Services.
Community Health Networks provided a statement of their own regarding the settlement. They said the $345 million would be pair from the reserves held by the Network.
In the statement Community spokesperson Kris Kirschner said that the settlement was unrelated to quality of service provided by the network, and was regarding compensation.
“This settlement, like those involving other health systems and hospitals, relates to the complex, highly regulated area of physician compensation. Community has consistently prioritized the highest regulatory and ethical standards in all our business processes.” said Kirschner.
Community says they pay physicians based off an evolving industry best practices with the advice of independent third-parties and that they “always sought to provide complete and accurate information to our third-party consultants.”
