healthy4u: Stark Law

Just the Latest Legal Settlement for HCA

Last month, we<a href="http://hcrenewal.blogspot.com/2012/08/paging-doctor-ebdita-how-private-equity.html"> posted</a> about investigative reports that suggesting that for-profit hospital chain HCAwas pushed by its private equity owners to put short-term revenue ahead of good patient care.  A legal settlement announced this week corroborates these concerns.  As <a href="http://www.wrcbtv.com/story/19584753/hca-to-pay-165-million-to-resolve-health-care-fraud-charges">reported</a> by television station WRCB in Chattanooga, TN, <blockquote>HCA Inc., one of the nation's largest private hospital chains, has agreed to pay $16.5 million to settle alleged violations of the Ethics in Patient Referrals Act (also known as the Stark law), the False Claims Act, and other federal and state laws and regulations in connection with the operation of its subsidiary, Parkridge Medical Center, Inc., in Chattanooga. In addition, Parkridge Medical Center has entered into a comprehensive five-year Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) to ensure its continued compliance with federal health care benefit program requirements. As alleged in the settlement agreement, during 2007, HCA, through its subsidiaries Parkridge and HCA Physician Services (HCAPS), entered into a series of financial transactions with a physician group, Diagnostic Associates of Chattanooga, through which it provided financial benefits intended to induce the physician members of Diagnostic to refer patients to HCA facilities. The financial benefits included lease of office space from Diagnostic at a rental rate well in excess of fair market value to meet the mortgage obligations of the Diagnostic members and release of Diagnostic members from a separate lease obligation. These financial arrangements violated the Ethics in Patient Referrals Act and the Anti-Kickback Statute – laws designed to protect patients as well as the integrity of government-funded health care benefit programs such as Medicare, Medicaid, TRICARE, and TennCare. </blockquote>The issue here were allegations that HCA and its subsidiaries were paying physicians extra so that they would refer patients to an HCA hospital. Obviously, physicians are supposed to put each patient's interests ahead of extraneous considerations, and hence should make referral decisions based on the patients needs, and the likely benefits and harms of the referral, not the amounts the physicians might make from such payments. Referrals for particular services can be very lucrative for hospitals.  So this settlement seems to provide more evidence that to get profitable referrals, HCA was willing to subvert physicians' values by paying physicians to induce to make what might have been the wrong decisions for individual patients.  Of course, in this situation some physicians were hardly blameless, since they were also willing to set aside their values to receive the payments that generated those referrals. This fits with the thesis we advanced last month.  While hospitals are supposed to have a mission to put care of the sick ahead of all else, it appears that for-profit hospitals, and especially those owned by private equity are more likely to put short-term revenue ahead of patient care. As an aside, while this settlement provides useful information, do not think of it as a solution to the immediate problem.  As we have frequently asserted, it is doubtful that the relatively small payment and the relatively unlikely to be enforced corporate integrity agreement imposed in this settlement will change the company's behavior, in the absence of any negative consequences for the people who authorized, directed or implemented the bad behavior.  HCA once made a $1.7 billion fraud settlement, at the time the biggest such settlement ever made (see <a href="http://hcrenewal.blogspot.com/2010/05/how-did-ceo-who-presided-over-company.html">this post</a>).  However, the company's CEO at the time, Rick Scott, left the firm with a golden parachute and no negative consequences, and is now Governor of Florida.  If that previous huge settlement did not deter the more recent bad behavior in the absence of any penalties for company executives, why should we expect that the current comparatively tiny settlement also in the absence of such penalties will have any effect? As we have now said many, many times, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich. Furthermore, as I <a href="http://hcrenewal.blogspot.com/2012/08/paging-doctor-ebdita-how-private-equity.html">wrote</a> last month, we need to challenge the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. Before market fundamentalism became so prominent, many stated prohibited the corporate practice of medicine, and the American Medical Association <a href="http://hcrenewal.blogspot.com/2007/12/relman-in-jama-on-threats-to-physicians.html">forbade the commercialization of medicine.</a> It is time to heed that wisdom. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.

Just the Latest Legal Settlement for HCA

Last month, we posted about investigative reports that suggesting that for-profit hospital chain HCAwas pushed by its private equity owners to put short-term revenue ahead of good patient care. A leg…

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21 Sep 2012

"Cogs in the Corporate Machine" - More on the Plight of Corporate Physicians

We discussed last week some of the perils of the latest trend towards the corporatization of medicine, practicing physicians becoming employees of hospital systems, including for-profit corporate systems.  A <a href="http://www.medscape.com/viewarticle/737543">recent article</a> in Medscape Business of Medicine included a striking anecdote about the life of a corporate physician. Controlling Referrals by Contractual Provision It started with the revelation that some employed physicians may sign contracts that obligate them to refer patients within the corporate system, even if that is not in their best interests: <blockquote>Victoria Rentel, a family physician in Columbus, Ohio, joined a hospital-owned group several years ago. At first, nearly everything went fine. There were a few glitches: she'd occasionally order tests or consults at competing facilities, either for patient convenience or because of health plan coverage. When the hospital's administrators found out, they told her it was a violation of her contract; but that didn't stop her because she knew the hospital never enforced this provision.</blockquote>A Non-Compete Clause, Even for a Laid-Off Physician It also included the observation that corporate physicians may be abruptly laid off. Worse, being laid off means having to leave town, because apparently even laid-off physicians are still obligated by non-compete clauses in their contracts: <blockquote>Then, out of the blue, she was informed that the hospital was going to close her practice within 45 days. She knew this wasn't her fault; the recession had hit the hospital hard, and it was laying off nearly half of the primary care doctors in her group. Still, it was a hard pill to swallow. Making matters worse, her contract's noncompete clause prohibited her from going to work for any of the other healthcare systems in town. To avoid legal sanctions, she joined the student health service at Ohio State University.</blockquote>Signing Contracts Without Understanding Them The article's introduction emphasized the problem of physicians signing onerous contracts, perhaps without fully understanding them or without getting adequate legal advice: <blockquote>Many other physicians -- especially those who, like Rentel, were previously in private practice -- complain about their jobs. In some cases, it's because physicians rushed into the arms of a hospital without looking carefully at their contracts or asking the right questions during their job interviews.</blockquote>Cogs in the Corporate Machine The introduction ended ominously: <blockquote>Ultimately, the loss of control over their own professional lives is what irks employed doctors the most if they used to be in private practice. But some doctors also get the sinking feeling that they've become cogs in the corporate machine. 'The reality is that when you work for a hospital system, you're a service line,' says Rentel. 'And because primary care reimbursement is relatively low, you're a service line that feeds more lucrative service lines.'</blockquote> Oddly enough, after that striking beginning, the article peters off into a discussion of some "gripes of employed physicians," which either soft-pedaled or failed to include the issues listed above. The specific issues, and the general response of physicians to their role as corporate wage slaves deserve further consideration. Signing Bad Contracts First, the notion that physicians frequently sign contracts, particularly such important contracts as their own employment agreements, without reading them, without clearly understanding them, and without obtaining competent legal counsel is very disturbing.   A physician who signs a contract without reading it, understanding it, and getting competent legal advice about it is at best naive to the point of foolishness.  My late father, an attorney, done told me to "never sign a contract you haven't read and understood."  Contracts are - surprise - enforceable legal documents that may involve surrendering important rights.  One should never sign a contract without being satisfied that its benefits outweigh its harms. It could be that physicians who so blithely sign contracts are exhibiting <a href="http://hcrenewal.blogspot.com/2007/10/physicians-learned-helplessness.html">learned helplessness</a>.  Maybe they feel somehow pressured to apparently voluntarily agree to doing something that ultimately will harm them.  I am not sure that simply declaring on a blog that we will have to unlearn our helplessness if we are ever to save medicine and health care will do much to solve what may be a fairly deep problem.  But we must do so. In addition, contracts are valid if entered into voluntarily.  It may be that some physicians truly sign contracts under duress.  Those contracts may not be valid, and could be challenged if they were so signed (again, if physicians are willing to unlearn their helplessness enough to get the counsel of a competent attorney.) Stopping "Leakage" Possibly Unethically, Maybe Illegally? The physician in the example above apparently had a contract provision which was violated simply by referring patients to competing facilities.  This appears to be an extreme way for a hospital to deal with the problem of "leakage," that is, the financial problem to the hospital caused when patients are referred outside the system.  Note that we discussed (<a href="http://hcrenewal.blogspot.com/2011/02/new-steward-health-care-will-superbowl.html">here</a> and <a href="http://hcrenewal.blogspot.com/2011/02/send-mercenaries-guns-and-money.html">here</a>) the example of a for-profit hospital system with a large number of physician employees pushed to choke off "leakage" of patient referrals outside the system. Although leakage may pose financial problems for hospitals, fighting leakage may lead to ethical problems.  Physicians are supposed to decide how to manage patients, and specifically to decide where to refer patients in the patients' interests, not just to keep money flowing to the health care system. "Leakage reduction" may possibly threaten physicians' first commandment, to make decisions to maximize benefits and minimize harms to individual patients, before all other considerations. Worse, in the example cited in the Medscape paper, the leakage reduction was apparently implemented not by just trying to persuade doctors to keep patients within the system, but by a contract provision that somehow forbade referrals out of the system.  That may have not only been unethical, but it could have been illegal.   The "<a href="http://quitamguide.org/stark-law-limitation-on-certain-physician-referrals">Stark Law</a>" (Title 42, Chapter 7, Subchapter XVIII, Part E, Section 1395 of the US Code) generally prohibits basing referral decisions on payments.  Full-time employed physicians are exempt from some of its provisions, but only if the physicians' "amount of remuneration under employment" "is not determined in a manner that takes into account (directly or indirectly) the volume or value of any referrals by the referring physician."  Therefore, were the contract referred to above to have forbidden outside referrals on pain of termination or reduction in remuneration, it could potentially violate this law.  There have been rumors that physicians have been pushed to sign contracts that could so violate the Stark Law, but the published example above makes this a real possibility. Physicians ought not to sign contracts that seem to limit referrals under penalty of pay reduction or termination, which may be both unethical and illegal.  Any physician presented with or who has signed such a contract ought to consult a competent attorney. If hospitals and hospital systems are trying to force physicians to make referrals based on the hospitals' financial advantage instead of in the best interests of patients, that is reprehensible.  If these organizations are trying to do so via contractual provisions, this deserves investigation, including investigation by the relevant law enforcement agencies.  Don't Be a Corporate Cog This article underscores my previously expressed <a href="http://hcrenewal.blogspot.com/2011/03/rise-of-corporate-physician-end-of.html">fears</a> about how making physicians into corporate employees may remove the last barriers preventing patients from becoming corporate financial cannon fodder.  Physicians' most central professional value is to put patients' interests first.  Practicing physicians who practice as corporate employees are at risk of being pressured, or even threatened under the cover of contract enforcement to put their corporate employers' revenues ahead of patients' interests.  Physicians should not let their patients, and their own values be so threatened.  Physicians who have inadvertently, foolishly, or under duress signed contracts that could threaten their professionalism and their patients' welfare need to do the right thing and challenge these contracts, or else there will soon be nothing left of the medical profession, and no one left to ethically care for patients.

"Cogs in the Corporate Machine" - More on the Plight of Corporate Physicians

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09 Mar 2011