Did you catch our recent five-part content series on Fair Market Value (FMV)? In part two, we discussed how the Physician Self-Referral Law – more commonly known as the Stark Law – plays a crucial role in the overall compliance requirements in FMV.
Recent media coverage has underscored the significant fiscal impact that can fall on both providers and health systems when non-compliance with these laws is pursued by the United States Government.
In 2023, the Department of Justice (Justice Department) had recoveries of over $1 billion under the False Claims Act, the government’s primary legal instrument used to enforce against what they believe to be fraud-related activities by healthcare entities that participate in Federal and State run Medicare and Medicaid Programs. Three of the top four cases involved alleged violations of the Anti-Kickback Statute (AKS) and Stark Law.
The largest of these recoveries related to a $490 million suit where a federal court in Minnesota ordered Precision Lens and its owner Paul Ehlen to pay the $490 million following a jury’s finding that they violated the False Claims Act and Anti-Kickback Statute by paying kickbacks to ophthalmic surgeons to encourage their use of the company’s products in cataract surgeries reimbursed by Medicare. Approximately $131 million of that amount was for damages (trebled under the statute), with the remaining $359 million from statutory penalties.
Becker’s Healthcare Review recently summarized a few of the other large 2023 cases that resulted in recoveries by the Justice Department from hospitals or health systems.
These included:
1. December 2023, Indianapolis-based Community Health agreed to pay $345 million to resolve a violation relating to Stark Law.
2. October 2023, Oakbrook Terrace, Illinois-based Cardiac Imaging and its CEO agreed to pay more than $85 million to settle allegations of excessive payments to referring cardiologists to supervise PET scans.
3. March 2023, Saginaw, Michigan-based Covenant Healthcare System and two physicians paid more than $69 million to resolve Stark Law-related claims.
Criminal penalties including jail terms, as well as administrative sanctions such as fines and exclusions from participation in federal healthcare programs can all result from violations of the AKS. Under the CMPL (Civil Monetary Penalties Law), physicians who pay or accept kickbacks also face penalties of up to $50,000 per kickback plus three times the amount of the remuneration.
It is imperative that hospitals, systems and health care providers are aware of these regulations and the financial impacts their non-compliance within AKS and the Stark Law could have on them personally, as well as their practices, hospitals, or health systems.
Ronnen Isakov is Managing Director Advisory Service of Medic Management Group. His background includes extensive work in areas including business advisory, valuation, network optimization, transaction support, and project management.