Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

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Aurora Health Care Pays $12M to Settle Healthcare Fraud Claims

The Wisconsin-based health system settled healthcare fraud and abuse allegations stemming from compensation arrangements with two physicians.

Healthcare fraud and abuse

Source: Thinkstock

By Jacqueline LaPointe

- An integrated health system that services patients in Wisconsin, Illinois, and Michigan recently agreed to pay $12 million to federal and state governments to settle healthcare fraud allegations.

According to an announcement from the US Attorney’s Office in the eastern district of Wisconsin, Aurora Health Care settled claims that the health system violated the Stark Law by entering compensation arrangements with two physicians that exceeded fair market value.

The Stark Law is a set of federal healthcare fraud and abuse laws that prohibit physician-self referral. In other words, the Stark Law forbids physicians from referring patients for designated healthcare services paid for by public healthcare programs to any entity with whom they have a financial relationship. Financial relationships include direct or indirect ownership or investment interest by the referring physician, as well as any financial interest held by any of the physician’s immediate family members, law firm Barrett and Singal explain.

The US Attorney’s Office added in the announcement that “such financial relationships can compromise the physicians’ professional judgment.”

The US federal government and the State of Wisconsin alleged that Aurora did not comply with the Stark Law during certain periods from 2008 to 2012. During those periods, the health system reportedly entered compensation arrangements that “were not commercially reasonable and because the compensation exceeded the fair market value of the physicians’ services, took into account the physicians’ anticipated referrals, and was not for identifiable services.”

Aurora is a non-profit health system employing 33,000 caregivers, including 1,800 physicians, across 15 hospitals and more than 150 clinics across three states. The health system brought in about $5.1 billion in annual revenue.

The health system also potentially violated the False Claims Act, the US Attorney’s Office stated.

The False Claims Act prohibits providers from knowingly filing claims for payments that violate Medicare’s or Medicaid’s rules. For example, submitting claims for services that violated the Stark Law are considered false claims under the act.

Aurora allegedly submitted claims for the physicians with whom the health system had an improper financial relationship. Therefore, the health system also violated the False Claims Act, the US Attorney’s Office reported.

“Each year, Federal and State governments spend over a trillion dollars on healthcare programs like Medicare and Medicaid,” said United States Attorney Krueger. “This settlement reflects the US Department of Justice’s commitment to using all available legal tools to ensure those healthcare dollars are spent wisely.”    

The Justice Department and other federal agencies are committed to cracking down on healthcare fraud and abuse. For example, HHS alongside the Justice Department and the Office of the Inspector General charged over 600 individuals in 2018 with healthcare fraud and abuse crimes. In the largest healthcare fraud takedown to date, the agencies caught individuals involved in schemes that defrauded Medicare and Medicaid of over $2 billion.

HHS and the Justice Department also reported in April 2018 that their agencies recovered about $2.6 billion in taxpayers dollars in the 2017 fiscal year because of its healthcare fraud and abuse efforts. The agencies recouped billions in dollars using legal action to take down criminals and data analytics to identify improper payments.

Healthcare providers should anticipate the agencies to continue their crackdown on healthcare fraud and abuse as the rate of healthcare costs continue to rise. Healthcare costs increased 3.9 percent in 2017, accounting for $3.5 trillion that year, CMS actuaries recently reported.

Reducing healthcare costs is a top priority for federal and state governments. And ensuring government payers properly reimburse providers for services rendered is key to lowering unnecessary healthcare spending.


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