Another False Claims Act Complaint Against Hospitalists
Recently, the government filed another False Claims Act complaint against hospitalists in United States ex rel Bijan Oughatiyan v. IPC Hospitalist Co., 1:09-CV-05418 (N.D. Ill. June 16, 2014) (DE-48). IPC Hospitalist Company, through IPC Hospitalist Management Company and its subsidiaries, employs more than 2500 hospitalists across the U.S. across 28 states.
The complaint alleges that IPC Hospitalist Company, IPC Hospitalist Management Co., and their affiliates and subsidiaries, engaged in a systemic pattern of submitting records to IPC’s billing department for the most expensive services claiming higher and more expensive levels of medical services than were actually performed, i.e. “upcoding,” for hospitalist services. According to the complaint, IPC uses an online portal and virtual system to continuously monitor its financial and clinical performance. In addition, IPC audits the billing information entered by hospitalists for completeness and accuracy.
Of import, the complaint also analyzes IPC’s compensation structure which includes a “physician incentive plan.” In addition to receiving a base salary and benefits, IPC hospitalists receive bonuses pursuant to IPC’s physician incentive plan that are based upon the amount billed by the hospitalist. In fact, IPC calculates the total amount billed by each hospitalist on a monthly basis, and subtracts from that amount the cost of the hospitalist’s salary and benefits. Of the remainder, IPC keeps 30 percent and pays the hospitalist 70 percent. Thus, according to the complaint, the more IPC hospitalists bill, the more IPC takes home and the easier it is for IPC to meet their investors’ earnings and revenue expectations.
Further, IPC ranks hospitalists against one another based on their individual billing patters, IPC routinely discussed and compared hospitalist billing patterns at pod meetings, and IPC hospitalists who consistently use lower or moderate billing codes are pressured by IPC trainers to change that practice.
For these reasons, the government alleges that corporate management knowingly pressured hospitalist employees to engage in the pattern of upcoding and to maximize their billings through the physician incentive plan and that was part of a systemic scheme to maximize billings and submit upcoded claims for payments to the U.S.
In light of the recent noteworthy multi-million dollar settlements with Halifax and Tuomey involving physician incentive compensation arrangements between hospitals and physicians, the complaint against IPC Hospitalist is yet another reminder that the government will closely scrutinize these relationships and compensation arrangements although the government’s theory of False Claims Act liability in the IPC Hospitalist complaint is more straightforward than the theories of liability employed in Halifax or Tuomey because it highlights a corporate culture that essentially aided and abetted upcoding.
Nonetheless,the emphasis in IPC on the “physician incentive plan” demonstrates that arrangements between physicians, physician-management companies, and hospitals should be properly evaluated to ensure that any bonuses are based on quality or performance metrics and are not entirely based on the potential to influence or induce referrals to the hospital. Indeed, even if a physician is an employee, the protections provided to physician-employees are not absolute and must comply with applicable self-referral and anti-kickback laws.
Author: Andrew Feldman
Mr. Feldman represents professionals, corporations, health care providers, and health care marketers in government investigations and prosecutions throughout the United States. Mr. Feldman works tirelessly for his clients from the time an investigation begins until the time a jury renders a verdict.
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