Intermountain Healthcare pays feds $25.5M over alleged improper financial relationships with doctors

Published: Wednesday, April 3 2013 2:50 p.m. MDT

Intermountain Healthcare has agreed to pay the federal government $25.5 million to settle claims that it violated laws regarding the financial relationships hospitals may have with doctors.

Tom Smart, Deseret News

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SALT LAKE CITY — Intermountain Healthcare has agreed to pay the federal government $25.5 million to settle claims that it violated laws regarding the financial relationships hospitals may have with doctors.

Federal regulators alleged Intermountain Healthcare entered into employment agreements under which physicians received bonuses that improperly took into account the value of some of their patient referrals.

In addition, office leases and compensation arrangements between Intermountain and referring physicians violated other requirements of a federal law regarding Medicare known as the Stark statute. The law restricts the financial relationships that hospitals may have with doctors who refer patients to them.

Improper relationships between health care providers and their referral sources can corrupt a doctor's judgment about the patient's true health care needs, said Stuart F. Delery, acting assistant attorney general for the Department of Justice's civil division.

“In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable for patients," Delery said in a statement.

Brent Wallace, Intermountain's chief medical officer, said the company should have kept a closer eye on the situation and regrets that its controls at the time were inadequate.

"Obviously, we're embarrassed. This is a big settlement. It's one that we would never plan to say we'd like to have this happen. It's very embarrassing," he said.

Wallace said he's not aware of Intermountain ever having a settlement of that size before.

Intermountain sees no evidence that doctors ordered inappropriate studies or performed inappropriate procedures, he said. Quality of care was not compromised, and patients' costs were not adversely affected, Wallace said.

"People should expect that hospitals and doctors care more for their patients than their bottom line profits,” said Gerald Roy, special agent in charge for the Office of Inspector General of the U.S. Department of Health and Human Services region including Utah.

A nonprofit health care system that enjoys tax-exempt status, Intermountain's income and expenses totaled $4.7 billion, according to its 2011 annual report.

Intermountain discovered it might be out of compliance with the Stark law and regulations regarding physician relationships through its regular review process and voluntarily disclosed it to the U.S. Attorney for Utah in 2009, Wallace said.

The biggest problem occurred at a small hospital in southern Idaho where doctors for several years paid Intermountain for office space on a lease that had expired, he said.

Intermountain has improved its controls with a centralized process to track all physician agreements, Wallace said. It added staff, implemented advanced tracking software, created oversight councils and provided additional training to ensure compliance.

"We have learned from this experience and are a better company as a result," he said.

Much of the $25.5 million settlement amount resulted from having to repay the government for services doctors ordered for Medicare patients during the time Intermountain was out of compliance with the Stark law, Wallace said.

E-mail: romboy@deseretnews.com, Twitter: dennisromboy

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