- Sutter Health has agreed to pay $30 million to settle claims the system violated anti-kickback laws by paying a group of cardiovascular surgeons for referring patients to Sutter between 2012 and 2014, the Department of Justice said Friday. (The DOJ noted these are allegations only with no determination of liability).
- Separately, Sutter agreed to pay an additional $15 million to resolve allegations related to other conduct it self-reported to authorities, which included violating anti-kickback laws and overbilling Medicare for services performed at some of its surgery centers.
- In the latest case, the allegations were brought to light in a whistleblower lawsuit filed in 2014 by an employee who served as a compliance officer for Sutter Medical Center in Sacramento. So far this year, Sutter has agreed to pay $75 million to settle various allegations of overbilling and improper kickbacks to physicians.
The federal kickback laws were designed to deter physicians from referring patients to other services or places that would financially benefit them because of the referral. In October alone, the DOJ's Civil Division said various healthcare organizations agreed to pay nearly $63 million to settle kickback claims.
At the same time, federal regulators want to relax the nation's anti-kickback laws in an effort to remove barriers they say inhibit innovative payment and care arrangements as the industry moves toward value-based payment arrangements. In October, HHS unveiled proposals that would usher in sweeping change to the anti-kickback statute and the Stark Law.
In the Sutter case, whistleblower Laurie Hanvey alleged Sutter agreed to financial arrangements with physicians to incentivize them to refer patients to Sutter. The arrangements allegedly included kickbacks, excessive compensation and Sutter-paid staff, according to Hanvey's original complaint filed in the federal court in the Northern District of California.
Hanvey will receive nearly $6 million for her role.
In the original complaint, Hanvey alleged Sutter provided physician assistants to Sacramento Cardiovascular Surgeons Medical Group for the purpose of encouraging referrals to Sutter for inpatient and outpatient services. Sutter allegedly paid $680,000 annually for four physician assistants.
The group, known as Sac Cardio, has agreed to pay $506,000 to resolve claims related to duplicative bills sent to Medicare for these physician assistants.
In April, Sutter agreed to pay $30 million to settle claims it received overpayments from the Medicare Advantage program. Sutter was accused of inflating the risk scores of some MA beneficiaries to receive higher capitated payments.
"Improper financial arrangements between hospitals and physicians can influence the type and amount of health care that is provided,” Assistant Attorney General Jody Hunt of DOJ's Civil Division said in a statement.