- TeamHealth will pay $60 million to settle allegations that the healthcare company it had acquired, IPC Healthcare, overcharged the CMS and violated the False Claims Act, the Department of Justice announced.
- IPC allegedly billed Medicare, Medicaid, the Defense Health Agency and the Federal Employees Health Benefits Program for "higher and more expensive levels of medical service than were actually performed."
- The settlement comes on the same day that private equity firm Blackstone Group completed its $6.1 billion acquisition of the physician staffing behemoth. TeamHealth became a privately held company as a result.
The lawsuit against IPC was filed by former employee Dr. Bijan Oughatiyan, who will receive about $11.4 million under the whistleblower provisions of the False Claims Act. The government argued that "IPC knowingly and systematically encouraged false billings by its hospitalists." Jay Hancock, a Kaiser Health News senior correspondent, reacted to the alleged scheme on Twitter:
Nice. Company paid big bonuses to its hospitalist docs to inflate hospital bills, shamed them if they lagged. https://t.co/PLS9sLEVq2— Jay Hancock (@jayhancock1) February 6, 2017
The Medicare fee-for-service (FFS) billing error rate has remained above the legal threshold of 10% for four consecutive years and 2016 improper payments resulted in a $41.1 billion loss, a CMS report released earlier this month shows. "Medicare loses more money over billing than any other program government-wide," the report stated. The program loses tens of billions of dollars on an annual basis "despite grave warnings from healthcare officials that the Medicare Trust Fund will be insolvent by 2028 – just 11 years from now," it added.
In November 2016, the CMS finalized new contracts for the controversial Medicare FFS Recovery Audit Contractors (RACs) program, which pays contractors to identify and recover overpayments. The awardees were Performant Recovery, Cotiviti, and HMS Federal Solutions. “With more than $166 billion erroneously paid out to providers over the past four years, it’s clear we need much more auditing oversight, not less, to preserve the Medicare program and protect the taxpayer dollars allocated to providing our nation’s seniors with important healthcare services," Kristin Walter, spokesperson for the Council for Medicare Integrity said in a statement.
TeamHealth's settlement is the latest in a series of False Claims Act cases that have been resolved less than two months into the year. In January, the DOJ announced that MedStar Ambulance will pay $12.7 million to settle allegations that it had knowingly submitted false Medicare claims, and that Walgreens faces a $50 million settlement over allegations it encouraged government beneficiaries to use its pharmacies by offering them financial incentives.
Blackstone's plans to acquire TeamHealth were announced in November 2016 after the hospital service provider's 2015 acquisition of IPC caused its debt to total $2.4 billion - up from $737 million prior to the transaction, Modern Healthcare reported. As part of the new agreement, Blackstone will purchase all of TeamHealth's outstanding shares for $43.50 for each share in cash.