Two reasons to avoid assembly line care

December 9, 2019

Takeaways from a recent False Claims Act Settlement and a CMS Final Rule.

Earlier this month, the U.S. Department of Justice (“DOJ”) announced a $12.3 settlement with Northwell Health Inc. and its affiliate, Lenox Hill Hospital, for violations of the False Claims Act (“FCA”) for the submission of claims for services that were only partially performed or supervised by attending surgeons. U.S. ex rel. Markelson v. Lenox Hill Hospital et al., Case No. 1:17-cv-07986 (S.D.N.Y. 2019).                                

At issue in this case was the allegations that a former urology department chair promoted the illegal practice of allowing medical residents to perform surgical procedures and schedule multiple surgeries simultaneously when it would be impossible for an attending to oversee them, unless he/she defied the laws of quantum physics. As the U.S. Attorney for the Southern District of New York stated, “[h]ospitals cannot pay surgeons for their referrals, and they cannot run their operating rooms like assembly lines.” And, “[d]efendants prioritized maximizing their own revenues over regulatory compliance.”

Unfortunately, as other FCA case settlements demonstrate, profits often usurp patient care and regulatory compliance. But, how do these types of settlements relate to a recent CMS Final Rule, which became effective November 4, 2019 and requires that Medicare, Medicaid and Children’s Health Insurance Program (CHIP) providers and suppliers disclose affiliations with other providers and suppliers?

Providers and suppliers alike have a duty to disclose the following:

Current or previous direct or indirect affiliation with a provider or supplier that has uncollected debt; has been or is subject to a payment suspension under a federal health care program; has been excluded from Medicare, Medicaid, or CHIP; or has had its Medicare, Medicaid, or CHIP billing privileges denied or revoked (all of which are hereafter occasionally referred to as ‘disclosable events’), and permits the Secretary to deny enrollment based on such an affiliation when the Secretary determines that it poses an undue risk of fraud, waste, or abuse.

The significance of the potential consequences for healthcare fraud cannot be understated. Now, there is an additional disclosure requirement, which providers cannot overlook. In light of the recent enforcement actions, including Lenox Hill, providers should assess their internal policies, procedures and practices, as well as evaluating the suppliers and providers with whom they currently contract. Failing to do so can lead to unintended consequences down the line.

Rachel V. Rose, JD, MBA, advises clients on compliance and transactions in healthcare, cybersecurity, corporate and securities law, while representing plaintiffs in False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.