HELENA — Two Montana hospitals have agreed to pay $3.95 million to settle allegations that they gave doctors incentive payments for patient referrals, then received Medicare reimbursements for those payments, federal prosecutors said Wednesday.
The settlement with the U.S. Department of Justice involves payments from 2003 to 2010 by St. Vincent Healthcare in Billings and Holy Rosary Healthcare in Miles City, which are operated by Denver-based Sisters of Charity Leavenworth Health System.
Eighty-six doctors employed by the hospitals over that period received incentive compensation based in part on the volume or value of referrals those physicians made to the hospitals, the settlement said. The hospitals then sought and received Medicare reimbursements for that incentive pay.
Federal law prohibits hospitals from billing Medicare for most services referred by doctors they have a financial relationship with, though there are a few exceptions. The incentive pay arrangement by St. Vincent and Holy Rosary is not allowed under the law, Justice Department officials said in a statement.
The hospitals had similar incentive pay arrangements with 42 independent physicians or physician groups, which the settlement agreement said potentially violated the law.
The hospitals reported the discrepancies to the U.S. attorney's office in 2009.
St. Vincent Healthcare CEO Jason Barker said the hospitals made the disclosure after an internal compliance review and have cooperated with the investigation.
"It is important to note that patient care was not compromised by our physician contracting arrangements," Barker said in a statement. "Further, no patient or governmental entity was billed for any service that was not provided and the contracting issues did not result in overutilization of these services."
Barker said the hospitals are committed to complying with all health care laws and avoiding future physician contracting mistakes.
"We have enhanced our focus on compliance efforts by allocating more resources towards our compliance goals and implementing tighter contracting processes," Barker said.
Justice Department and hospital officials declined to provide further details of how the incentive pay program worked.
The settlement, signed Tuesday, calls for the hospitals to pay $3.95 million plus 1.38 percent annual interest from Nov. 8 until payment is made. Because they are sister hospitals, the fines are not divided between the facilities.
The agreement also says that because the hospitals disclosed the problems themselves, federal authorities have agreed to not seek any action to exclude them from Medicare, Medicaid or any other federal health care programs.