EmCare and Envision: Admission Targets, Physician Bonuses and Hospital Contracts

In the EmCare and Envision admission kickbacks settlement, EmCare agreed to pay $29.8 million over allegations that bonuses and hospital contracts encouraged unnecessary Medicare admissions. The alleged incentives reached both the emergency physician recommending admission and the company supplying that physician. If you saw admission targets tied to compensation or a staffing contract, you may have seen the business decision behind the clinical one.

The Justice Department announced the resolution on December 19, 2017. Its national announcement puts the figure at $29.6 million.

The national announcement also described a separate settlement with Physician’s Alliance and three executives over alleged payments for referrals to Lancaster Regional Medical Center and Heart of Lancaster Medical Center, hospitals owned by Health Management Associates in Pennsylvania. That agreement called for $4 million and a percentage of the proceeds from selling the group’s interest in a joint venture with the hospital chain. Former hospital-chain executives brought that whistleblower case.

Admission Targets Reached the Doctor and the Staffing Company

The government alleged that, from 2008 through 2012, EmCare received payments and other benefits from Health Management Associates to recommend inpatient admission for Medicare patients who should have received outpatient or observation care. EmCare supplied physicians to hospital emergency departments, and Envision Healthcare Corporation was its parent.

The financial reason was plain. According to the district announcement, Medicare paid on average at least three times as much for an inpatient admission as for observation care or an emergency-department visit. The government alleged that the recommendations caused medically unnecessary admissions, so a bedside call became a Medicare bill.

The alleged physician compensation and referral targets operated at different levels. Health Management Associates allegedly made bonus payments to EmCare emergency physicians and tied EmCare’s retention of existing contracts and receipt of new contracts to increased emergency-department admissions.

That is why the contract terms matter as much as the compensation terms. Under the alleged arrangement, the company supplying physicians had its own business reason to favor more admissions. We see the absurdity: a patient’s need for admission competing with the hospital’s revenue target and the contractor’s next deal.

The Whistleblowers Knew the Hospital Relationship

Two physicians and their emergency medicine practice brought the qui tam case against Health Management Associates and EmCare in western North Carolina. Until 2009, their practice had supplied emergency physicians to Lake Norman Regional Medical Center and Davidson Regional Medical Center, the chain’s hospitals in the Charlotte metropolitan area. They knew the relationship between the hospital and the practice from the physician side of the contract.

The settlement also resolved claims in a related case brought by a former EmCare employee in South Carolina. Envision also entered a Corporate Integrity Agreement with the HHS Office of Inspector General as part of the EmCare resolution.

The Hospital’s Revenue Sits Beside the Physician’s Bill

The alleged admission incentives reached beyond the emergency physician’s fee. The hospital could also bill for its resources through a separate institutional claim. CMS’s physician claims manual distinguishes facility and nonfacility rates for physician services. Looking only at the physician’s payment misses the hospital’s side of the transaction.

The Robert Wood Johnson Foundation’s June 2008 research synthesis, Physician Self-Referral and Physician-Owned Specialty Facilities, explains why that separation matters. It describes professional and facility payments as distinct sources of income and explains how payment per admission or per case can encourage greater volume. Its account of the incentive is blunt:

In the EmCare case, the government alleged another way of connecting the hospital’s admission revenue to physician and company interests: bonuses and staffing contracts. For someone working inside that arrangement, the connection may be visible in compensation decisions or contract discussions even when the hospital bill sits elsewhere.

A Contract Can Lose Money and Still Buy Referrals

The whistleblower’s complaint against Covenant Healthcare alleged another reason a hospital might retain physician contracts: the referrals could recover the losses on the contracts themselves. The allegation puts the hospital’s wider financial interest into a single sentence:

That is the contract question an insider can help answer: what business was the hospital buying with the payment? In the EmCare allegations, increased admissions affected the staffing company’s existing and future hospital contracts. In the Covenant complaint, the whistleblower alleged that referral volume explained why the hospital kept loss-making contracts in place. Both accounts direct attention beyond the physician’s pay to the hospital revenue the relationship was expected to produce.

What Evidence Does a Whistleblower Need?

For admission kickback allegations, the useful evidence connects the patient’s admission, the government claim and the financial arrangement behind the recommendation. We examine clinical and billing records alongside the business records that explain who benefited. The EmCare allegations make those connections concrete: an inpatient recommendation, Medicare payment, a physician bonus and a hospital staffing contract.

An emergency physician may know what admission instructions accompanied the clinical work. Someone handling compensation or hospital contracts may know what increased admissions meant for a bonus, renewal or new award. We work with you to connect those perspectives to the actual recommendations and claims, so the case explains how the alleged incentive reached the patient encounter.

How Much of a Settlement Does a Whistleblower Get?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In this case, the Justice Department announced a $6.2 million whistleblower reward for the two physicians and their medical practice together.

You Know What the Admission Target Meant

If you saw hospital admission pressure reach a physician’s bonus or a staffing contract, speak to one of our whistleblower experts about how the admissions were driven. We build the case with you around the clinical facts, the contracts and the government money, and bring in healthcare fraud whistleblower lawyers who understand physician compensation and hospital referrals. We stay beside you as your knowledge of the business becomes the foundation of your strongest whistleblower case.