KPMD: Claiming EHR Incentives While the Hospital Was Closing

KPMD received nearly $1.7 million in EHR incentive payments after falsely attesting that a closing hospital’s emergency room qualified for them, according to the Justice Department’s account of the criminal case. The software company had taken an assignment of the hospital’s government incentive payments, then made the false statements that brought the money in.

How the Hospital’s Incentive Payments Reached KPMD

The software contract gave KPMD a direct financial interest in the hospital’s eligibility. According to the Justice Department’s account of court documents, the Anaheim, California technology company contracted with Southwest Regional Medical Center in Georgetown, Ohio, in September 2011. KPMD agreed to implement its electronic health records software. In exchange, the hospital assigned its government incentive payments to the company.

That arrangement put the government payment inside the software deal. The money intended to encourage a hospital to use certified electronic records would flow to the vendor implementing the system.

KPMD’s CEO later purchased the hospital. The Justice Department then describes KPMD making false attestations to the federal and state medical incentive programs that Southwest Regional’s emergency room met the criteria for payments. The hospital was in the process of closing down. The resulting payments went by wire to KPMD.

We see a program intended to support electronic health records paying a software company on false assurances about a hospital that was shutting down. The same company had the right to receive the incentives and made the statement that unlocked them. Closing doors. Incoming wires.

What Is the EHR Incentive Program?

The EHR incentive program paid eligible hospitals and professionals to adopt and use certified electronic health records technology. The HITECH Act, part of the 2009 Recovery Act, created Medicare and Medicaid incentives. Ohio implemented a hospital incentive consistent with the federal program, which is why KPMD’s false attestations reached both federal and state programs.

The payment depended on representations about eligibility and use. In a June 2017 audit of Medicare incentives paid to eligible professionals, the Department of Health and Human Services Office of Inspector General described providers reporting their own data through an online system run by the Centers for Medicare & Medicaid Services. The Inspector General found that CMS performed minimal documentation reviews, leaving those self-attestations vulnerable to abuse.

Buying a System and Using It Well

Financial incentives can make an installation count look more impressive than the underlying use. The 2022 Vassar College senior thesis A Panacea or a Problem? Electronic Health Records and the Complicated Politics of Its Stakeholder Network argues that incentives drove adoption while encouraging providers to pursue the payment rather than the system’s intrinsic value. It draws a distinction between high adoption rates and effective integration into care:

A Panacea or a Problem? Electronic Health Records and the Complicated Politics of Its Stakeholder Network, Vassar College, 2022

KPMD’s criminal case supplies a concrete transaction to examine: the vendor’s compensation came through the hospital’s incentive stream, and the vendor falsely attested to the emergency room’s eligibility.

What KPMD’s Guilty Plea Shows

KPMD pleaded guilty to two counts of filing a false claim, according to the Justice Department’s announcement. The U.S. Attorney for the Southern District of Ohio and the Special Agent in Charge of the United States Health and Human Services Office of Inspector General announced the case’s outcome.

The Justice Department alleged that Practice Fusion misrepresented its software’s capabilities and caused customers to submit false federal incentive claims, while KPMD made the false attestations and directly received the hospital’s assigned payments.

A Hospital Officer Made the Statement at Shelby Regional

The closest parallel is a false hospital attestation made by a chief financial officer. In its account of the Shelby Regional criminal case, the Justice Department described the CFO’s guilty plea for falsely telling Medicare that the hospital was a meaningful user of electronic health records. Shelby Regional Medical Center, in Center, Texas, did not meet the requirements, but received an incentive payment after the statement.

At Shelby Regional, the hospital’s CFO made the false statement and the hospital received the payment. At Southwest Regional, KPMD made the false attestations and received the assigned payments.

What an EHR Insider Would Recognize

The revealing connection in KPMD is between the software agreement, the right to receive incentives, the attestation and the hospital’s operating condition. We examine those relationships with the healthcare insider who knows what happened inside the business. The contract explains why the payment reached the vendor. Hospital operations explain why the eligibility statement was false.

That payment question also distinguishes this subject from EHR billing fraud, where clinical documentation can manufacture apparent support for a higher medical bill. Here, the representation concerned eligibility for an incentive payment. Knowing which representation produced the money helps us identify the records and decisions that matter to the case.

For a civil whistleblower case, we connect that operational knowledge to the government payment and the people who understood the discrepancy. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Hospital Was Doing

If you know who claimed the EHR incentives, who received them and why the hospital failed to qualify, speak with our whistleblower experts about the transaction. We build your case around the software agreement, the payment and the decisions you witnessed, and bring in EHR fraud whistleblower lawyers who understand hospital incentive claims. We stay beside you as your partners throughout the case.