Post Acute Medical: Physician Contracts and Reciprocal Home Health Referrals

In the Post Acute Medical home health kickback settlement, the hospital operator agreed to pay $13,168,000 to resolve allegations that physician payments and reciprocal referrals generated false Medicare and Medicaid claims. For someone who handled physician agreements, hospital referrals or home health intake, the case turns on what the hospital expected to receive for the money it paid and the patients it sent elsewhere.

The Justice Department announced the settlement on August 15, 2018. It described Post Acute Medical as a Pennsylvania-based operator of long-term care and rehabilitation hospitals across the country. A whistleblower filed the qui tam case that led to the settlement. The hospital company sat on both sides of the alleged referral exchange: paying physicians who could send patients in, and directing patients to outside providers expected to send business back.

What the Physician Contracts Allegedly Bought

Post Acute Medical’s physician-services contracts allegedly paid for referrals to its hospitals under the appearance of medical or administrative work. The company had entered into physician-services contracts since its founding in 2006. The government said the contracts ostensibly retained physicians as medical directors or in other administrative or medical roles, while the payments were intended to induce those physicians to refer patients to Post Acute Medical facilities.

The government’s allegation concerned what the company intended to buy. We examine the stated duties, the work behind the payment and the business that followed.

For a physician-practice employee, the useful knowledge may concern the work expected under the agreement. For someone in hospital contracting or finance, it may concern how the payment was approved and what the decision-makers expected from the relationship.

The contract question also appears in sham marketing arrangements used to conceal referral payments. Here, the government’s focus was on physicians retained by a hospital operator.

How the Reciprocal Home Health Referrals Worked

Post Acute Medical allegedly sent patients to unaffiliated healthcare providers, including home health companies, with an understanding that those providers would refer other patients back to Post Acute Medical’s facilities. An agency employee who understood that expectation could see something a referral form by itself would never explain.

We see the absurdity in that alleged bargain: the patient becomes something a provider expects another business to return in kind. A referral decision is supposed to serve the person needing care. The government alleged an exchange serving the providers’ business interests. Patients as return business.

The ordinary discharge workflow explains where that pressure could enter. Hospital discharge planners evaluate patients’ needs after hospitalization, available services and access with the patient and caregivers. The discharge process includes presenting participating home health agencies serving the patient’s area that request inclusion and documenting that the list was presented. Patient choice belongs in that process.

The home health certification chain then connects the referral with the encounter, eligibility certification, assessment, plan of care, visits and claim. Different participants can hold different parts of those records. Someone handling intake may know where the patient came from, while someone overseeing provider relationships may know why that destination was favored. Bringing those accounts together is how we examine the business arrangement behind the clinical handoff.

What the Settlement Covered

The settlement resolved allegations that Post Acute Medical knowingly submitted claims to Medicare and certain Medicaid programs resulting from improper physician relationships and kickbacks. The Anti-Kickback Statute and the Physician Self-Referral Law, also called the Stark Law, protect medical decisions from improper financial incentives.

The resolution also covered allegations under the Texas and Louisiana false claims statutes, with both states sharing in the settlement. The Justice Department’s Civil Division, the U.S. Attorney’s Offices for the Middle District of Pennsylvania and Southern District of Texas, and the Department of Health and Human Services Office of Inspector General handled the government’s matter.

An Independent Review of the Arrangements

Post Acute Medical also entered a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. It included an arrangements review conducted by an Independent Review Organization. For an insider familiar with physician contracts or relationships between providers, the business arrangement itself is part of the story worth discussing with us.

The Agency Side of a Physician Relationship

On the agency side, a whistleblower complaint alleged that Amedisys hired physicians for unspecified or unperformed services to induce referrals, a parallel to the alleged referral purpose of Post Acute Medical’s physician contracts. Both accounts connect the physician’s compensation to the patients the business sought through referrals.

What Evidence Is Needed to Prove Fraud?

Evidence in a referral case connects the arrangement, the benefit, the patient referrals and the resulting government claims. We work through those connections with the insider who knows how the relationship operated.

An agreement may sit with contracting, payment information with finance, referral information with intake, and clinical support with the people treating the patient. You can start that conversation with the part you know. A contract employee’s understanding of the payment or an intake employee’s account of the expected return referral can give us a place to begin.

How Much Does Medicare Fraud Whistleblower Pay?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In Post Acute Medical’s case, the Justice Department said the whistleblower would receive approximately $2.35 million as a share of the federal government’s recovery.

You Know What the Referral Was Worth

If a physician payment or a hospital’s home health referral came with an expectation of patients in return, speak with one of our Whistleblower Experts about that arrangement. We build your strongest healthcare whistleblower case around the decisions you saw, bring in healthcare fraud whistleblower lawyers who understand hospital and home health referral arrangements, and stay beside you through the case.