A hospital system in Memphis, Tennessee, participated in an elaborate health care fraud scheme that paid outpatient cancer centers rebates for referring patients to its hospitals and received hundreds of millions of dollars in Medicare reimbursements, U.S. Department of Justice Alleged in court documents In Midtown Tennessee on Monday.
U.S. government files lawsuit Methodist Le Bonheur Healthcare and Methodist Healthcare Memphis Hospitals, alleging that the hospital system paid multimillion-dollar kickbacks to West Clinic, PC, a cancer center with sites in the Southeast, According to a Justice Department press release. Officials were tipped off by the former dean of Methodist University Hospital and the former executive dean and vice president of the University of Tennessee Health Sciences Center, who served on the hospital’s board.
“The Methodist Church has purchased all outpatient locations in the largest oncology clinic in the Memphis area,” the release said. At the time, the Methodist Church did not have its own cancer treatment center.
The government charged the hospital system with violating the False Claims Act and the Anti-Kickback Act in arrangements between January 1, 2012 and December 31, 2018.
The program was created to allow physicians hired by West to receive inpatient and outpatient services to treat cancer patients at Methodist hospitals, while West employees will be responsible for the management of the Methodist Adult Oncology Service Line. As a result, Methodists received more Medicare reimbursements related to cancer care, according to the U.S. Department of Justice.
“By purchasing West’s outpatient locations, Methodist was able to bill Medicare for not only the facility and specialty components of outpatient treatment, but also the chemotherapy and other drugs provided, and Methodist could recoup an amazing amount of money through the 340B drug discount program. The cost discounts generated a profit of $50 million for the Methodist Church in just one year,” according to the press release.
The 340B plan allows covered hospitals to purchase drugs, including chemotherapy drugs, at discounted prices, typically 30% to 50% below the drug list price.
According to the press release, the two sides set out to “achieve a ‘cancer center without walls'”. But a formal agreement was never reached, which would be against the rules.
according to Complaints filed this weekWest also needs cash inflows to “protect or increase physician compensation because insurers are reducing reimbursement and it is expanding at considerable expense.”
In order to provide West with a substantial amount of cash, the Methodist Church invested $7 million in ACORN Research, an entity in which West and its medical directors and shareholders have a financial interest. This includes a $3.5 million debt owed to West. According to the press release, the rebates were paid separately over a period of seven years and disguised as payments and double payments to West.
“Methodist seeks compensation for tainted claims filed or caused to be filed with Medicare within seven years of the transaction, including illegally obtained patient referrals,” U.S. Attorney Mark H. Wildasin said in a statement.
Methodist Hospital did not immediately respond to a request for comment.
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