Vanguard Health Systems, which is based in Nashville, Tennessee, is accused of committing a number of violations under both the False Claims Act and the Stark Law, including illegal billing practices, offering unlawful kickbacks, and failing to properly supervise cardiac rehabilitation therapy at one of its facilities. Accordingly, the defendant has agreed to pay $2.9 million to settle the allegations, but has not admitted liability or wrongdoing in any regard.
The case was exposed [1. Department of Justice Press Release, “Vanguard Health Systems, Inc. Agrees To Pay $2.9 Million To Settle False Claims Act Allegations.” June 15, 2015. http://www.justice.gov/usao-mdtn/pr/vanguard-health-systems-inc-agrees-pay-29-million-settle-false-claims-act-allegations] due to the courageous actions of a former Vanguard employee who filed a civil lawsuit under the federal False Claims Act as a qui tam “relator.” While the government opted not to intervene in this particular case, the plaintiff was able to continue her cause of action and will receive a $500,000 reward as a result.
Details of the accusations against Vanguard Health Systems
In 2013, the Vanguard Health Systems was bought by Texas-based Tenet Healthcare – another familiar face in the healthcare fraud realm. However, prior to this acquisition, Vanguard is accused of engaging in a wide variety of fraudulent practices [2. Settlement agreement: http://www.kslaw.com/Library/publication/HH111411_Settlement.pdf] to the detriment of the Medicare and Medicaid trust funds.
First, and perhaps most distressing, Vanguard is accused of allowing unsupervised therapists to offer post-operative cardiac rehabilitation services to patients without the oversight of a physician or cardiologist. Cardiac rehabilitation often involves both education and exercise components for patients who have experienced a heart attack or related episode. Government healthcare programs are permitted to reimburse patients for the costs of this care, provided the therapists are properly supervised by a physician familiar with the patient’s plan of care. Here, Vanguard is alleged to have allowed therapists to treat patients, while simultaneously allowing the supposed supervising cardiologist to seek reimbursement for time spent overseeing the programs when, in fact, there was no doctor present.
Secondly, the defendant is alleged to have offered salaries, bonuses, and incentives to physicians within the network that were well above fair market value for practitioner compensation. Under both the False Claims Act and the related Stark Law, healthcare providers are prohibited from engaging in any arrangement or partnership for financial gain that involves Medicare, Medicaid, or TRICARE patients. The policy behind this prohibition is that doctors should be making referrals based on the individual patient’s needs, and not because of an expectation of financial gain.
Lastly, Vanguard is accused of entering codes for Evaluation and Management (E&M) [4. Centers for Medicare & Medicaid Services Evaluation and Management Services Guide, http://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/eval_mgmt_serv_guide-ICN006764.pdf] visits in excess of that which is allowed under Medicare and Medicaid rules. Engaging in a practice known as “upcoding,” Vanguard is alleged to have entered codes to increase profitability that did not match the actual level or extent of service offered to the patient. An example of upcoding not necessarily implicated in this case involves charging for a visit with a physician when, in fact, the patient was treated by a nurse practitioner.
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