HHS' inspector general's office is investigating hospital "givebacks" of physician practices, MODERN HEALTHCARE has learned.
At issue is whether the low prices-or, in some cases, no price-physicians are paying hospitals to get their practices back are illegal kickbacks designed to encourage the physicians to continue to refer their patients to the hospitals.
The kickback provisions of the Medicare and Medicaid fraud-and-abuse statutes bar any form of remuneration to induce the referral of Medicare or Medicaid patients.
"Any time you have a business transaction between physicians and something like a hospital that stands to benefit from referrals from that physician, the potential for a kickback concern exists," said Alwyn Cassil, a spokeswoman for the inspector general.
Cassil would neither confirm nor deny the existence of such a probe. However, several officials, who requested anonymity, confirmed that a physician practice giveback investigation is under way.
The inquiry brings full circle the agency's concern about hospitals' running physician practices. In 1992, the agency released a letter from D. McCarty Thornton, chief counsel to HHS' inspector general, to then-Internal Revenue Service official T.J. Sullivan, saying hospitals that were paying inflated prices for physician practices may be running afoul of the kickback law. That practice could be construed as an illegal quid pro quo for referrals, Thornton said.
At that time, buying practices was a craze among hospitals looking for ways to capture physicians and their patients. Since then, many hospitals and healthcare systems have been losing big money on their practices and have been reselling them-or giving them back-to the physicians. The 1998 inspector general's work plan looked at the financial impact of hospital-owned physician practices on Medicare but did not address kickbacks.
James Unland, president of Health Capital Group of Chicago, a healthcare consulting firm, said even well-intentioned "uncoupling" is fraught with legal complications.
Unland said many hospitals haven't done their homework before dumping those practices. Practices can be unprofitable by a hospital's definition but still have value, he said.