Regional News/West: Two Montana hospitals pay $4 million

Two Montana hospitals sponsored by the Sisters of Charity of Leavenworth Health System are paying federal authorities $4 million after an internal review turned up more than 100 potentially illegal arrangements for paying doctors.

The two hospitals—206-bed St. Vincent Healthcare in Billings and 25-bed Holy Rosary Healthcare in Miles City—reported the potential problems directly to the U.S. attorney's office in Montana and negotiated settlements of alleged violations of the Stark law and False Claims Act.

“We had taken an internal review of our processes and systems up there, and that's when we disclosed this,” said Cheston Turbyfill, director of public affairs for Sisters of Charity of Leavenworth Health System, which has corporate offices in Denver.

The settlement says the hospitals “do not contest” Stark law liability, but the agreement was not an admission of wrongdoing under the False Claims Act.

The internal reviews turned up the names of 86 doctors employed directly by the hospitals who were paid in part on the basis of how much Medicare revenue they generated for the hospital between 2003 and 2010, which is prohibited by the Stark law.

“There are limitations to how the compensation can be paid to physicians,” said Scott Taebel, a Milwaukee attorney for Hall, Render, Killian, Heath & Lyman who was not involved in the case. “Even though they work for the hospitals, the compensation can't be tied to the volume or value of those referrals.”

In addition, the hospitals' audits turned up 53 financial arrangements with independent physician groups that potentially violated the Stark law by compensating them for referring patients to the hospitals, the U.S. Justice Department said.

“It is important to note that patient care was not compromised by our physician contracting arrangements,” Jason Barker, St. Vincent Healthcare president and CEO, said in a statement.

“Further, no patient or governmental entity was billed for any service that was not provided and the contracting issues did not result in overutilization of these services,” he said.

Follow Joe Carlson on Twitter: @MHJCarlson