In 2019, the Department of Justice intervened in a lawsuit filed by Louis Longo, a former employee of Wheeling Hospital, against Wheeling Hospital stemming from allegations related to physician compensation. On September 9th, 2020, the Department of Justice announced a settlement with Wheeling Hospital in the amount of $50 million. This settlement resolved claims resulting from alleged violations of the Stark Law and the Anti-Kickback Statute. The following are allegations that were made in the complaint about the alleged behavior of the hospital:
- “Wheeling Hospital employed and overpaid many of its highest referring physicians”
- “the Chief Operating Officer . . . issued a memorandum evaluating many of the practices with losses and recommending that they maintain these relationships (despite excessive salaries and/or low physician productivity in order to “protect the downstream revenue[.].””
- “Wheeling Hospital paid [an OBGYN] between $1M and $1.27M per year for seven years.” The Complaint alleged that the physicians compensation per wRVU was around “$86 per work RVU”, which would mean approximately 11,600 wRVUs or more. The Complaint also alleged that the practice lost approximately $400,000 per year.
- “Ultimately, the memo concluded and recommended that Defendants should “continue to absorb the practice loss” as they “would not want to endanger the significant downstream revenue that she produces”.”
- Another OBGYN was purported to have a base salary of $650,000, plus 80% of the practice net income. The Complaint alleges this to be “well in excess of the 90th percentile” and based upon production yielded “$78 per work RVU.”
- The Complaint alleged the hospital entered into employment contracts with two radiation oncologists for ten-year terms worth in excess of $1,000,000 annually and a “bonus to be determined by the CEO.”
- A cardiovascular surgeon was alleged to be paid “$120 per work RVU” based upon his production and salary, “had a generous paid-time-off arrangement (twelve weeks off), and a favorable Continuing Medical Education arrangement which had him traveling to (resort) locations of his choice for approximately four more weeks per year.”
- “Furthermore, Wheeling Hospital improperly paid several of its pediatricians more than the 90th percentile of MGMA.”
For the AAPCP, regardless as to whether these allegations are true, the reality is that Members should be aware of best practices in process, data use, and ultimately management of appropriate compensation plans within your organizations. The government continues to scrutinize these areas, so adhering to best practices is a must. Those best practices include:
- Ensuring your organization has a strong governance structure for approval of provider compensation.
- Regularly educating leaders within your organization on the risk associated with provider compensation.
- Decisions related to compensation of providers should be materially divorced from discussions of downstream revenue, including ensuring you or others involved with provider compensation do not have access to such information.
- Concepts of how payments work and what amounts should be paid should be rooted in relevant data, market information, sustainability, and compliance to State and Federal regulations.
For more information on the Department of Justice settlement, please see the following link.
