Mercy Springfield Reaches Settlement with Justice Department

May 18, 2017

Mercy Hospital Springfield and Mercy Clinic Springfield Communities recently agreed to a settlement with the U.S. Department of Justice (DOJ) and the Office of Inspector General of the U.S. Department of Health & Human Services (OIG) to resolve a lawsuit related to physician compensation.

Specifically, the lawsuit involves how physicians were paid for their work in the Mercy Hospital Infusion Center between 2009 and 2014. The physicians who worked in the infusion center did nothing wrong, and all patients received services that were medically necessary and were billed appropriately for the care they received. The same high standards of care were in place both before and after the infusion center changed from being clinic-based to hospital-based.

The settlement amount, which was based on a portion of the infusion center’s revenue during that five-year period, is $34 million. Mercy has been in discussions with the DOJ on this matter for many months and was able to plan for this expense and set aside the necessary funds for this settlement during the last fiscal year, so that it will not have an impact on current fiscal year finances and operations.

As part of the settlement, Mercy Hospital Springfield and Mercy Clinic Springfield Communities also signed a Corporate Integrity Agreement with the OIG. This five-year agreement requires Mercy to conduct enhanced training and education, perform regular internal reviews and policy and procedure updates, and implement more rigorous governance oversight structure related to physician contracting and compensation practices.

The background of the issue is as follows:

  • Prior to 2009, Mercy’s infusion center was part of Mercy Clinic. That year, the decision was made to transfer the center to Mercy Hospital Springfield in order to be eligible to participate in a federal drug pricing program, providing significant cost reductions for expensive chemotherapy drugs that benefit our cancer patients.
  • Mercy Clinic continued to operate the infusion center under a management agreement with the hospital, and the hospital paid the clinic for these management services. The clinic then paid the oncologists for their services based on their work in the infusion center. The mistake occurred when the clinic paid the physicians in a manner determined by the DOJ to be a technical violation of federal law.
  • The regulations regarding physician billing practices are very complex, and in settling the lawsuit the DOJ acknowledged that Mercy did not intentionally violate the law. These were regulatory issues, not patient care issues. Even though they are commonly labeled as fraud and abuse laws, the government investigation did not find any intentional wrongdoing or fraud at Mercy and the settlement we reached with the government dismisses all allegations of fraud. In addition, Mercy changed the way physicians are paid three years ago as part of an internal assessment of physician compensation practices.

“We take this situation very seriously. We made a regulatory mistake and we are working hard to make it right,” said Jon Swope, regional president of Mercy Central Communities. “Our efforts today are focused on continuing to maintain a more rigorous audit and compliance program, including developing the plan to implement the new Corporate Integrity Agreement. Just as we are committed to the highest levels of health care quality and safety, we also are committed to ensuring that we comply with all the technical aspects of the laws involving physician compensation.”

Statement from Jon Swope, regional president of Mercy Central Communities

Mercy Springfield Communities is comprised of Mercy Hospital Springfieldan 866-bed referral center; an orthopedic hospital; a rehab hospital; a children’s hospital; five regional hospitals in Lebanon, Aurora, Cassville, Mountain View, Missouri and Berryville, Arkansas; and Mercy Clinic, a physician clinic with nearly 700 doctors and locations throughout the region. It is part of Mercy, named one of the top five large U.S. health systems in 2017 by Truven, an IBM Watson Health company. Mercy serves millions annually and includes 43 acute care and specialty (heart, children’s, orthopedic and rehab) hospitals, more than 700 physician practices and outpatient facilities, 40,000 co-workers and more than 2,000 Mercy Clinic physicians in Arkansas, Kansas, Missouri and Oklahoma. Mercy also has outreach ministries in Louisiana, Mississippi and Texas. 

Media Contacts

Sonya Kullmann
Berryville, Branson, Cassville, Lebanon, Mountain View, Rolla, Springfield, Aurora
Phone: 417-820-2426