Providence to pay $22.7 million to resolve allegations it billed for medically-unnecessary surgeries

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Providence Health & Services Washington has agreed to pay $22,690,458 to resolve allegations that it fraudulently billed Medicare, Medicaid and other federal healthcare programs for medically unnecessary neurosurgery procedures, according to the Department of Justice for the Eastern District of Washington.

Providence operates 51 hospitals in seven western U.S. states, including Providence St. Mary's Medical Center in Walla Walla, Washington. 

Between 2013 and 2018, Providence St. Mary's employed neurosurgeons identified in the settlement agreement as Drs. A and B. Providence St. Mary's paid neurosurgeons based on a productivity metric that provided them a financial incentive to perform more surgical procedures of greater complexity, according to the DOJ. 

Between 2014 and 2018, Dr. A was one of the highest producing neurosurgeons in the entire Providence system. Between 2014 and 2017, based on the productivity metric, Providence paid Dr. A between $2.5 million and $2.9 million per year. 

The settlement agreement resolves allegations that Providence falsely billed Medicare, Washington State Medicaid and other federal healthcare programs for deficient and medically unnecessary neurosurgery procedures performed by Drs. A and B.

According to court documents, the case began in January 2020, when a whistleblower, the former medical director of neurosurgery at Providence St. Mary's, filed a complaint. The United States intervened in the action in January 2022. The whistleblower will receive $4,197,734 of the total settlement amount.

WHY THIS MATTERS

Providence medical personnel articulated concerns that Dr. A and Dr. B were endangering the safety of patients, created through their surgeries an excessive level of complications and negative outcomes, performed surgery on candidates who were not appropriate for surgery, and failed to properly document their procedures and outcomes, according to the settlement. 

Providence further admitted that medical personnel articulated additional concerns that Dr. A completed medical documentation with falsified and exaggerated diagnoses to obtain reimbursement from insurance providers and performed surgical procedures that did not meet the medical necessity requirements set by Medicare and other insurance programs. Dr. A also "over-operated" in performing surgeries of greater complexity and scope than were medically appropriate and jeopardized patient safety by attempting to perform an excessive number of overly complex surgeries. 

Finally, Providence admitted that, while it eventually placed both Dr. B and Dr. A on administrative leave in February 2017 and May 2018, respectively, it allowed both doctors to resign while on leave, and did not take any action to report Dr. A or Dr. B to the National Practitioner Data Bank or the Washington State Department of Health.

As part of the settlement, Providence entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of the Inspector General, requiring that it implement and maintain a number of quality-of-care and patient safety obligations. Additionally, the CIA requires that Providence retain outside experts to perform annual claims and clinical quality systems reviews.

THE LARGER TREND

Despite repeated warnings, Providence failed to ensure that Drs. A and B were performing medically-appropriate surgeries, according to Vanessa R. Waldref, the United States Attorney for the Eastern District of Washington.

"Providence's decision not to report Dr. A or Dr. B to federal or state medical oversight bodies allowed both surgeons to simply resign from Providence and then continue to endanger patients at other hospitals," Waldref said.

Providence did step up to accept responsibility, take appropriate and meaningful corrective action and cooperate with the investigation, Waldref said.

ON THE RECORD

"Ensuring that surgical procedures are medically appropriate and properly performed is critical to building safe and strong communities here in the Eastern District of Washington," Waldref said. "Patients with back pain and spinal injury deserve top-notch care from a provider who puts the patient first and is not improperly influenced by how much he can bill for the procedure."

"Patients trust their doctors that the care they receive is necessary, particularly when they are undergoing neurosurgery," said Washington Attorney General Bob Ferguson. "Performing unnecessary surgeries for profit is a betrayal of that trust."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com