Iowa hospital pays $4.5M to settle excess compensation claims

An Iowa hospital has agreed to pay $4.5 million to settle with the federal government over charges that it used Medicare funds to pay physicians sweet salaries in exchange for their referrals. The hospital admits no wrongdoing and says that the doctors were simply very productive.

Covenant Medical Center of Waterloo allegedly paid Medicare money to five doctors who, in return, referred patients to the hospital. According to news reports, this pushed the doctors' income up so much that they ended up among the five highest-paid physicians in the country.

When it investigated, the U.S. Department of Justice concluded that the doctors were being paid far above market value, which disqualified them from receiving Medicare bucks. In its complaint, the DoJ alleged that the payments violated Stark Law provisions, which bar improper compensation deals between hospitals and doctors.

Other news reports on the incident noted that the doctors, at least two of whom were bringing home more than $2 million per year, were making more than double what doctors could have made elsewhere in the state. Worse, by some standards, the hospital was paying them more than the non-profit was spending on charity care, according to some estimates.

To learn more about the case:
- read this Kaiser Daily News piece