Dr. Sherif

Dr. Sherif Khalil.

San Gorgonio Memorial Hospital’s immediate-past medical chief of staff and the medical group he contracts for has been slapped with a $5,039,180 settlement to resolve allegations that Khalil and Beaver Medical Group reported invalid diagnoses for the federal Medicare Advantage plans, causing those plans to receive inflated payments from Medicare, the Department of Justice announced on Aug. 8.

Dr. Sherif Khalil had served two years as chief of staff for the hospital; his term concluded July 1.

Khalil is an internist who contracts his primary care physician services at the hospital through Beaver Medical Group and Epic Management, LP, both based in Redlands.

Khalil’s private practice is in Beaumont.

In a statement from Beaver Medical Group, the agreement “represents the first settlement of its kind for Beaver, one of the oldest medical groups in California. Settlements associated with such inquiries, however, have become increasingly common in the healthcare industry: today’s doctors are required to track over 68,000 diagnostic codes, which makes coding difficult to master and onerous for any doctor.”

The statement points out that $2.8 billion of such settlements, 90 percent of which involved the healthcare industry, took place last year alone.

Beaver Medical Group Administrator John Goodman said in a statement, “Beaver takes compliance with federal Medicare guidelines seriously and is committed to best practices,” adding, “There has been and will be no disruption in care to Beaver’s patients” at San Gorgonio Memorial Hospital, “nor has this matter affected individual patient medical costs.”

Beaver Medical Group points out that Dr. Khalil has been serving the Pass area for more than 20 years.

“He cares for one of the largest patient populations among Beaver physicians, and has an outstanding track record for quality and patient outcomes,” according to the organization.

According to Beaver Medical Group, “The settlement was modest in comparison with recent settlements by other healthcare companies.

Less than half of the agreed upon settlement reflected payment of a penalty, and the individual physician paid only a nominal amount of the settlement.”

An example of an anomaly in coding could happen when a physician purports to bill Medicare for seeing 30 patients in a day; with an average time of 15 minutes per patient, some in the industry feel that it is unrealistic to bill for so many patients consistently in a single day.

“The United States relies on healthcare providers to submit accurate diagnosis data to Medicare Advantage plans to ensure those plans receive the appropriate compensation from Medicare,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “We will pursue those who undermine the integrity of the Medicare program and the data it relies on.”

The settlement resolves allegations originally brought in a lawsuit filed under the whistleblower provisions of the False Claims Act by Dr. David Nutter, a former Beaver employee.

The act permits private parties to sue on behalf of the government for false claims of government funds, and to receive a share of any recovery; Nutter will receive approximately $850,000, according to the Department of Justice.

Under the Medicare Advantage program, known as the Medicare Part C program, Medicare beneficiaries may opt to obtain health care coverage through private insurance plans that are owned and operated by private insurers known as Medicare Advantage Organizations.

Medicare pays MAOs a fixed, monthly amount to provide health coverage to Medicare beneficiaries who enroll in their plans.

Medicare adjusts those monthly payments to reflect the health status of each beneficiary.

Generally Medicare pays MAOs more for sicker beneficiaries than healthier ones.

MAOs often contract with physician groups and other healthcare providers to provide care to Medicare beneficiaries enrolled in their plans. These healthcare providers report diagnoses and other information to the MAOs, which the MAOs then submit to Medicare in order to obtain higher risk-adjusted payments.

In this case, several MAOs in California contracted with Beaver to provide health care to Medicare beneficiaries enrolled in their plans. The MAOs often compensated Beaver with a share of the payments that the MAOs received from Medicare for the beneficiaries under

Beaver’s care. Thus, Beaver had a financial incentive to submit additional diagnosis codes to the MAOs in order to increase the payments that the MAOs received from Medicare. The settlement resolves allegations that Beaver and Dr. Khalil knowingly submitted diagnoses that were not supported by the beneficiaries’ medical records in order to inflate the payments that the MAO received from Medicare.

“As enrollment in Medicare Advantage continues to grow, investigation into accuracy of diagnosis data becomes ever more important,” said Timothy B. Francesca, Acting Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Those who inflate bills sent to government health programs can expect to pay a heavy price.”

Beaver Medical Group President Dr. Richard Hill said in a statement, “While we vigorously deny the allegations, we wanted to avoid a lengthy and costly legal challenge and maintain our focus on patient care,” he said. “Beaver’s commitment to quality care is reflected in the fact that Beaver Medical Group has received the Elite States in the America’s Physician Group Standards of Excellence Survey” for the last two years in a row.

According to the Department of Justice, the claims resolved by the settlement with Beaver Medical Group, Epic Management L.P and Dr. Khalil are allegations only; there has been no determination of liability.

Staff Writer David James Heiss may be reached at dheiss@recordgazette.net .

Staff Writer David James Heiss may be reached at dheiss@recordgazette.net , or by calling (951) 849-4586 x114.


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