Oncologists in Philadelphia are alleging Jefferson Health system is violating federal antitrust and kickback laws by creating a “concerted campaign to eliminate” the group’s “presence in the oncology marketplace.”
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Lawsuit raises antitrust and kickback allegations around cancer patient referrals
Bob Herman
By Bob Herman Sept. 8, 2023
Oncologists in Philadelphia are alleging Jefferson Health system is violating federal antitrust and kickback laws.
A large independent group of oncologists in Philadelphia is suing the area’s dominant hospital system, Jefferson Health, alleging the system is violating federal antitrust and kickback laws by creating a “concerted campaign to eliminate” the group’s “presence in the oncology marketplace.”
The lawsuit resurfaces longstanding concerns associated with hospitals buying up physician groups and then forcing those physicians to refer patients to the hospitals’ own facilities, even if that’s not in a patient’s best interest. Hospitals have increasingly acquired physician groups over the past 15 years, and in the process have entrenched monopoly positions for certain types of care by preventing patients from “leaking” to competitors.
Obtaining more market share and negotiating power isn’t the only incentive for hospitals to scoop up physicians. Oncology, in particular, is a lucrative specialty for hospitals to own. Revenue is immediately boosted because hospitals are able to charge more for the cancer doctors’ services in a hospital-owned clinic, even though those same services would be significantly cheaper in an independent clinic. Hospitals that participate in a federal drug discount program, known as 340B, also are able to buy expensive chemotherapy drugs for cheap while still billing insurers full freight.
Alliance Cancer Specialists, a group of 36 oncologists, said those factors are exactly at play in its part of Philadelphia. ACS alleged its longstanding relationship with Jefferson deteriorated in recent years after it rebuffed Jefferson’s acquisition attempt. Jefferson allegedly started demanding that its own hospitalist physicians only refer cancer patients to oncologists who are employed by Jefferson instead of sending them to ACS.
“The physicians who received this message reasonably understood it to mean that under all circumstances, only referrals to [Jefferson’s] hospital-employed physicians are acceptable,” according to the lawsuit.
Top medical leaders at Jefferson then hinted to its physicians “their continued employment was conditioned upon their referrals” only to Jefferson’s cancer doctors, the lawsuit alleged. Jefferson also tied the incentive compensation of its physicians to whether cancer patients were retained “in-house,” according to the suit, which is based on ACS’ alleged interactions with Jefferson as of last month
ACS said Jefferson most recently threatened to terminate the privileges of its oncologists at a handful of Jefferson’s hospitals by Sept. 16 — meaning those doctors could no longer treat or admit patients at those specific facilities.
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A spokesperson for Jefferson Health would not confirm whether the system sent a letter stating that it will revoke the privileges of ACS doctors. The system does not comment on pending litigation. However, “we intend to vigorously defend our position,” the spokesperson said.
Federal law specifically outlaws hospitals paying for referrals. The federal government has intervened in several cases over the past few years, including some that involve cancer care.