Dana-Farber to Pay $15M in Justice Department Settlement

Dana-Farber Cancer Institute has agreed to pay $15 million to resolve allegations that it submitted false claims to federal healthcare programs, according to an announcement from the U.S. Department of Justice on Wednesday.

The settlement stems from a years-long investigation into the prestigious Boston-based cancer center’s billing practices. Federal authorities alleged that Dana-Farber improperly billed Medicare and other government healthcare programs for services that were either unsupported by medical documentation or performed by providers who did not meet supervision requirements.

“Healthcare providers that participate in federal healthcare programs must follow the rules,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Justice Department’s Civil Division, in a statement. “We will continue to use the False Claims Act to protect the integrity of these important programs and ensure that taxpayer dollars are properly spent.”

According to investigators, Dana-Farber violated Medicare’s “incident to” billing regulations between January 2016 and December 2021. These regulations specify conditions under which services performed by non-physician practitioners can be billed under a physician’s name at higher reimbursement rates. The Justice Department contended that Dana-Farber failed to maintain the level of physician supervision required for such billing arrangements.

The settlement also addresses allegations that Dana-Farber submitted claims for evaluation and management services that lacked sufficient documentation in medical records to support the level of service billed.

Dana-Farber, while agreeing to the settlement, has not admitted liability. The cancer institute will implement a corrective action plan and enter into a five-year corporate integrity agreement with the Department of Health and Human Services’ Office of Inspector General to ensure future compliance.

The case highlights the increasing scrutiny facing major academic medical centers and specialized care providers across the country. Healthcare fraud investigations have intensified in recent years as the federal government works to control rising healthcare costs and ensure proper stewardship of public funds.

Dana-Farber Cancer Institute, founded in 1947, is consistently ranked among the nation’s top cancer treatment facilities and maintains close affiliations with Harvard Medical School and other prominent Boston healthcare institutions. The center treats more than 100,000 patients annually and conducts groundbreaking cancer research.

This settlement comes during a challenging period for many academic medical centers, which are navigating financial pressures from inflation, staffing shortages, and changes in reimbursement models. Several major healthcare systems have reported operating losses in recent quarters, making regulatory penalties particularly consequential.

Healthcare compliance experts note that billing regulations for teaching hospitals and specialty centers are especially complex, creating compliance risks even for institutions with robust internal controls. The “incident to” billing requirements at the center of this case are particularly nuanced, requiring specific documentation of physician involvement in patient care.

“These cases demonstrate the government’s commitment to ensuring that providers meet documentation requirements and supervision standards,” said Jesse Witten, a healthcare attorney not involved in the case. “The penalties can be substantial because each improperly documented claim can trigger separate liability under the False Claims Act.”

The False Claims Act, originally enacted during the Civil War to combat fraud against the government, remains a powerful enforcement tool. Whistleblowers who report healthcare fraud can receive a portion of any recovery, though the Justice Department did not indicate whether this case originated from a whistleblower complaint.

For patients, the settlement should not impact care delivery at Dana-Farber, which will continue normal operations throughout the compliance monitoring period.

Federal healthcare fraud enforcement has recovered more than $5 billion annually in recent years, with a significant portion coming from settlements with hospitals and healthcare systems related to billing practices and regulatory compliance issues.