The requirement, part of a far-reaching "corporate integrity agreement" imposing greater government oversight of the Towson hospital, also requires St. Joseph to follow strict rules designed to discourage — or catch — kickbacks to doctors and fraudulent treatment and billing.
St. Joseph's other obligations include keeping a database of business arrangements, providing annual reports to the federal government and maintaining independent supervision of physicians and the cardiac laboratory.
Failure to comply could result in thousands of dollars in fines or an exclusion from participation in the federal Medicare program — the "death penalty" for a hospital, said Gary W. Thompson, a health care lawyer based in Washington.
The agreement, signed in November, was made public online last week by the Office of the Inspector General of the U.S. Department of Health and Human Services.
It's part of a $22 million settlement repaying federal funds received for Midei's questionable stents and resolving claims of a decade-long kickback scheme between St. Joseph and MidAtlantic Cardiovascular Associates — a Pikesville cardiology group co-founded by Midei.
The 17-page settlement claims that St. Joseph paid MidAtlantic to refer patients for "lucrative cardiovascular procedures" from 1996 to 2006, and that the hospital "submitted false claims for medically unnecessary stent procedures performed by Dr. Mark Midei" in the years afterward.
St. Joseph, which admitted no liability in the settlement, removed three top executives in February 2009 because of the federal investigation and brought in a restructuring team to revamp its practices. Midei was fired in July of that year, and the hospital has since notified 585 of his patients that their artery-opening stents might have been unnecessary.
Midei, who denies any wrongdoing, filed a lawsuit against the hospital this fall.
In a statement, the hospital said it "views the corporate integrity agreement as an opportunity to enhance and upgrade its existing compliance systems."
But health care lawyers say such agreements are more like "involuntary" compliance programs that burden providers who've been caught doing something wrong — intentionally or otherwise.
"They're subject to significantly higher scrutiny by the federal government," which can lead others to be wary of working with them, said Todd A. Rodriguez, a health care attorney in Exton, Pa. "It's just a red flag in general, that the hospital has … had issues, it's had compliance issues, that's what it tells you," Rodriquez said.
There were roughly 380 corporate integrity agreements listed on the HHS inspector general's website last week, involving individuals, billion-dollar corporations and nonprofits, including St. Joseph. Three other Maryland businesses also have such agreements, as do five state physicians.
The agreements usually span three to five years and often require many of the same components as the one reached with St. Joseph: hiring a compliance officer, developing written standards and policies, implementing training programs, creating a whistle-blower procedure, providing annual reports, undergoing monitoring and review, and being subject to financial penalties for noncompliance.
Where the St. Joseph agreement differs is in its provisions for physicians, particularly those working in cardiology, said lawyers who reviewed the document.
"They're requiring more peer review and physician oversight, and evaluations of outcomes with respect to these cardiology procedures," said Edwin Rauzi, a health care attorney based in Seattle.
The agreement is "more specific in terms of the behavior that it imposes upon different actors," Rauzi said. "It involves physicians, whereas most of the other times [such agreements involve] hospital executives."
St. Joseph has to create a compliance committee that includes "physician executives" responsible for the quality of care by the medical staff. And it must appoint a medical director for the cardiac laboratory who reports at least quarterly to the physician executives.
The hospital must also hire a peer review consultant to ensure the integrity of internal evaluations and an independent review organization that will, among other things, annually "evaluate and analyze the medical necessity and appropriateness of interventional procedures performed in the SJMC Cardiac Catheterization Lab."
After the allegations against Midei became public, state regulators reported that Midei was able to avoid the hospital's peer review process in part because he had the authority to select which cases were subject to review.
The medical center has several months to put the components of the agreement into place, though representatives said they have already implemented many of them.
It hired a corporate responsibility officer last year, according to a statement; strengthened the hospital's internal review programs to include random case evaluation and checking for medical necessity; revised the physician contract review and approval process; and has have already trained most of the staff on the compliance requirements.
"The goal is to develop and maintain a model program and to ensure that it meets the government's expectations for a robust compliance effort," St. Joseph said in its statement.
But the terrain is tough to navigate, health care lawyers said. "They're dealing with a very complicated regulatory framework," Rodriguez said. "There's lots of ways to get into trouble with these regulations completely unwittingly."
Still, most providers agree to monetary settlements and corporate integrity agreements, lawyers said, because for all practical purposes they have to. The penalty is exclusion from federal health care programs.
"For just about any provider in the United States, you might as well close the doors," if they are excluded from billing Medicare and other government reimbursement programs, said Washington lawyer Thompson. "I don't think you can just paint a broad brush and say all those entities are corrupt."