U.S. Probes Fees Paid to Doctors by Baxter Unit

Baxter International Inc., the world’s largest hospital supplier, is under a federal criminal investigation for allegedly making kickbacks to doctors, a government spokeswoman said Monday.

Baxter’s Caremark Inc. is being investigated for allegedly making improper payments to doctors who oversee its care of homebound Medicare patients, said Judy Holtz of the inspector general’s office of the Department of Health and Human Services.

Under the Caremark system, physicians refer patients to the company, which provides home health-care services such as medicines, intravenous feeding and therapy.

Caremark then pays doctors to monitor the home treatments and is reimbursed by Medicare.

The federal agency is investigating whether the company actually pays the doctors for services rendered--or uses the payments to encourage doctors to refer patients to Caremark, boosting its Medicare business.

Caremark said it makes the weekly payments, called “fee-for-service,” of $12 to $150 per patient to doctors who monitor the treatments.

“We absolutely deny any criminal wrongdoing,” said Les Jacobson, spokesman for Caremark. “This program is legal and proper.”

Jacobson said the government has subpoenaed 800 contracts and the doctors’ financial records concerning payments of the fees.

The doctors are paid for going over charts, reviewing medicines and issuing new treatment orders, Jacobson said.

“If you look at the amounts being paid to doctors, it cannot be construed as kickbacks,” Jacobson said. “It’s less by far than they would be receiving for the same services in the hospital.”

He said Caremark would stop paying the consulting fees for Medicare and Medicaid patients on Oct. 1 because such contracts are not included in new federal regulations defining permissible health-care business arrangements that take effect on that date.

The price of Baxter stock fell on the news, analysts said. Baxter closed off $1.25 at $33.50 in New York Stock Exchange trading.

The Health and Human Services spokeswoman estimated that the probe, the second criminal investigation that Baxter now faces, will take at least nine months.

“We’re early on in the investigation,” Holtz said.

Deerfield, Ill.-based Baxter has annual revenue of $8 billion a year and is the world’s largest hospital supplier.