Cayuga Medical Center at Ithaca

Letter To The Community From Dr. Rob Mackenzie, President & CEO, Cayuga Medical Center

The purpose of my letter is to make you aware of a compliance issue and related governmental settlement associated with several physician contracts and recruitment agreements at Cayuga Medical Center. I would like to first provide you some background information that will be helpful to understand this complex issue.

Cayuga Medical Center often helps recruit new physicians to the Ithaca area, and offers loans to help them start in private practice. We forgive those loans in return for the physicians’ commitment to continue to practice in our community. Government regulations tell us what we can and cannot do to assist new physicians.

In 2004, a change was made in one of these many regulations, indicating that loans to physicians joining an existing practice could no longer include any portion of that practice’s overhead, unless new space or staff was added. All contracts entered into after this change were and continue to be compliant. However, the government did not “grandfather” prior recruitment contracts.

In 2007, we discovered that four recruitment contracts signed prior to 2004 had not been corrected, due to our administrative oversight. This oversight was discovered through our internal compliance program, which helps make sure we are always doing the right thing at CMC. Once we discovered our oversight, we immediately self-reported it to the Office of Inspector General (OIG).

During the course of their investigation, the OIG discovered two additional physician contracts that they believe were also out of compliance. We, along with our legal counsel, disagree with their interpretation of these additional two cases.

However, to avoid a lengthy legal proceeding, high legal costs, and to do what is in the best interest of Cayuga Medical Center, we have decided to settle this matter with the Office of Inspector General for $3.5 million. We have previously set aside sufficient funds to cover this expense, so that this issue does not impact current medical center operations. The physicians we recruited have done nothing wrong, and are not required to pay any money back.

This situation did not involve the delivery of health care services to our community. Neither was there any finding of fraud and abuse. Indeed, the Federal Government has praised the medical center and its staff for self reporting the compliance issue to them and for being cooperative throughout this matter.

Cayuga Medical Center always strives to do the right thing in a very complex regulatory environment that is always changing. We take our responsibility of being stewards of taxpayer funded programs very seriously and believe our internal controls are comprehensive.

If you have any questions or comments, please email me at rmackenzie@cayugamed.org.

Thank you,

Dr. Rob Mackenzie

President & CEO

Cayuga Medical Center