The Office of Inspector General of the U.S. Department of Health & Human Services (HHS) has offered additional opinions regarding arrangements that use incentives, nixing one and blessing the second.
First, on April 1, 2014, the Office of Inspector General (OIG) issued related opinions regarding an electronic health record (EHR) vendor’s arrangements. The OIG terminated Advisory Opinion No. 11-18, November 30, 2011, requested by the EHR vendor, which had supported the vendor offering an online database service that, in part, facilitated referrals to other health care providers using the service, through the use of discounted fees (OIG Final Notice of Termination of OIG Advisory Opinion No. 11-18, April 1, 2014). The OIG also issued OIG Advisory Opinion No. 14-03, April 1, 2014 requested by a large network of clinical laboratories, inquiring whether a laboratory’s payment of the same EHR’s transmission fee for a diagnostic test, as opposed to payment by the referring physician, was a violation of the federal anti-kickback statute. Consistent with the Final Notice of Termination, the OIG concluded that the laboratories’ underwriting of the EHR’s transmission fees could constitute an impermissible kickback.
Opinion 14-03 reviewed the arrangement from the laboratories’ perspective — the EHR vendor charges a referring physician a per-order fee for each referral service ordered; however, under the arrangement, a referring physician could avoid the per-order fee by referring the service to other EHR vendor contracted providers, including laboratories. In effect, the referring physician had the option of paying the transmission fee to use the laboratory of choice, or to avoid the transmission fee by choosing a laboratory in the EHR vendor’s network, in which case, the lab pays the fee. In Advisory Opinion 14-03, the OIG concluded “[t]his fee structure could potentially influence the [r]eferring [p]hysicians’ referral decisions in a material way.”
OIG’s Advisory Opinion 14-03 was based, in part, on certifications by the Requestor that there was “no reason” for a laboratory to pay the per-order fee other than to secure referrals. The OIG stated “[t]he [a]rrangement therefore appears to permit [a laboratory] to do indirectly what it cannot do directly; that is, to pay compensation to [a referring physician], by relieving them of a financial obligation, in return for [that referring physician’s] laboratory test referrals.”
In overturning its earlier Opinion and also supporting the Termination Notice, the OIG’s Opinion No. 14-03 finds that the “small, per-referral transmission fee may be unlikely to influence the [r]eferring [p]hysician’s referral decisions in a meaningful way when the overall number of referrals . . . is relatively low; however, the risk that such a fee could influence a [r]eferring [p]hysician’s decision-making increases as the number of referrals increases.” The OIG found that because “physicians typically order laboratory tests with considerable frequency,” the arrangement “includes potentially problematic financial incentives,” and “poses more than a minimal risk of fraud and abuse under the anti-kickback statute.” Although it appears that the EHR’s discounted fee arrangement would still be permissible if the volume of referrals was low, the EHR vendor has opted to eliminate the fee waiver option for all participating providers.
Shortly after the issuance of the Advisory Opinion Termination and Advisory Opinion, the OIG issued another opinion relating to financial incentives in another context and determined that the proposed arrangement did not pose a risk of fraud and abuse sufficient to violate the anti-kickback statute. (OIG Advisory Opinion No. 14-04, Apr. 9, 2014). This third Opinion concluded that a company offering Medicare Supplemental Health Insurance (Medigap) policies could contract with a preferred hospital organization (PPO) that has contracts with hospitals throughout the country, and the PPO hospitals could provide discounts of up to 100% on Medicare inpatient deductibles that would otherwise be paid by the company. The company would provide a $100 premium credit to policyholders who use the PPO hospitals for inpatient care and the company would also pay the PHO hospital a fee whenever the discount was applied.
Although OIG concluded that the proposed arrangement did not qualify under safe harbor provisions for coinsurance and deductible amounts or reduced premium amounts, the OIG did conclude that the proposed arrangement posed an insignificant risk of fraud or abuse as it would not increase or affect per-service Medicare payments, was unlikely to increase utilization, was unlikely to unfairly affect competition among hospitals or professional medical judgment, and would operate transparently.
Both OIG Advisory Opinions 14-03 and 14-04 involved the same weighing of the financial incentives’ impact on medical judgment, competition and utilization. In the earlier Opinion, the OIG determined that the cumulative effect of many small payments, over time, posed a risk of fraud or abuse, while the second arrangement avoided that risk because it presented little incentive for providers to engage in fraud or abuse.