On January 7, 2016, the Department of Health and Human Services, Office of Inspector General (OIG) issued Advisory Opinion 16-01 [PDF], approving yet another insurer’s proposed contract with a preferred hospital network. The advisory opinion is one in a series of OIG Advisory Opinions addressing preferred hospital network discounts under the anti-kickback statute and the civil monetary penalty prohibition against inducements to beneficiaries. The OIG again concludes that a Medigap insurer's contract with a preferred hospital network to receive discouts on Medicareinpatient deductibles poses a low risk of fraud and abuse.
The Medigap insurers requesting the advisory opinion proposed to contract with a network of preferred hospitals for discounts on Medicare inpatient deductibles for their policyholders and to provide a premium credit to policyholders who use a preferred hospital for inpatient stays. The preferred hospitals would provide up to 100 percent discounts on Part A inpatient deductibles incurred by policyholders. The requestors would be relieved from paying the discounted amount, but would pay the preferred hospital network a fee for administrative services with each discount received. The arrangement would not affect the policyholders’ liability to pay for covered services. Policyholders would receive a portion of the savings resulting from their use of a preferred hospital and would be well-informed of this arrangement through notification letters and biannual updates.
The OIG concluded that it would not impose administrative sanctions under either the anti-kickback statute or the civil monetary penalty prohibition against inducements to beneficiaries because the premium credit presented a sufficiently low risk of fraud and abuse and the potential for savings for beneficiaries. The OIG noted:
The per-service Medicare payments would not be affected by the discounts and premium credits.
It is unlikely that the arrangement would increase utilization because the discount applies only to the portion of the cost-sharing obligation that the insurer is obligated to cover.
It is unlikely to affect competition because the preferred hospital network would be open to “any accredited, Medicare-certified hospital that meets the requirements of applicable state laws and that contractually agrees to discount all or a portion of the Part A deductibles for Policyholders.”
It is unlikely to affect professional medical judgment because physicians and surgeons would not receive remuneration. In addition, requestors would make clear to policyholders that they may choose to be treated at a non-network hospital without sustaining further out-of-pocket costs.