On October 2, 2008, the OIG issued an advisory opinion responding to a request by a Medigap insurer to determine whether an arrangement between a managed care network and its network hospitals that would provide discounts for plan beneficiaries who used in-network hospitals for inpatient stays would violate the Anti-kickback statute.
Under the proposed arrangement, a hospital network would enter into contracts with a MCO as a part of the preferred network. Pursuant to these contracts, Medigap policyholders would be given discounts of up to 100% off of Medicare inpatient deductibles (which would be the responsibility of the Medigap plan under normal circumstances). The Medigap insurer would pay the MCO an administrative fee each time a policyholder receives a discount. In return for choosing a network hospital, the policyholders would share in the savings by receiving a $100 credit toward their next renewal premium.
The OIG determined that although waivers of Medicare cost-sharing amounts and relief of a financial obligation would normally constitute prohibited remuneration under the Anti-kickback statute and the civil monetary penalties statute, the arrangement presented a very low risk of fraud and abuse.
The OIG found that the discount would not increase or affect per service Medicare payments, utilization would not be increased because patients already had purchased the supplemental insurance, and competition among hospitals would not be unfairly affected since the program would be open to any accredited, Medicare-certified hospital. Additionally, because physicians would not receive any remuneration and the patient could go to any hospital without incurring out of pocket charges, professional judgment would not be affected.
Further, the OIG found that the premium credit would essentially fall within the statutory exception for differentials in coinsurance and deductibles as part of a benefit plan design (as found in Section 1128A(a)(6)(C) of the Social Security Act). Even though the premium credit was not technically a “differential,” it would have the same purpose and effect.