OIG Advisory Opinion No. 08-21:

On November 25, 2008, the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) issued Advisory Opinion No. 08-21, in which the OIG reiterated is position regarding gainsharing arrangements, this time in the context of cardiac catheterization procedures. Consistent with prior guidance, the OIG found that the arrangement implicated the anti-kickback statute (42 U.S.C. § 1320a-7b) and the civil monetary penalties provisions of the Social Security Act (42 U.S.C. § 1320a-7a). However, also consistent with prior guidance, the OIG concluded that it would not impose administrative sanctions on the parties involved. At issue in this opinion was an arrangement whereunder the hospital agreed to pay physician groups a share of cost savings resulting from changes the groups made to their cardiac catheterization practices over two years. The cost-saving measures involved standardizing use of medical devices and supplies and reducing inappropriate utilization of medical devices and supplies. This gainsharing program was implemented prior to the request for an opinion, but no money had been exchanged.

Given that supply use was determined on a case-by-case basis and that the range of supplies was not limited, the OIG concluded that the arrangement was sufficiently safeguarded to protect against inappropriate reductions in services. In addition, the OIG concluded that it would not seek sanctions because the arrangement used “objective historical clinical measures . . . to establish ‘floors’ beyond which no savings accrued” to the physician group. Further, patients were provided with written disclosure of the program and financial incentives were limited in duration and amount.

Although the OIG approved the gainsharing arrangement in this particular opinion, the OIG cautioned that other gainsharing arrangements that may include payments for cost savings could lead to different results, including arrangements where physicians are rewarded based on overall cost-savings without accountability for specific cost-reduction measures.

OIG Advisory Opinion No. 08-22:

On December 8, 2008, the OIG issued Advisory Opinion No. 08-22, indicating that a physician group’s proposal to employ part-time physicians to perform endoscopies on physician group’s premises would not generate prohibited remuneration under the anti-kickback statute (42 U.S.C. § 1320a-7b). The requestor of the opinion, a nonprofit, tax-exempt corporation that meets all of the requirements of a “physician group” under 42 C.F.R. § 411.352, proposed to pay part-time physicians a salary based on the fair market value of the professional services that the part-time physician personally provides while employed by the requestor.

The OIG indicated that “the anti-kickback statute does not prohibit payments made by employers to their bona fide employees, for employment in the furnishing of items or services for which payment may be made under Medicare, Medicaid, or other Federal health care programs.” Relying upon the certification of the requestor that the part-time employees at issue in the opinion are bona fide employees of the requestor in accordance with the definition of the term set forth at 26 U.S.C. § 3121(d)(2) and that such physicians would be paid fair market value for services performed, the OIG concluded that the wages paid to the part-time physicians would not constitute prohibited remuneration under the anti-kickback statute.

OIG Advisory Opinion No. 08-23

In an advisory opinion issued on December 12, 2008, the OIG said it would not penalize a county’s proposal to use tax revenues to cover cost-sharing amounts for residents who use emergency medical services (EMS) transportation to hospitals.

The county in question provides EMS transportation through its fire department. It requested an advisory opinion from the OIG under a proposal not to bill county residents who received EMS transportation to hospitals for otherwise applicable cost-sharing amounts, such as deductibles and copayments. Instead, the county proposed accepting amounts received from third party payors (including Federal health care programs) as payment in full for EMS transportation, and would treat revenues received from taxes as payment of the cost-sharing amounts.

Citing Chapter 16, Section 50.3.1 of the Centers for Medicare & Medicaid Services Medicare Benefit Policy Manual, the OIG determined that it would not impose administrative sanctions on the county. Section 50.3.1 provides that states or local government facilities that reduce or waive its charges for patients unable to pay, or charges patients only to the extent of their Medicare and other health insurance coverage, is not viewed as furnishing free services.

Consequently, since Medicare would not require the county to collect cost-sharing amounts from residents, the OIG would not impose sanctions under the anti-kickback statute where the cost-sharing wavier is implemented by the county categorically for bona fide residents of the county. However, the OIG did note that this advisory opinion would not apply to waivers of cost-sharing amounts based on criteria other than residency.

OIG Advisory Opinion No. 08-24

On January 7, 2009, the OIG issued an advisory opinion, approving an arrangement under which twenty-three physicians and podiatrists proposed to share a medical practice. Although the practice failed to satisfy the investments in group practices safe harbor under the anti-kickback statute (42 C.F.R. § 1001.952(p)), because one physician held a one-percent equity but did not treat patients at the practice, the OIG found no “appreciable additional risks” of fraud and abuse given the totality of the circumstances certified by the requestors. The OIG further noted that the absence of safe harbor protection was not fatal, noting that the practice otherwise complied with the safe harbor in nearly all other respects.

In reviewing the totality of the facts and circumstances, the OIG emphasized that all equity interests are held in the practice and not some subdivision thereof. Each investor holds a fixed percentage stake in the entire practice, rather than in a particular subdivision. Further, to a degree directly proportionate to their individual stake in the practice, each investor shares in the entire enterprise’s risks and returns. The OIG also observed that the requestors of the opinion certified that the proposed arrangement would comply fully in all respects with the requirements of the “group practice” definition under the physician self-referral law.

In light of these circumstances and others observed by the OIG, the OIG concluded that the proposed arrangement presented minimal risk of Federal health care program abuse.