The HHS Office of Inspector General allows nursing facilities to give discounts to private insurers. OIG Advisory Opinion 17-08 describes a startup company planning to develop a network of nursing facilities (the Network). The company wants nursing facilities in the Network to provide discounts on daily rates charged to a long-term care insurer (Participating Payor) and its Policyholders. Qualifying nursing facilities must 1) have a quality rank of 3-stars or higher and 2) offer discounts off the daily rates for semi-private rooms covered by a Participating Payor.
Elements of the Discount Program
The OIG lists important aspects of the discount program such as:
- A Participating Payor must be a private long-term care insurer, although a Policyholder may also be a federal healthcare Beneficiary.
- No discounts are offered for stays covered by federal healthcare programs.
- The discount is split with 2/3 to the Participating Payor and 1/3 to the Policyholder.
- The Network provides no benefits other than the discount to a Participating Payor or a Policyholder.
- The Network pays an administrative fee to the Participating Payor.
- A Policyholder remains free to select any nursing facility covered by the Participating Payor and is not penalized for choosing a non-participating facility.
Factors Favoring Approval
The OIG considered whether the Anti-Kickback Statute and Civil Monetary Penalties could apply but found “sufficiently low” likelihood of improper inducement of a federal healthcare Beneficiary for several reasons.
- The Network has no control over whether a Policyholder who is also a Beneficiary may need care in the future that is federally reimbursable.
- A discount is not contingent on whether items or services are received from the Network.
- The arrangement does not affect competition. Any qualified nursing facility has access to the Network, and a Beneficiary is free to use a non-covered facility without increased cost.
- Open access to the Network avoids steering.
- A Beneficiary is likely to select a nursing facility based on many factors beyond the discount.
Physicians and Planners Not Compensated
The OIG also approvingly emphasizes that physicians, discharge planners, and others participating in site selection do not receive remuneration.
Usual Limitations Apply
Although the Advisory Opinion contains the standard list of limitations on its application, nursing facilities and insurers will want to analyze the opinion for guidance.