Last month, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services reaffirmed its position. longstanding position that an arrangement to conduct Federal health care program (FHCP) business is non-partisan as to whether the arrangement implicates the Federal Anti-Kickback Statute (AKS ) or not. Specifically, the OIG issued a unfavorable advisory opinion (AO 23-06), explains that the Requester proposed purchasing the technical component (TC) of surgical pathology services paid for by commercial health plans that could create significant incentives for physicians approved by the Requester. request payment of that TC for referring patients, including FHCP beneficiaries, to the Claimant.
Under the Proposed Agreement, the Requestor (which operates anatomical pathology laboratories throughout the United States) would enter into agreements with other laboratories (which may or may not be owned by or hire a referring physician) to perform the TC of commercial tests referred to the Requester. Because other laboratories are out-of-network for commercial health plans, the Claimant will bill globally for the TC and the professional component (PC) of the tests, then fair market value (FMV), the fee per specimen for that laboratory. other laboratories to perform the TC of the test in question. The requester certifies to OIG that its arrangements with these other laboratories will satisfy the conditions outlined in the individual service and management contracts and results-based payment arrangements ( 42 CFR 1001.952(d)) except requires that the aggregate services contracted for shall not exceed those reasonably necessary to accomplish the commercially reasonable business purpose of the service. It is because of this unmet requirement that the OIG appears to have lost its discretion when it issued AO 23-06.
FirstlyOIG began its analysis of the Proposed Arrangements with the premise that the agreements help grow FHCP’s business maybe suspected under AKS. In accordance with and as detailed in Special Fraud Alert 2014The OIG reasoned that such arrangements could imply and potentially violate the AKS by concealing remuneration for FHCP’s business through payments of amounts allegedly related to unrelated persons. must FHCP (For examplecommercial business.
That’s the potential of the Proposed Agreement, according to the OIG: [T]he pays remuneration from the Claimant for [the other laboratories] may increase the likelihood that these organizations or their affiliated referring Physicians will request services from Requesters for a fee. [FHCPs]. We cannot conclude that there would be no nexus between the compensation paid as part of the Proposed Agreement and the potential referral to Requester for services reimbursed by [FHCPs].
Monday, Petitioner has certified that its arrangements with other laboratories would not be fully consistent with a safe harbor. Therefore, the OIG is tasked with evaluating the Proposed Agreement in light of its total facts and circumstances. For such analysis, OIG relies on the Requestor’s certification that (1) the Proposed Agreement is likely to result in referrals of FHCP business from other laboratories, (2) the Requestor itself The requester is equipped to perform both the TC and PC of most anatomic pathology services, and (3) the performance of both components of the Requestor is more efficient and cost-effective than pay another lab to do the same thing, in whole or in part.
Therefore, OIG concluded that it is difficult to discern any commercially reasonable business purpose for the Requestor to enter into the Proposed Arrangement for the opportunity to bill and retain payment for both components of the pathology service [(the TC and PC)]under an arrangement that is both less effective and more costly than the payment’s ability to attract patient referrals, including FHCP beneficiaries.
Final, even though the Requestor has certified that it will transfer the FMV, per-sample fee to other laboratories to perform the TC of the test in question, and even though the OIG is statutorily prohibited, pursuant to 42 USC 1320a- 7d(b)(3)(A) of the Social Security Act, from objections to aspects of the FMV, OIG interpreted that the FMV charge would not protect the Proposed Agreement from involvement and would potential violation of AKS. On this point, the OIG, again, relies Special Fraud Alert 2014argued that the AKS is relevant when a clinical laboratory pays a physician for services, and whether an actual violation of the AKS occurred depends on the purpose, regardless of whether the payment was FMV for services are provided or not.
OIG’s position in AO 23-06, although unfavorable, still provides useful guidance for industry:
- Arrangements that relate solely to non-FHCP business may still involve and potentially violate the AKS. Carve outs do not provide absolute protection against AKS execution.
- The parties’ intentions with respect to such agreements are important.
- FMV is not the end-all solution for regulatory compliance.
- Commercial reasonableness remains important because it is not only a requirement to protect certain safe harbors but can also become part of the OIG’s story in demonstrating the necessary intent under AKS.
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