The OIG Publishes Two Advisory Opinions

The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently issued two Advisory Opinions.  The first Advisory Opinion, AO 10-12, found that an arrangement between a grant program operated by a nonprofit, tax exempt charitable organization that provides grants to brain tumor patients who require financial assistance for the costs of drugs and/or devices would not result in civil monetary penalties (CMPs) even though the arrangement could cause prohibited remuneration under the Anti-Kickback Statute.

Although the funding for the grants comes from manufacturers of drugs and devices used to treat brain tumors and other conditions covered by the program, the OIG found sufficient safeguards in the system that mitigate the risk of improper influence.  First, the grant program will award assistance to beneficiaries based on objective criteria.  The assistance will not limit the patient’s ability to choose a provider, practitioner or supplier because the patient will have already made these choices prior to receiving the assistance.  In addition, no donor will exert control over the Foundation or affect the Foundation’s decision to award assistance.  Donors will not receive data that would allow it to determine the correlation between its donations and the use of its products or services.

In the second Advisory Opinion, AO 10-13, the OIG determined that it would not impose administrative sanctions for the provision of free insurance pre-authorization services because the arrangement included sufficient safeguards to reduce the risk that the free services would be inducements for referrals.  The proposed arrangement involved a hospital addressing requests from insurers for the pre-authorization of diagnostic imaging services before they are completed by the hospital.  The pre-authorization services would be provided by the hospital free of charge and without regard to the volume and/or value of any physician referrals.

For four reasons the OIG found that the risk of improper inducements for referrals was low.  First, the proposed arrangement would not target particular physicians.  Second, the safeguards in place were sufficient to reduce the risk of fraud and abuse.  Physicians would not receive payments, there would be no ancillary agreements and there were no assurances that pre-authorization approval would be made.  Third, the pre-authorization services would operate transparently.  Finally, the hospital has a legitimate business reason to operate the pre-authorization services as their payment is at stake.

If you would like any of your financial arrangements analyzed for Stark or Anti-Kickback Statute violations, please contact a Wachler & Associates attorney at 248-544-0888.