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OIG Releases Favorable Advisory Opinion Regarding an Exclusivity Agreement Between a Nonprofit Corporation and Community Hospitals

On August 29, 2011, the U.S Department of Health and Human Services, Office of Inspector General (OIG) issued a favorable advisory opinion regarding a health system’s proposal to enter into arrangements to provide neuro emergency clinical protocols and immediate consultations with stroke neurologists via telemedicine technology to certain community hospitals.

The Requestor is an operating division of a not-for-profit corporation with a mission of increasing access to quality neuroscience care by providing access to the nationally ranked neuroscience care available through its flagship program. Under the proposed arrangement, Requestor would provide the following services to community hospitals in its service area free of charge: (1) neuro emergency telemedicine technology, (2) neuro emergency clinical consultations, (3) acceptance of neuro emergency transfers, and (4) neuro emergency clinical protocols, training and medical education. The Requestor would enter into a written agreement with the participating community hospitals, which would establish all of the services that each party would provide under the agreement. In recognition of Requestor’s investment of time and capital in the proposed arrangement, the participating hospital would be required to agree not to participate in any other neuro emergency telemedicine service without prior approval of Requestor for the length of the agreement (anticipated at 2 years). The exclusivity requirement would not (1) restrict a participating hospital’s emergency or attending physician from consulting with any stroke specialist of his or her choice, (2) require either party or its physicians to refer patients to the other party, or (3) restrict the freedom of a patient or physician to request a transfer to a stroke center other than Requestor’s.

Due to the agreement creating the potential for Requestor and the participating hospital to refer federal healthcare business to one another, OIG acknowledged that the proposed arrangement could possibly implicate the Anti-Kickback Statute. However, OIG concluded that it would not subject Requestor to administrative sanctions under the Anti-Kickback Statute for the following reasons:

  • The arrangement does not require or encourage the participating hospitals to refer patients to Requestor’s hospital in order to participate in the program.
  • Neither the volume or value of a hospital’s previous or anticipated referrals, nor the volume or value of any other business generated between the parties, would be a condition of Program participation.
  • The primary beneficiaries would be the stroke patients who could be treated at the Participating Hospitals’ emergency departments when treatment is most effective. Also, the program would likely reduce the volume of transfers of stroke patients to the Requestor’s hospital, which would allow patients to receive the level of tertiary care that they normally would be unable to receive.
  • The arrangement does not require either party to engage in any marketing activities, and each party would be responsible for its own marketing costs.
  • Since few, if any of the consultations provided under the program would be billable to Medicare, it is not likely that the program will result in increased costs to the federal healthcare programs. Also, because the Program is designed to reduce the volume of transfers of stroke patients to the Requestor’s hospital, the costs associated with these transfers would also decrease.

For more information on compliance with the Anti-Kickback Statute or any other health care regulations, please contact a Wachler & Associates attorney at 248-544-0888.