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The OIG Publishes Two Favorable Advisory Opinions

Last week the Office of Inspector General (OIG) issued two Advisory Opinions addressing proposed programs that could potentially implicate the anti-kickback statute and the imposition of civil monetary penalties (CMPs).

The first OIG Advisory Opinion, 10-18, analyzed a proposed program by a health system which involved post-surgical free hotel accommodations to pediatric tonsillectomy patients insured by federal healthcare programs.  The health system provides services in a rural area and consists of four facilities that provide tonsillectomies.  The proposed program would offer the free overnight stay to pediatric tonsillectomy patients who are treated at the health system’s Surgery Center.  All of the procedures performed at the Surgery Center will be by ear, nose and throat specialists (Clinic ENTs) who only perform tonsillectomies at hospitals in the Health System.  Even though the patients that stay at the adjacent hotel will be Federal healthcare program beneficiaries, neither Federal healthcare programs nor private insurers will be billed directly or indirectly for the costs.  The OIG’s Advisory Opinion listed several components of the proposed program which contributed to its determination that the program would not constitute grounds for violation of the anti-kickback statute.  These included:

– The Clinic ENTs that perform the services do not have privileges at hospitals outside the Health System and do not perform tonsillectomies at hospitals outside the Health System.

– Clinic ENTs’ salaries are not affected by the volume or value of the surgeries performed.

– The proposed program is not advertised to potential patients.  The patient only learns of the program after the Clinic ENT has been selected and the patient chooses which facility, of the four in the health system, that the procedure will be performed.

– The program is designed to overcome access barriers that exist for patients that reside in rural counties surrounding the health system and therefore could potentially improve quality of care for pediatric patients receiving tonsillectomies on an outpatient basis. 

Based upon a combination of reasons, the OIG concluded that the proposed program would likely not constitute as Federal healthcare program abuse and that it would not impose civil monetary penalties arising in connection with the anti-kickback statute for the proposed arrangement. 

The second OIG Advisory Opinion published by the OIG, 10-19, found that a nonprofit charitable organization could accept donations of cash and durable medical equipment from entities such as pharmaceutical manufacturers and DME suppliers and use those donations and funds to provide DME services to patients with hemophilia (Coagulation Disorder).

The nonprofit charitable organization would form a new, independent, tax-exempt charitable nonprofit that would provide financial grants and DME to entities that provide services and DME directly to certain individuals suffering from hemophilia.  The donors to the program would likely be pharmaceutical manufacturers, pharmacies and other providers that would provide services to patients suffering from hemophilia.  No restrictions will be allowed to be imposed on donations by donors, except for the specification that the donations be used to help those suffering from hemophilia.  Donors will not have knowledge of the specific use of their donation, but will be able to access the reports of the independent foundation.  The independent foundation will be controlled by a separate and independent board of directors with no financial ties to the Coagulation Disorder Industry.

The foundation would distribute financial assistance to (1) non-profit organizations serving those suffering from hemophilia that qualify as a public charity and (2) federally funded HTCs in the foundations’ region.  Individuals will not be eligible to apply for financial assistance from the foundation.  The organizations that qualify for assistance from the foundation may only use the grants to support individuals or families affected by coagulation disorders and to fund ancillary services for patients, i.e. transportation.  Specific donations of DME would be provided directly to patients, unless the healthcare program already covered the provision of those items.  These items would be provided to uninsured individuals that require financial assistance.

The OIG found that the proposed arrangement had a minimal risk of generating improper remuneration.  To reach this decision, the OIG stressed that no donor or affiliate of the donor would be able to influence the foundation or its programs and that the charitable organization must be motivated by bona fidecharitable purposes.

If you would like any of your financial arrangements analyzed for Stark or anti-kickback compliance, please visit or contact a Wachler & Associates attorney at 248-544-0888.   

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