The Office of Inspector General of the Department of Health and
Human Services (the "OIG") recently issued Advisory Opinion 11-06, which examined the
fraud and abuse risks associated with post-acute care referral
services. The advisory opinion indicates that when it comes to
patient referral services, the OIG will not stray far from the
requirements of the referral service safe harbor
In the advisory opinion, a company that provided discharge
planning software, online tools, and other related support services
to hospitals developed an Internet referral service that those
hospitals could use to identify and select post-acute care
providers – such as skilled nursing facilities, home
health agencies, and assisted living facilities. The referral
service primarily consisted of an online, nationwide database of
licensed post-acute care providers that was based on state
licensure records. The hospitals participating in the service would
use the list to identify the post-acute care providers that were
best suited to meet their patients' needs. Once a provider
or providers had been identified, the hospital would send the
patient's name, medical records, and other relevant
information to the referral service which would, in turn, forward
the information to the provider(s) that had been selected. Although
it varied, most hospitals made their post-acute care referrals on a
first-come, first-served basis.
As originally structured, participating hospitals paid the company
a fee to utilize its post-acute care referral service. The company
certified that the fees it collected from the hospitals were fair
market value for the services being provided and were not tied,
directly or indirectly, to the volume of referrals or other
business generated between the parties. The company added, however,
that the fees collected did exceed the costs associated with the
operation of the service. While the company did not currently
charge post-acute care providers to be part of the referral
service, under the terms of the proposed arrangement, the company
would require those providers to pay a one-time implementation fee
and a monthly service fee if they wanted to fully participate in
the referral service on a going-forward basis. Providers that
elected not to pay the fees would still be included in the referral
service's database but would only be able to receive and
respond to requests for referrals via facsimile. While the company
certified that the fees that would be charged to the post-acute
care providers would not vary based on the volume or value of
referrals, it also certified that it would be more expensive for
the company to fax requests for referrals to non-paying providers
than it would be to send those requests electronically.
The OIG began its analysis by reviewing the requirements of the
anti-kickback statute safe harbor for referral services. The OIG
noted that, among other things, the referral service safe harbor
requires that if a referral service charges its participants any
fees, the fees (i) must be assessed equally against and collected
equally from all participants in the referral service and (ii) may
only be based on the cost of operating the referral service and not
on the volume or value of patient referrals. Because the
participation fees would not be assessed equally against or
collected equally from all of the participating providers, the OIG
quickly determined that the company's proposed arrangement
would not qualify for safe harbor protection.
In addition to finding that the proposed arrangement would not
qualify for safe harbor protection, however, the OIG also
determined that the arrangement would present more than a minimal
risk under the anti-kickback statute. First, the OIG noted that
because referrals were typically made on a first-come, first-served
basis, post-acute care providers that did not pay the participation
fee would be forced to receive and respond to requests for
referrals via facsimile and would be at a significant competitive
disadvantage. Second, the OIG indicated that because it would cost
the company more to fax requests for referrals to non-paying
providers than it would for the company to send those requests
electronically, it appeared that the difference in delivery methods
was primarily intended to penalize providers that chose not to pay
the participation fee. Finally, the OIG observed that a number of
post-acute care providers had indicated that they could not afford
to pay the fees that were going to be charged but believed that
they would lose a significant amount of business if they could not
find a way to do so. As a result, the OIG stated that these (and
all) providers could face pressure to recoup the fees for the
referral service through overutilization, upcoding, extended
patient stays, and the provision of unnecessary services.
Therefore, the OIG declined to protect the proposed
arrangement.
Given the facts and circumstances, it is not surprising that the
OIG refused to approve this proposed arrangement. The advisory
opinion reinforces the government's position that while
there may be a number of benefits from streamlining and
coordinating hospital and post-hospital care, efforts to integrate
those services must still comply with the anti-kickback
statute.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.