office of inspector general

On October 24, 2018, Congress enacted a new anti-kickback law that applies to many commercial health insurance plans, as well as Medicare and Medicaid.  The law, known as the “Eliminating Kickbacks in Recovery Act of 2018” (the “Law”), was passed as part of the SUPPORT for Patients and Communities Act, which generally targets the national opioid crisis.

PillsMoneyThe Law makes it a criminal offense to do any of the following:

  1. Solicit or receive any remuneration (including any kickback, bribe or rebate), directly or indirectly, in return for referring a patient or patronage to a recovery home, clinical treatment facility or clinical laboratory; or
  2. Offer or pay a kickback to “induce” a referral of an individual to a recovery home, clinical treatment facility or clinical laboratory, or in exchange for an individual using the services of a recovery home, clinical treatment facility or clinical laboratory.

A “Clinical treatment facility” is broadly defined under the Law as essentially any non-hospital licensed facility that provides treatment for substance use.  Penalties for each violation can include a fine of up to $200,000 and imprisonment of up to 10 years.

The Law has seven “safe harbors”, some of which are similar to the safe harbors under the federal Anti-Kickback Statute that is generally applicable to Medicare and Medicaid services.  However, in contrast to the Anti-Kickback Statute, the safe harbor for employees and independent contractors under the Law expressly excludes from safe harbor protection any payment made to an employee or independent contractor that is determined or varies by:  (1) the number of individuals referred to one of the above facilities; (2) the number of tests or procedures performed; or (3) the amount billed to or received from the individual’s health insurance plan.

Although the Anti-Kickback Statute prohibits conduct similar to that prohibited by the Law in the context of Medicare and Medicaid, the Law casts a wider net in the context of referrals to recovery homes, clinical treatment facilities and clinical laboratories, as it applies to many commercial insurance plans.

It remains to be seen whether and how this Law may be narrowed down in application.  The U.S. Attorney General has the authority to issue additional safe harbor regulations under the Law, which could be used to clarify existing safe harbors.  The Law may also be amended by Congress in the future.

In addition to having a significant impact on the clinical laboratory industry, the Law could affect physicians employed or engaged by recovery homes or clinical treatment facilities, or participating in an arrangement directly or indirectly involving referrals to such homes or facilities.

The full text of the Law may be accessed at this link:  Eliminating Kickbacks in Recovery Act of 2018.

If you have any questions about how the Law may apply to your practice, please consult with experienced legal counsel.

Two recent Advisory Opinions by the Office of Inspector General (OIG) shed some much needed light of the OIG’s view of marketing by health care providers.  Last week the OIG published Advisory Opinions 10-23 and 10-24, both concerning a proposed arrangement between a sleep testing provider and a hospital.  The facts in both Opinions were very similar: the hospital contracted with a sleep testing company to provide certain sleep testing equipment and services.  Among other things, the sleep testing company would provide marketing services for the hospital’s sleep center.  

In Opinion 10-23 the OIG concluded that the arrangement could potentially generate prohibited remuneration under the anti-kickback statute and that the OIG could potentially impose administrative sanctions if the parties proceeded with the arrangement.  In opinion 10-24, however, the OIG concluded that while the proposed arrangement could potentially generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals of Federal health care program business were present, the OIG would not impose sanctions on the parties because the arrangement included sufficient safeguards against the risks if improper inducement.

In both proposed arrangements, the parties stipulated that the compensation to be paid to the sleep testing company was consistent with fair market value.  However, in Opinion 10-23, the compensation was on a per test basis (sleep company was paid each time a patient was tested) and in Opinion 10-24, the sleep company was paid a fixed amount regardless of the number of patients seen or tested.  Although Advisory Opinions may generally only be relied upon by the parties requesting them, these two contrasting opinions suggest that marketing as an element of an independent service agreement is not fatal to the arrangement under the kickback statute as long as the compensation is fixed in advance, does not fluctuate with the volume or value of services and is consistent with fair market value.


Physicians and other Part B providers should be aware that the Office of Inspector General of the Department of Health and Human Services has released its Work Plan for Fiscal year 2011. The Work Plan describes those area the OIG intends to review in the coming fiscal year and is a key tool for determining what “risk areas” to focus on from a compliance standpoint. A partial list of the Part B review areas in the 2011 Work Plan is as follows:

Place‐of‐Service Errors. Will review physician coding of place of service on Medicare Part B claims for services performed in ambulatory surgical centers (ASC) and hospital outpatient departments.

Coding of Evaluation and Management Services. Will review evaluation and management (E&M) claims to identify trends in the coding of E&M services, the extent of potentially inappropriate payments for E&M services and the consistency of E&M medical review determinations, and industry practices related to the number of E&M services provided by physicians and reimbursed as part of the global surgery fee.

Medicare Payments for Part B Imaging Services. Will review Medicare payments for Part B imaging services focusing on the practice expense components to determine whether Medicare payments reflect the expenses incurred and whether the utilization rates reflect industry practices.

Billing of Portable X‐Ray Suppliers. Will review providers of portable x‐ray services with unusual claims patterns and identify Medicare claims that are questionable.

Questionable Billing for Medicare Outpatient Therapy Services. Will review paid claims data for Medicare outpatient therapy services from 2009 and identify questionable billing patterns.

Appropriateness of Medicare Payments for Polysomnography. Will review the appropriateness of Medicare payments for sleep studies.

Excessive Payments for Diagnostic Tests. Will review Medicare payments for high‐cost diagnostic tests to determine whether they were medically necessary.

Independent Diagnostic Testing Facilities’ Compliance With Medicare Standards. Will review selected IDTFs enrolled in Medicare to determine the extent to which they comply with selected Medicare standards.

More information on the Work Plan can be found here.

It is apparent that preventive care will take on greater importance in the "reformed " health care system and while Medicare historically did not cover routine or preventive screening services, the list of preventive services now covered by Medicare has grown in recent years.  Physicians should familiarize themselves with the applicable coverage and billing rules so as not to miss an opportunity to capture revenue for these services where appropriate.  To help physicians in this regard, CMS has published a guide to preventive and screening services for physicians and other providers.  Also, for a good overview on the OIG’s current thinking on offering free screening services, physicians and other providers should have a look at the recent OIG Advisory Opinion 09-11 addressing free blood pressure screenings to walk-in visitors at a hospital.

In its recent Advisory Opinion No. 09-05, the OIG reviewed a proposed arrangement whereby a hospital would compensate physicians for on-call services performed on behalf of the hospital’s uninsured patients. The OIG concluded that while the Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute, if the requisite intent to induce or reward referrals of Federal health care program business were present, the Office of Inspector General (“OIG”) would not impose administrative sanctions on the arrangement.

Under the proposed arrangement, the hospital would pay physicians for services provided during on-call periods to indigent patients. The proposal included four discount payment amounts/categories: (1) Emergency consultations: $100 flat fee; (2) Care of patients admitted as inpatients from the Emergency Department: $300 per admission. (3) Surgical procedure or procedures performed on a patient admitted from the Emergency Department: $350 flat fee; and (4) Endoscopy procedure or procedures performed on a patient admitted from the Emergency Department: $150 flat fee.

The OIG noted that while there is “substantial risk that improperly structured payments for on-call coverage could be used to disguise unlawful remuneration” under the anti-kickback statute, the proposed arrangement included adequate safeguards against such abuse including:

(1) The payment amounts were represented to be within the range of fair market value for services rendered;

(2) The hospital had a legitimate rationale for revising its on-call coverage policy (physicians were refusing to provide on-call services);

(3) The proposed arrangement would be offered uniformly to all physicians on staff, the method of scheduling on-call coverage would be governed by the hospital’s medical staff by-laws, would be uniform within each department or specialty, and would not be used to selectively reward the highest referrers; and

(4) The proposed arrangement would appear to create an equitable mechanism for the hospital to compensate physicians who actually provide care that the Hospital must furnish.

While the Advisory Opinion does not contain any surprises, it provides a very useful analysis at a time when on-call compensation arrangements are proliferating. Physician who have on-call compensation arrangements or who are considering entering into one are well-advised to review their arrangements in light of the OIG’s analysis.