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Oct 10

OIG Advisory Opinion 08-12

The Office of Inspector General of the Department of Health and Human Services (OIG) issued Advisory Opinion 08-12, concluding that the processing and submission of insurance preauthorizations for certain radiology and imaging procedures would not generate prohibited remuneration under the anti-kickback statute and would not be subject to administrative sanctions.

Under the proposed arrangement, the requestor would form and wholly own Newco, which would contract with various radiology and imaging centers (Centers) around the country to provide purely administrative services (processing and submission of insurance preauthorizations for radiology and imaging procedures when required by a patient's insurance company). Newco would obtain necessary patient information solely from the Centers. The Centers would pay Newco a flat, fair market value fee per preauthorization processed and submitted regardless of whether the insurance company approves the preauthorization. Most of the preauthorizations would involve private payors, though a small number could involve federal program payors (e.g., Medicare Advantage programs). Newco would not provide any marketing or other management services to the Centers.

Significantly, Newco and its affiliates are not and would not be:
(1) healthcare providers, practitioners, or suppliers; (2) affiliated with the healthcare industry, except as a provider of the subject services; (3) in a position to receive or influence referrals of items or services covered under a federal healthcare program; or (4) in contact with any private or public healthcare beneficiaries in the performance of their businesses.

While the OIG commented that the arrangement would not fit the personal services and management contracts safe harbor under the anti-kickback statute because the aggregate compensation to be paid Newco would not be set in advance, the OIG found that the proposed arrangement otherwise appeared to be compliant with the anti-kickback statute due to the apparent lack of potential referrals of federal healthcare business associated with the arrangement, based on the factors set forth below.

First, Newco and its affiliates are not healthcare providers, practitioners, or suppliers, and they are not affiliated with the healthcare industry (other than through the proposed arrangement). Newco's services would be purely administrative and would be compensated in a manner consistent with fair market value. Newco would have no ability to receive or influence referrals.

Second, the proposed arrangement is distinguishable from arrangements that involve marketing or promotion services. All patient information would be provided to Newco by the Centers. Newco would not contact patients or physicians. No coding, billing, or claims work is involved in the arrangement. As a result, Newco's services do not rise to the level of arranging for or recommending the purchasing, leasing, or ordering of items or services payable under a federal healthcare program.

Third, the proposed arrangement is distinguishable from arrangements where the administrative services are provided by or on behalf of a supplier (such as an imaging company) or manufacturer to an existing or potential referral source. The OIG commented, "In those situations, there is a significant risk that at least one purpose of providing the services is to influence referrals to the party providing the services."

The OIG cautioned that if a Center or another third party (such as a manufacturer) paid Newco to provide the services for or on behalf of a Center referral source, such as a physician, and thus relieved the referral source of the cost of processing and submitting preauthorizations, then the Center or other third party could be providing prohibited remuneration to the referral source, in violation of the anti-kickback statute.

The Fraud and Abuse Practice Group Leadership of the American Health Lawyers Association (www.healthlawyers.org) would like to thank Advisory Opinions Task Force members Ingrid Brydolf (Davis Wright Tremaine LLP, Portland, OR) and Joseph M. Kahn (Nexsen Pruet PLLC, Greensboro, NC), for respectively writing and reviewing this summary.

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