The Department of Health and Human Services Office of the Inspector General (OIG) has issued an Advisory Opinion (Opinion) in connection with a hospital’s gainsharing arrangement (Arrangement) with a designated group of neurosurgeons who perform spinal fusion surgeries at the hospital. According to the Opinion, the OIG would not impose sanctions because the Arrangement, when viewed in its entirety, is not designed or likely to induce the neurosurgeons to (i) reduce or limit medically necessary services to their Medicare or Medicaid patients, or (ii) increase referrals to the hospital. This Opinion is the latest in a line of earlier advisory opinions to “bless” gainsharing arrangements that meet certain criteria for minimizing the risk of fraud and abuse. Continue Reading OIG Reaffirms Permissibility of Certain Gainsharing Arrangements

Last week, the OIG issued a favorable opinion to a hospice provider seeking to make supplemental payments to skilled nursing facilities.  Under the proposed arrangement, the hospice provider would make a supplemental payment to the nursing facility for dual-eligible individuals electing the hospice benefit that would be in addition to and separate from what the managed care organization (“MCO”) pays the nursing facility.

This supplemental payment by the hospice provider is different than the traditional payments that hospice providers make to nursing facilities for dual-eligible individuals.  Traditionally, when a dual-eligible individual residing in a nursing facility elects the hospice benefit, Medicare pays the hospice provider a per diem rate that does not include room and board.  Medicaid is responsible for paying the individual’s room and board.  Medicaid pays room and board to the hospice provider and the hospice provider pays the nursing facility the negotiated rate.  In a 1998 Special Fraud Alert on nursing home arrangements with hospices, the OIG specifically stated that this payment arrangement, in which the hospice provider pays the nursing facility only after receiving payment from Medicaid, is acceptable. Continue Reading OIG Gives Green Light to Hospice Provider’s Payment to Nursing Facilities

Last week, the Office of Inspector General (OIG) for the Department of Health and Human Services published Advisory Opinion 15-10 (Opinion). The Opinion addressed a hospital system’s proposal to lease non-clinician employees and provide operational and management services to a related psychiatric hospital. While finding that the Proposed Arrangement could potentially generate prohibited remuneration under the Anti-Kickback Statute (AKS), the OIG stated that it would not impose administrative sanctions in connection with the arrangement because it was sufficiently low-risk.

The hospital system (System) that requested the Advisory Opinion is a non-profit system that owns multiple hospitals and other health care providers.  The System and a non-profit corporation are the sole members of a non-profit psychiatric hospital (Center), which in turn is part of the System’s integrated health network. The Center is paid by Medicare under the inpatient psychiatric facility prospective payment system and the Center (and certain parts of the System) file cost reports with the Centers for Medicare & Medicaid Services (CMS). The System and Center are possible referral sources for each other.

Prior to requesting the Advisory Opinion, the System and Center were already parties to a Master Services Agreement and an Employee Lease Agreement under which the System: (1) leased non-clinician employees to the Center for an amount equal to the System’s fully loaded costs (i.e., salary, benefits and overhead expenses for those employees) plus a two percent administrative fee; and (2) provided operational and management services to the Center for a fee equal to the System’s fully loaded costs to provide those services plus a two percent administrative fee (the Existing Arrangement).  Under the arrangement proposed to OIG (Proposed Arrangement), the parties would retain the Existing Arrangement except that the Center would no longer pay a two percent administrative fee for either the leased employees or the operational and management services. Continue Reading OIG Issues Favorable Advisory Opinion of Hospital Leasing Arrangement