In October, 2007, the OIG posted three Advisory Opinions that addresses: whether State-operated veterans’ homes can accept bid offers from therapy service providers to furnish services for free or below cost, the addition of optometrists as owners of single-specialty ophthalmology ambulatory surgical centers, and a county’s exclusive contracts for emergency ambulance services with private ambulance companies.
Summaries of each Advisory Opinion are found below.
OIG Advisory Opinion 07-12
Advisory Opinion 07-12 addresses whether State-operated veterans’ homes could accept bid offers from occupational, physical, and speech pathology service providers at low or no-cost without violating the Federal anti-kickback statute.
According to the facts, a particular State agency is responsible for the operation, management, financing, and general direction of the veterans’ homes. Under the state-mandated Invitation for Bid (IFB) process, the State must award the service contracts to the lowest bidder, who will have exclusive rights to provide therapy services for the duration of the contract. The IFB required the contractors to disclose the charge to provide therapy services to the veterans’ homes uninsured residents. For the uninsured residents, the veterans’ homes would cover the complete costs of therapy services at the bid price stipulated by the contractor in the proposal. For insured residents, the veterans’ homes would pay all cost-sharing amounts to the lowest bidder. Under the proposed arrangements, the lowest bidder submitted a no-cost bid at one veteran’s home and a low cost bid at another home.
Although the OIG concluded that the proposed arrangement potentially implicates the anti-kickback statute, the OIG concluded it would not impose sanctions because of the combination of specific factors presented in the facts. Specifically, the OIG recognized that the State mandated the veterans’ homes program and thus should have flexibility to organize and manage veterans’ services. By statute, the State agency was required to issue IFBs to contract with therapy service providers and the proposed arrangement flowed through this competitive bid process. Moreover, the OIG concluded that the State subsidy of cost-sharing amounts was unlikely to influence a veteran’s choice of nursing facility. Further, the State, not private entities, would benefit from the financial savings under the proposed arrangement. In addition, the OIG recognized that the therapy services could be ordered only by veterans’ homes physicians, none of whom had financial relationships with the lowest bidder. Lastly, the OIG concluded the proposed arrangement would not compromise patient care and would not have an adverse effect on competition.
For a full copy of the OIG’s Advisory Opinion 07-12, click here.
OIG Advisory Opinion No. 07-13
Advisory Opinion 07-13 addresses whether the addition of optometrists as owners of single-specialty ophthalmology ambulatory surgical centers (“ASCs”) implicates the anti-kickback statute.
In this Advisory Opinion, the OIG examined the relationship between a group practice (composed of ophthalmologists, optometrists, and a wholly-owned subsidiary of a non-profit hospital) and an ambulatory surgical center. The surgical center owns 3 single-specialty, Medicare-certified ophthalmology ASCs. While the group practice’s ophthalmologists and the hospital both have ownership interests in the ASC, the optometrists do not. The optometrists, however, make referrals to the ophthalmologists for treatment of eye injuries or diseases and, as employees of the group practice, have agreed to refer patients for non-inpatient services to the ASC in certain cases. The proposed arrangement would allow the optometrists to join the ophthalmologists and the hospital as owners of the ASC through membership purchase agreements that would allow the optometrists to purchase specific numbers of shares over a 3-year period.
The OIG concluded that the proposed arrangement could potentially implicate the anti-kickback statute because surgical center joint ventures that include investors who are in a position to generate surgical business are susceptible to fraud and abuse. The OIG reasoned that, although some physician-owned surgical center ventures may be beneficial, the current safe harbor for physician-owned ASCs requires compliance with carefully tailored criteria to mitigate the risks of fraud and abuse, such as: (1) limiting ownership to physicians who perform ASC procedures on a regular basis, as demonstrated by meeting a one-third practice income test, and (2) the involvement of other investors who are not in a position to generate referrals to the ASC or its investors. The OIG concluded that the proposed arrangement does not satisfy these safe harbor requirements because the optometrists do not perform surgical procedures but instead can generate referrals to the ASCs. The OIG believes that no safeguards currently in place would effectively minimize the significant risk that the proposed arrangement would become a vehicle for providing the optometrists with a share of profits from their referrals to the ophthalmologists currently utilizing the ASCs. The OIG reasoned that, under the proposed arrangement, the likelihood that the optometrists would be using their investment in the ASC simply as a vehicle for receiving remuneration for patient referrals to the ophthalmologists would significantly increase.
For a full copy of the OIG’s Advisory Opinion 07-13, click here.
OIG Advisory Opinion No. 07-14
Advisory Opinion No. 07-14 addresses whether a county’s exclusive contracts for emergency ambulance services with private ambulance companies, under which the companies would be responsible for absorbing the costs of transporting uninsured arrestees and would reimburse the county for the costs of providing administrative and emergency dispatch services, implicates the anti-kickback statute.
In this Advisory Opinion, the OIG examined a county-operated emergency medical services (“EMS”) system that provides emergency transportation and care to the county’s residents. The county has continuously contracted with the same 3 companies to serve its EMS system since 1981. The county and the companies recently entered into new, but essentially identical, contracts that place the responsibility for billing and collection for services from individuals transported and third party payers on the ambulance companies. The proposed arrangement contains 3 new contractual provisions: (1) that the ambulance companies bear the cost of transporting uninsured arrestees, and that the companies would be expected to transport or care for fewer than 400 arrestees annually across the entire county; (2) that the companies reimburse the county for costs incurred by the county providing quality assurance oversight, medical oversight, and contract administration services with respect to the EMS system; and (3) that the companies pay the county’s fire protection division a share of the overall estimated costs of providing EMS dispatch services.
Even though the OIG stated that this arrangement would implicate the anti-kickback statute, the OIG concluded that the proposed arrangement would pose a minimal risk of federal health care program fraud or abuse because several factors, in combination, mitigate the risk: (1) the proposed arrangement would be part of a comprehensive regulatory scheme by the county to manage the delivery of emergency medical services, and thus would be managed by a valid governmental entity legally empowered to regulate the provision of these services in the county within the police powers traditionally delegated to local government; (2) the proposed arrangement, by providing only partial compensation for the actual costs of the county’s and the fire protection division’s services, would not cause the ambulance companies to overpay the sources of the referrals (the typical anti-kickback concern); (3) the payments to be made under the proposed arrangement would not pose an increased risk of overutilization or increased costs to the federal health care programs because neither the county, the fire protection division, nor the ambulance companies have a significant ability to affect utilization of emergency medical services in the county; (4) the contract exclusivity would not adversely impact competition because the county has consistently contracted with these companies since 1981 and has chosen to maintain contracts with these companies in a manner consistent with relevant government contracting laws; (5) the potentially prohibited remuneration—privately-borne costs of transport for uninsured arrestees, and payments to the county and the fire protection division—would inure to the public, rather than private, benefit; (6) the proposed arrangement would not represent a fundamental change in the delivery of emergency medical services in the county; and (7) the free transport of uninsured arrestees, and the payments to the county and the fire protection division, relate directly to the emergency medical transports covered by the contracts, and there is no ancillary or unrelated remuneration (e.g., free or reduced cost equipment) offered or paid by the ambulance companies to the county or the fire protection division.
For a full copy of the OIG’s Advisory Opinion 07-14, click here.