Executive Summary
On August 23, 2012, the Department of Health and Human Services Office of the Inspector General (“OIG”) issued OIG Advisory Opinion 12-10 (the “AO”). The OIG reviewed a proposed arrangement to provide free insurance pre-authorization services to referring physicians and concluded that while the free services potentially could be characterized as prohibited remuneration in violation of the Anti-Kickback Statute (“AKS”) if the necessary intent to influence referrals of federal health care program business were present, the OIG would not impose sanctions under the facts and circumstances presented by the party requesting the AO (“Requestor”). The AO can be found here.
Proposed Arrangement
The Requestor is a physician-owned radiology services provider that seeks to offer free of charge pre-authorization services to all referring physicians and patients. Commercial insurers often require pre-authorization for imaging services to ensure appropriate utilization. Under the proposed pre-authorization program, the Requestor would obtain from referring physicians, and provide to the patient’s insurer, any documentation of medical necessity or other pertinent information requested by the insurer. The disclosure of information would comply with HIPAA and all state and federal privacy laws. The Requestor would also provide to the referring physician a copy of the information shared with the insurer. The services would be made available to all referring physicians without consideration of any physician’s past or expected future radiology referrals. The Requestor would make no promises or representations to physicians or patients concerning the approval of the services being requested. Further, the Requestor certified that it would not pay any money to referring physicians and did not have any “ancillary agreements” with referring physicians that would induce or reward referrals.
The Requestor noted that referring physicians often have insurance contracts with many insurers and that, in turn, each insurer may sponsor multiple plans, all of which have different requirements addressing the party responsible for obtaining pre-authorization (e.g., imaging services provider, patient, primary care physician, referring physician). The Requestor stated it would be impossible for it to know the pre-authorization terms for every plan and every contract, but that if the Requestor’s contract with a particular insurer prohibits the Requestor from securing the pre-authorization, the Requestor would not perform the pre-authorization service in such case. The Requestor as the provider of radiology services has a strong interest in offering pre-authorization services because it is the party that could be denied reimbursement.
The OIG noted that Medicare usually does not require pre-authorization for imaging services but that the proposed program would implicate Medicare/Medicaid referrals since some Medicare/Medicaid patients enroll in HMOs that require pre-authorization for at least some diagnostic imaging services.
OIG’s Analysis
The OIG reiterated its long-standing position that the provision of free or below fair market value services to “actual or potential referral sources” is suspect under the AKS. It observed that the Requestor’s pre-authorization program might have “independent value” to referring physicians. First, if a referring physician’s insurance contract requires the physician to obtain pre-authorization for imaging services for the physician’s patients, then the Requestor’s program would relieve the referring physician of a contractual duty he/she otherwise would have to provide at some cost. For obvious reasons, the pre-authorization program would confer a financial benefit on referring physicians. Second, even if there were no contractual duty to perform pre-authorization, to the extent the referring physician’s office staff engages in these administrative tasks, the Requestor’s execution of the pre-authorization function could save the referring physician money and thus could be considered remuneration. Under the current interpretation of the AKS, if even one purpose of providing free services is to influence referrals, then the AKS is violated.
Notwithstanding the OIG’s position that the pre-authorization program could constitute prohibited remuneration, it would decline to impose sanctions under the AKS because it believed the proposed arrangement posed a low risk of fraud and abuse for the following reasons:
- The proposed arrangement did not “target” particular doctors.
- The Requestor would make no payments to referring physicians or enter into side arrangements that could benefit the referring physicians. The Requestor would make no guarantees that pre-authorization efforts would be successful.
- The arrangement would be “transparent,” meaning the Requestor would disclose to insurers the existence of the pre-authorization program and would communicate with referring physicians regarding information submitted to insurers. The Requestor would not embed its personnel at potential referrers’ offices, thus creating a greater opportunity to generate referrals.
- Due to the existence of so many insurance plans and their frequent amendments, the Requestor, likely, would not know when it was relieving a referring physician of a contractual obligation to obtain pre-authorization for his/her patients (i.e., bestowing a benefit). Thus, the intent to induce referrals would be absent.
- The Requestor has a bona fide interest in engaging in the pre-authorization process unrelated to the pursuit of referrals because its payments are at stake.
Finally, in a footnote to the AO, the OIG stated it also would decline to impose civil monetary penalties against the Requestor for potentially giving something of value to a federal health care program beneficiary that could influence the beneficiary’s selection of a particular radiology services provider. In addition to the safeguards the OIG identified above, the OIG noted the pre-authorization program would implicate only a limited number of persons enrolled in Medicare/Medicaid managed care plans.
Conclusion/Practical Takeaway
As always, the OIG clarified that its favorable opinion only can be relied on by the Requestor. Providers wishing to provide similar services should proceed very carefully and be sure to structure a program with safeguards like those set forth in the AO.
If you have any questions or would like additional information about this topic, please contact Adele Merenstein at (317) 752-4427 or amerenst@hallrender.com or your regular Hall Render attorney.
