The U.S. Department of Health and Human Services Office of Inspector General (“OIG”) recently issued Advisory Opinion 26-15 addressing a subscription-based referral management software platform used during hospital discharge planning. OIG concluded that, under the facts presented, the arrangement could generate prohibited remuneration under the Federal Anti-Kickback Statute (“AKS”) because providers paying subscription fees received a competitive advantage in obtaining referrals for federally reimbursable services.
Although advisory opinions apply only to the requesting parties, Advisory Opinion 26-15 reflects OIG’s continued focus on technology arrangements that intersect with hospital discharge planning and referral management. Hospitals, post-acute providers and health care technology companies should consider whether the opinion has implications for existing or future referral management arrangements.
Background
The requestor operated home health agencies (“HHAs”) that relied on hospital referrals for post-discharge patients. Under the arrangement, the requestor paid subscription fees to a technology vendor that operated an online referral management platform connecting hospitals with HHAs during the discharge planning process.
According to the advisory opinion, hospitals presented patients with a list of available HHAs regardless of whether the agencies subscribed to the platform. However, only subscribing HHAs could receive and respond to referrals electronically through the software. Non-subscribing providers instead received referrals through traditional methods such as fax, telephone or email.
The requestor certified that hospitals frequently awarded referrals on a first-come, first-served basis. As a result, providers subscribing to the software could respond to referral requests more quickly than non-subscribing providers, providing subscribers with a competitive advantage in obtaining referrals. The vendor also received fees from hospitals using the platform.
OIG’s Analysis
OIG concluded that the arrangement implicated the AKS because the requestor paid remuneration to the software vendor in exchange for access to a platform that facilitated referrals for services reimbursable by federal health care programs.
OIG also determined that the arrangement did not qualify for protection under the referral services safe harbor. Among other concerns, OIG noted that the subscription fees were not assessed uniformly against all participants and were not based solely on the cost of operating the referral service.
Because no safe harbor applied, OIG evaluated whether the arrangement presented more than a minimal risk of fraud and abuse. OIG identified several concerns.
First, OIG concluded that the subscription model created the potential for inappropriate steering and unfair competition. Based on the requestor’s certification that referrals were frequently awarded on a first-come, first-served basis, providers paying subscription fees obtained a significant competitive advantage by receiving and responding to referrals electronically, while non-subscribing providers experienced delays associated with traditional communication methods.
Second, OIG expressed concern that providers were effectively paying for enhanced access to referral opportunities rather than competing based solely on the quality of care they provide.
Finally, OIG noted that providers paying subscription fees could face pressure to recoup those costs through increased utilization, potentially creating incentives for medically unnecessary services reimbursable by federal health care programs.
Based on these considerations, OIG concluded that the arrangement presented more than a minimal risk of fraud and abuse and therefore issued an unfavorable advisory opinion.
Observations
Like all OIG advisory opinions, Advisory Opinion 26-15 is limited to the specific facts presented by the requesting party and may not be relied upon by others. Nevertheless, the opinion provides insight into OIG’s continued scrutiny of technology arrangements in which provider payments may affect access to referrals or participation in hospital discharge planning.
At the same time, the opinion does not address the many variations of referral management, care coordination and interoperability technology currently used throughout the health care industry. Organizations should evaluate their arrangements based on their particular facts and circumstances, including the functionality of the technology, the pricing structure and the role the platform plays in the referral process.
Key Takeaways
- OIG concluded that a subscription-based referral management arrangement may implicate AKS where provider payments create a competitive advantage in obtaining referrals.
- Although limited to the requesting parties, Advisory Opinion 26-15 may prompt increased scrutiny of referral management arrangements involving hospitals, post-acute providers and technology vendors.
- The opinion emphasizes OIG’s concern with arrangements in which payment may influence referral opportunities or competitive access to referrals.
- Organizations that develop, market or utilize referral management technology should consider reviewing existing arrangements to determine whether the opinion has implications for their current practices or future business models.
If you have any questions regarding Advisory Opinion 26-15 or its potential implications for referral management, care coordination or interoperability arrangements, please contact:
- Sean Fahey at (317) 977-1472 or sfahey@hallrender.com;
- Brian Jent at (317) 977-1402 or bjent@hallrender.com;
- Todd Selby at (317) 977-1440 or tselby@hallrender.com; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
