OIG Issues New Open Letter to Providers
Posted by: Robert Markette
April 25, 2006

The Department of Health and Human Services Office of Inspector General (“OIG”) issued an open letter to providers on Monday. This letter addresses recent issues raised with the OIG by providers regarding concerns about improper relationships between hospitals and physicians.

Certain providers have discovered through their own internal compliance programs, that they are engaged in inappropriate relationships with physicians. These relationships include renting office space to physicians at less than fair market value. As a result of these contacts, OIG is attempting to “increase awareness” for providers of ways to resolve these issues. It appears that this amounts to supplementing the current self-disclosure program.

Because the letter discusses specific concerns of the hospital industry, it would not be to surprising to discover this “supplementation” has little bearing on the home care industry. However, because home health agencies and hospices do contract with physicians, it may provide some additional guidance to HHAs and Hospices as to what OIG will require from a self disclosure of an anti-kickback or self-referral violation.

It seems quite likely that the major effort here will be in provider education. In other words, OIG will be reminding hospitals that they are free to self disclose to OIG and that a properly performed self-disclosure will potentially lessen the provider’s burden. There may be some clarification as to the protocol for this type of self-disclosure. The main point is that this collaborative effort will be starting soon and aimed at these particular concerns.

Much like the original self-disclosure protocol and the open letter to providers issued in 2000, this letter does not provide a clear statement regarding “amnesty.” OIG leaves itself rather free to decide what to do to providers after a self-disclosure. As a former criminal defense attorney, it strikes me that this provides very little incentive to come forward. If a provider self-discloses, they may simply provide the government the evidence it needs to prosecute the self-disclosing provider.

Of course, in most instances, a proper compliance program is going to discover employees making mistakes or employee fraud. These types of discoveries are likely to lead to the provider simply repaying the overpayment and the employee being prosecuted.

Which leads to a second point – compliance programs. OIG would like every provider to have its own compliance program. In fact, having a compliance program can reduce your liability after a self-disclosure as well as provide a basis for a less restrictive post compliance agreement with OIG.

More importantly, even if you were disinclined to self disclose, having a proper compliance program can help you to catch problems early. The procedures and internal audit functions required by a proper compliance program are likely to catch errors early. This would allow you to correct the problem immediately. In turn, the amount of overpayment and potential penalties would be lessened, because the inappropriate conduct was terminated quickly. That alone is a strong reason to institute a corporate compliance program.

OIG has issue compliance guidances for both home health and hospice. I can only attach one document to each blog post, so I will have both of them posted on our website under health law articles. (This will probably not occur until tomorrow, because my secretary, Mandisa, is out today.) You can link to that page here.

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Free stuff, that's OIGs concern
Posted by: Robert Markette
April 20, 2006

There continues to be a great deal of discussion about the Office of Inspector General’s Advisory opinion from March 27. The biggest issue seems to be what can we continue to do without violating fraud and abuse. It has been suggested by some that the key concern to OIG was the nature of the visit. This has led to a recurring suggestion that agencies could instead perform a coordination visit, which is a prerequisite to home care.

In my opinion, if you are providing free services to a patient or prospective patient, you are on a very dangerous road. Right or wrong, OIG will most likely not see any difference between free pre-operative assessments and other free services to home care clients. OIG’s concern in the March 27 opinion was not the type of service being provided.

Its concern was that the service was being provided for free and that this was done to maximize the agencies opportunity to meet with the potential patient before surgery (and before they had the opportunity to choose a post operative health care provider). The free service, in turn, was likely to lead the beneficiary to choose the requesting agency as her provider of post operative home care. (Providing free non-covered services to a current patient would implicate the same concerns.)

The facts of the case implied that the doctor referred the patient for an assessment, in order to determine if the patient’s home was an appropriate place for recovery. If it was not, the physician would not be able to order home care. In effect, this visit was a necessary service to determine the appropriateness of home care, but that did not alert OIG’s analysis. (I discussed in an earlier post that OIG may have overlooked a few good reasons to not prosecute this type of arrangement.)

Over the years, OIG has offered a number of advisory opinions regarding free items or services to referral sources and beneficiaries. In the overwhelming majority of cases, OIG has advised the arrangement would violate the Anti-Kickback or Civil Money Penalty Statutes.

There have been exceptions, for example OIG has occasionally found an arrangement to be a violation, but not one it would prosecute. For example, last year OIG offered an opinion on home health agencies offering medic alert pagers for free that found them not to be a violation, because of CMS’s mandate to HHAs to adopt innovative telehealth technologies.

Of course, there is the CMP exception for low value items or benefits, but in light of the “beneficiary’s perception” analysis used by OIG in the March 27 letter, if you are offering a service, it may be impossible to fit within that exception. OIG determined that a service that cost the agency only $10.00 to provide was likely to be perceived by the beneficiary as a valuable service.

In my mind, the bottom line is that if you provide a free service to a beneficiary (or to a referral source for that matter) you are likely engaged in a violation of the anti-kickback and civil money penalty statutes. You should be very hesitant to engage in any form of free visit to a home care client, regardless of what you call it.

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Further thoughts on OIG recent advisory opinion
Posted by: Robert Markette
April 12, 2006

I have been reading a number of the responses to last weeks OIG opinion regarding a home health agency providing free assessments to potential clients.  Although some people seemed to be surprised by OIG’s opinion, given the repeated responses from OIG whenever a proposal involved anything free being provided to a potential referral source or beneficiary, their response was not really surprising.

The question that has occurred to me is whether OIG’s concern is misplaced.  One of OIG’s repeated concerns in fraud and abuse is over usage of Medicare.  In fact, in numerous opinions, OIG has stated a proposed arrangement is a technical violation, but not one it would choose to enforce, because it was not likely to lead to over utilization.

It strikes me that the arrangement put forward in the opinion OIG issued last week is similar.  The patient is going to receive surgery.  The patient is going to need aftercare.  Medicare is going to pay for this aftercare, regardless of whether the patient receives a free assessment.  If the doctor refers the agency to determine whether the aftercare can occur at home and the beneficiary can receive this assessment for free, why not allow it?

Yes, OIG was right; the agency was most likely willing to provide the free assessment, because the patient, out of familiarity, was more likely to choose that particular provider.  (Hospitals do something similar by opening hospital based home health agencies.  In healthcare, familiarity is a good thing.) 

But isn’t all good marketing designed to ensure that the customer picks your product.  How many attorneys provide free consultations?  It is not a problem for any of them ethically, it is simply good business sense and the individual who may need legal services receives some initial advice from the attorney.

Why can’t a potential home health patient receive the same service?  Perhaps the referring physician need to allow the patient to choose an entity to receive the assessment from or take some other action to prevent “collusion” between providers, but to eliminate the beneficiaries ability to receive the assessment for free is a waste of an opportunity to provide additional services to beneficiaries without incurring any additional costs to Medicare or the beneficiary.

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