Legal Intelligencer article by Lamb McErlane Health Law attorneys Vasilios J. Kalogredis, Esq. and Sonal Parekh, Esq.

The HHS Office of Inspector General (“OIG”) issued Advisory Opinion No. 26-15 (“Opinion”) on June 25, 2026 regarding an arrangement whereby an operator of home health agencies (“Requestor”) pays subscription fees to a health care technology vendor (the “Vendor”) for online referral management software (the “Software”) that facilitates hospital referrals to the home health agencies (the “Arrangement”). Specifically, Requestor inquired whether the Arrangement would constitute grounds for sanctions under Sections 1128A(a)(7) or 1128(b)(7) of the Social Security Act (“SSA”) as those sections relate to the Federal Anti-Kickback Statute[1] (“AKS”).

Due to the particular referral process and risks presented, the OIG issued an unfavorable opinion, concluding that the Arrangement would generate prohibited remuneration under the AKS if the requisite intent were present, thereby providing grounds for the imposition of administrative sanctions.

Factual Background

Requestor operates home health agencies (“HHAs”) that furnish skilled and unskilled in-home care services to adults and children, including beneficiaries of Federal health care programs. Many of Requestor’s patients are referred by hospitals upon discharge. Medicare regulations require hospitals to provide patients being discharged for home health services with a list of HHAs that participate in Medicare, are available to the patient, and serve the patient’s geographic area. HHAs must request to be included on the hospital’s list.[2] Requestor certified that hospital referrals are frequently made on a first-come, first-served basis, such that an HHA’s ability to respond quickly to a hospital’s request for services can determine whether it obtains the referral.

Under the Arrangement, Requestor pays the Vendor a separate subscription fee for each hospital from which it wishes to receive referrals through the Software. The Software connects hospitals with HHAs during discharge planning by allowing subscribing HHAs to electronically receive hospital requests for home health services and immediately accept referrals. According to Requestor, participating hospitals can view a list of HHAs in their region regardless of whether an HHA subscribes to the Software; however, only subscribing HHAs are able to receive electronic referral communications and respond through the Software.

Where a hospital uses the Software but an HHA does not subscribe, the hospital would need to communicate referral requests by other means, including facsimile, email, telephone, or hand-delivery. An HHA seeking to accept such a referral would then need to contact the appropriate hospital representative by telephone, rather than accepting it immediately through the Software. Requestor certified that these additional steps create delays that, in practice, effectively exclude non-subscribing HHAs from securing referrals.

Requestor further represented that the Vendor’s subscription fees vary based on factors such as geographic location and number of commonly owned HHAs purchasing subscriptions, including potential volume discounts for multi-location operators. Based on its communications with the Vendor, Requestor understood that the fees were not based solely on the Vendor’s costs of providing the referral service. Requestor also understood that hospitals pay the Vendor to participate; however, the OIG did not evaluate the separate arrangements between the hospitals and the Vendor.

The Law

The AKS[3] makes it “a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, the referral of an individual to a person for… any item or service reimbursable under a Federal health care program.” The prohibition extends to remuneration to induce, or in return for, the purchasing, leasing, or ordering of, or arranging for or recommending the purchasing, leasing, or ordering of, any good, facility, service, or item reimbursable by a Federal health care program. Here, remuneration includes the transfer of anything of value. The statute applies to any arrangement where at least one purpose of the remuneration is to induce referrals for items or services reimbursable by a Federal health care program. Violations of the AKS constitute a felony punishable by a maximum fine of $100,000 and/or up to 10 years of jail time, as well as exclusion from Federal health care programs and potential imposition of fines by the OIG.

While statutory exceptions and regulatory safe harbors exist, protection is only available where all elements of a safe harbor are strictly satisfied. Arrangements that fall outside of safe harbor protection are subject to a fact-intensive, case-by-case analysis. Here, the OIG considered the potential applicability of the “Referral Services Safe Harbor,”[4] which protects certain payments between a referral service and its participants. Among other requirements, the safe harbor provides that referral fees must (i) be assessed uniformly against all participants; (ii) be based only on the costs of operating the referral service; and (iii) not vary based on the volume or value of Federal health care program referrals.

Legal Analysis and Conclusion

The OIG acknowledged that the Arrangement implicated the AKS because Requestor paid remuneration to the Vendor in exchange for access to Software that facilitates arranging for home health services, including services reimbursable by Federal health care programs. Although the payment was characterized as a software subscription fee, the Software enabled Requestor to receive and accept hospital referrals electronically, thereby providing a means of obtaining Federal health care program business.

The OIG then examined whether the Arrangement satisfied the Referral Services Safe Harbor. The OIG concluded that it did not, finding that the Arrangement failed to satisfy multiple safe-harbor requirements, including the requirement that referral fees be uniformly assessed against all participants.[5] In particular, subscription pricing varied among HHAs, and Requestor understood that the Vendor’s fees were not based solely on the cost of operating the referral service. Because the Arrangement was not protected by a safe harbor, the OIG next evaluated whether the facts nevertheless presented a sufficiently low risk of fraud and abuse to warrant a favorable opinion.

The OIG identified a risk of inappropriate steering and unfair competition. Specifically, because hospital referrals are often accepted on a first-come, first-served basis, subscribing HHAs gain a significant practical advantage by being able to receive and respond to referral requests immediately. In contrast, non-subscribing HHAs must rely on slower communications and telephone follow-up. According to Requestor’s certifications, these delays could effectively prevent non-subscribing HHAs from obtaining referrals, particularly where an HHA could not afford the subscription fees. The OIG reasoned that the practical effect of the Arrangement was to favor HHAs paying the Vendor for the opportunity to secure patient referrals, rather than HHAs being selected based on the quality of care they provide. The payment-based advantage was therefore central to the OIG’s unfavorable analysis.

The OIG also identified a risk of overutilization or inappropriate utilization of services. HHAs paying subscription fees could experience pressure to recover those costs through additional patient services. The OIG explained that such pressure could create incentives to furnish or bill for services that are not medically necessary, potentially increasing expenditures under Federal health care programs.

Based on these concerns, the OIG concluded that the Arrangement would generate prohibited remuneration under the AKS, if the requisite intent were present, under the AKS, constituting grounds for the imposition of sanctions under Sections 1128A(a)(7) and 1128(b)(7) of the SSA.

This Opinion offers practice compliance guidance for health care providers and technology vendors utilizing electronic referral platforms. In particular, the mere characterization of a payment as a software subscription does not resolve the AKS analysis where the platform facilitates the receipt of patient referrals. Providers should consider how subscription fees are assessed, whether they satisfy an applicable safe harbor, whether paid functionality creates a meaningful competitive advantage over non-paying providers, as well as whether the referral process presents practical steering concerns.

Limitations

As with all OIG advisory opinions, this Opinion is binding only with respect to the Requestor and the specific arrangement presented, and it may not be relied upon by other persons as legal protection for different arrangements. OIG also expressed no opinion regarding other Federal, State, or local laws that might apply. Nevertheless, the Opinion provides useful compliance guidance for providers and counsel evaluating patient-facing warranties and reinforces the importance of structuring the remedy, disclosures, documentation, and purchasing conditions to track the safe harbor closely.

If you have any questions or if we may be of further assistance regarding compliance under the AKS or other health law matters, please feel free to contact Bill Kalogredis, Esq. or Sonal Parekh, Esq.

[1] See Section 1128B(b) of the SSA.

[2] 42 C.F.R. § 482.43(d)(1).

[3] 42 U.S.C. § 1320a-7b(b).

[4] 42 C.F.R. § 1001.952(f).

[5] 42 C.F.R. § 1001.952(f)(2).

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Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, veterinarians, and other health care professionals and their businesses as to contractual, regulatory and transactional matters for over 50 years. He is Chairman of Lamb McErlane PC’s Health Law Department. Bill can be reached by email at bkalogredis@lambmcerlane.com or by phone at 610-701-4402.

Sonal Parekh, Esq., is an associate at Lamb McErlane PC who focuses on health care transactional matters and a broad range of health care regulatory-related issues on behalf of health care systems, physicians, dentists, behavioral health providers, and other health care providers, and is a pharmacist by education and training. Sonal can be reached by email at sparekh@lambmcerlane.com or by phone at 610-701-4416.

*This article is for educational purposes only and is not intended to be legal advice. Should you require legal advice on this topic, any health care matter, or have any questions or concerns, please contact Vasilios J. (Bill) Kalogredis, Esq. or Sonal Parekh, Esq.

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