February Legal Intelligencer article by Lamb McErlane Health Law attorneys Vasilios J. (Bill) Kalogredis and Artyom (Art) Sharbatyan.

OIG Advisory Opinion No.22-20:

Hospital employed nurse practitioners (NPs) that provided services traditionally performed by physicians fell under “safe harbor” provision of the Anti-Kickback Statute.

On December 14, 2022, the Office of Inspector General (OIG) of the United States Department of Health and Human Services (HHS) issued Advisory Opinion No. 22-20 that addresses a request from an acute-care hospital, that provides a range of inpatient and outpatient hospital-based services. The hospital sought to determine whether its arrangement to utilize hospital’s nurse practitioners (NPs) in providing Medicare and Medicaid beneficiaries with services that were previously only performed by participating physicians in certain units within one of hospital’s two campuses (“Arrangement”) may trigger the imposition of sanctions for potential violations under the Federal Anti-Kickback Statute (AKS) and/or the Civil Monetary Penalties Law (CMP) of the Social Security Act (Act).

Based on the facts submitted by the inquiring hospital the OIG concluded that the proposed arrangement would not be in violation of the AKS or the CMP and would fall under the safe harbor provisions of the Act. The opinion stipulates that it is limited in scope and application and may not be relied upon by other persons[1]. Nevertheless, it may have a significant favorable impact on the healthcare industry, especially for many underserved areas of the country with considerable deficiency in numbers of doctors, as the opinion may serve as a guide for hospitals to expand their services under certain circumstances and provide more comprehensive care to beneficiaries of Federal health care programs, such as Medicare and Medicaid. The advisory opinion can be accessed on the OIG’s web site at www.oig.hhs.gov in the Advisory Opinion page of the Compliance section.

Under the AKS it is unlawful to give or receive anything of value in exchange for the referral of business reimbursable by the Federal health care programs and the statute prescribes criminal and/or civil penalties for those who knowingly violate it. The CMP imposes penalties for making false statements or misrepresentations to the government as well as for committing other forms of fraud and abuse involving said programs. The safe harbor regulations describe certain payments and business practices that induce payment by Medicare and Medicaid programs that will not be considered kickbacks for the purposes of the statute, by specifying allowable financial and referral arrangements between various healthcare providers and/or other entities. Therefore, to be qualified for the safe harbor provisions and be protected from a legal liability certain conditions must be met.

This Advisory Opinion addressed a proposed arrangement by the hospital under which the hospital employs NPs to assist participating physicians and allows these NPs to perform a wide range of tasks and services that were traditionally only performed by physicians. Said tasks and services include:

• promptly initiating plans of care through existing hospital protocols;
• implementing any applicable hospital care protocols;
• making rounds on assigned units, during which the NPs address concerns of patients, their families, nurses, and other clinicians, such as physical and speech therapists;
• responding to laboratory or imaging studies, including arranging prompt follow-up testing and attending to abnormal results as needed;
• addressing rapid changes in patient condition, including adjusting care plans and ordering imaging, laboratory tests, or other diagnostic tools or interventions in real time;
• coaching, educating, and otherwise supporting nurses on the unit;
• overseeing and supporting unit-based quality improvement projects;
• discharge planning, which at times includes obtaining insurance authorizations for post-acute care and scheduling follow-up testing and appointments.

The hospital certified that NPs render the services in question out of one of hospital’s two medical campuses, and are restricted to non-surgical and non-specialty units. The Advisory Opinion expressly states that a different conclusion might have been reached if the Arrangement was offered on surgical or specialty units where specialist physicians make more lucrative referrals to a hospital. Patients in these units require ongoing care throughout the day, including real-time attention to their conditions. Utilizing NPs enhances patient care by enabling patients to be examined more promptly and effectively. This, in turn, results in quicker turnaround for patients’ diagnosis and treatment. The NPs’ duties are performed in collaboration with treating primary care physicians. These physicians must still do their daily rounds and are not allowed to use the NPs’ services or records to support any service claims. Instead, they must perform their own patient evaluations and provide their own assessments to bill for their services. The hospital covers the financial burden for the NPs’ services, and it does not separately bill insurance carriers for these services. Hospital also certified that it does not consider volume or value of physician’s past or future referrals, nor does it target any specific physicians when offering NPs’ services.

The described arrangement would normally implicate AKS because providing remuneration in the form of NP services to participating physicians could induce such physicians to make referrals to the hospital for items and services reimbursable by Medicare or Medicaid plans. Besides, services performed by the NPs on behalf of the participating physicians potentially relieve the physicians from a number of tasks and services for which they otherwise would have to expend their time and resources.

However, the OIG reviewed the hospital’s arrangement and in reliance of the provided facts determined that even though the arrangement would generate a prohibited remuneration in violation of the AKS, the OIG will not impose sanctions against the hospital or the participating physicians in connection with the statute, as long as the underlying material facts were fully, completely, and accurately presented, since these particular circumstances mitigate the risk that the arrangement is used to induce valuable referrals from any physicians. Additionally, the arrangement contains safeguards that lower the risk of fraud and abuse under the AKS, such as NPs continued collaboration with treating physicians, physicians’ daily rounds, as well as physician’s inability to bill for the services not actually performed by them, among other things. The OIG noted that the hospital’s proposal would provide a valuable service to the community by expanding access to healthcare services and increasing the availability of primary care services to hospital’s patients. The OIG also noted that the described arrangement would not result in any inappropriate cost increases to the Federal health care programs, as the services provided by the NPs are not separately billed for and the hospital is neither a surgical nor specialty facility where more lucrative referrals could be made.

This ruling is significant for several reasons. First, it may potentially allow hospitals to expand their services and provide more comprehensive care to patients. Nurse practitioners are highly trained healthcare professionals who are able to provide many of the same services as physicians, including diagnosing and treating illnesses, ordering and interpreting diagnostic tests, and prescribing medications [within the parameters of the laws in the state of  practice]. By allowing NPs to provide these services, hospitals might be able to offer more services to patients, which will help to improve access to care and reduce healthcare costs.

Second, the ruling may potentially help to address the primary care shortage in the United States. The shortage of primary care providers is a significant problem in many areas of the country, and the use of NPs can help in addressing this issue. NPs are able to provide primary care services to patients, which may help to reduce the burden on physicians and increase access to care.

Third, the ruling may also help to reduce healthcare costs. By allowing NPs to provide services that were previously only provided by physicians, hospitals will be able to expand their services and provide more comprehensive care to patients, while Physicians may be freed up by the responsibilities taken on by the NPs. This will help to reduce the need for patients to seek care from other providers, which will ultimately reduce healthcare costs.

However, the ruling included limitations, providing that the advisory opinion is limited in scope and application to the particular hospital requesting the determination and cannot be relied upon by others. Additionally, the OIG reserved the right to reconsider, terminate or modify the opinion where public interest may require so. The OIG advisory opinions are legal opinions binding on the HHS but no other governmental agency or department. These opinions are also binding on the requesting parties and protect such parties from OIG administrative sanctions, so long as the underlying facts are presented truthfully.

In conclusion, the OIG’s recent advisory opinion is a positive development for the healthcare industry. It allows hospitals to expand their services and provide more comprehensive care to patients. It will also help to address the primary care shortage in the United States and reduce healthcare costs. This is a positive step forward for the healthcare industry, and it is expected to have a significant impact on the way that healthcare services are provided in the future.

*Artyom Sharbatyan contributed to this article.

Read the article online in Law.com here.

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Vasilios J. (Bill) Kalogredis, Esq. has been exclusively advising physicians, dentists, and other health care professionals and their businesses as to contractual, regulatory and transactional matters for over 45 years. He is Chairman of Lamb McErlane PC’s Health Law Department. bkalogredis@lambmcerlane.com. 610-701-4402.

*Art Sharbatyan, Esq. has extensive real life practical experience in the healthcare field with particular concentration in dental practice groups. He represents healthcare providers in their business and legal needs at Lamb McErlane, PC’s Health Law Department. asharbatyan@lambmcerlane.com; (610) 701-4416.

[1] Persons or entities as referenced in the AKS.