July 29, 2025 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. 25-03 (“Opinion”) on June 6, 2025 regarding an arrangement whereby two requestors, “Requestor Inc.” and “Requestor PC” (collectively, “Requestors”) proposed to enter into an agreement with telehealth providers to lease employees and provide certain administrative services (the “Proposed Arrangement”). Specifically, Requestors inquired as to whether the Proposed Arrangement, as discussed below, would warrant sanctions under Section 1128(b)(7) or Section 1128A(a)(7) of the Social Security Act (“SSA”) as they relate to the federal Anti-Kickback Statute[1] (“AKS”).

The Opinion concludes that the Proposed Arrangement, if undertaken, would not generate prohibited remuneration under the AKS and therefore would not warrant administrative sanctions under Sections 1128A(a)(7) or 1128(b)(7) of the SSA.

Factual Background

The Proposed Arrangement relates to several parties, as described below.

1. Requestor Inc. is a management support organization that provides non-clinical management services to Requestor PC.

 

2. Requestor PC is wholly owned by a physician shareholder and maintains payor contracts with numerous commercial health plans and commercial entities that administer Medicare Advantage and Medicaid managed care plans. According to Requestor PC, it maintains (i) over 400 contracts with commercial preferred provider organization, exclusive provider organization and health maintenance organization plans, covering approximately 80 percent of all commercial covered lives and (ii) contracts covering approximately 65 percent of Medicare Advantage covered lives. Requestor PC does not employ or contract with staff that provide clinical services.

 

3. Certain independent third parties (each, a “Platform”) that are management services organizations (“MSOs”) provide management services to telehealth providers (each, a “Platform PC”) who provide health care items and services through a Platform’s website to patients (“Platform Patients”). Each Platform PC provides various telehealth services, including services that are reimbursable by a Federal health care program, to Platform Patients. Requestors maintain that Platform PCs engage in too few contracts with health plans (including Medicare Advantage and Medicaid managed care plans), such that Platform Patients face reduced access to telehealth services from an in-network provider and may face out-of-pocket expenditures for health care services that could be covered by other health insurance plans. According to Requestors, Platform Patients, particularly those residing in underserved and rural communities, are negatively impacted by limited access to insurance-covered telehealth services furnished by Platform PCs. In certain cases, Platform Patients covered by payor contracts held by both a Platform PC and Requestor PC will be referred to Requestor PC.[2] With respect to these cases, Requestors certified that they would not control or influence decisions regarding how to allocate Platform Patients.

 

4. Platform Patients are patients, including Federal health care program enrollees, who visit a Platform’s website to obtain various health care items and services and access telehealth services.

 

5. Health Care Professionals (“HCPs”) are health care professionals employed by or otherwise contracted with a Platform PC.

The Proposed Arrangement

Under the Proposed Arrangement, Requestors would enter into an agreement with the Platforms and Platform PCs (collectively, the “Platform Entities”) whereby: (i) Requestor PC would lease HCPs, from a Platform PC, to provide telehealth services to Platform Patients covered by insurance plans with which Requestor PC contracts; and (ii) a Platform would provide certain administrative services to Requestor PC (the “Agreement”). Pursuant to the Agreement, Requestors would credential the leased HCPs, facilitate the enrollment of the leased HCPs under Requestor PC’s existing payor contracts, and submit claims for telehealth services provided by the HCPs thereunder. The Platform would furnish, to Requestor PC, administrative services including: (i) accounting services; (ii) marketing services; (iii) administrative support, such as patient scheduling; and (iv) HIPAA-compliant information technology services.

Pursuant to the Agreement[3], Requestor PC would pay a “Service Fee” in accordance with fair market value comprising of: (i) a flat HCP lease fee at the HCP’s hourly rate (the “HCP Lease Fee”) and (ii) a fee for the non-clinical administrative services (the “Admin Fee”). The Service Fee would be determined in advance, consistent with fair market value, and would not take into account the volume or value of any referrals or business otherwise generated for which payment may be made in whole or in part by a Federal health program.

Requestors further certified that (i) the Proposed Arrangement would meet all conditions of the safe harbor for personal services and management contracts and outcomes-based payment arrangements[4] and (ii) the aggregate services contracted for would not exceed those which are reasonably necessary to accomplish the business purpose of the services.

The Law

1. Federal Anti-Kickback Statute.

The AKS[5] 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.

Certain statutory exceptions and safe harbor regulations to the AKS have been implemented to provide protection if all conditions of the safe harbor are met. The safe harbor for personal services and management contracts and outcomes-based payment arrangements (the “PSMC Safe Harbor”)[6] provides that “remuneration” does not include any payment made by a principal to an agent as compensation for services of the agent so long as the following conditions are met: (i) the agency agreement is in writing, signed by the parties; (ii) the agency agreement specifies all services to be provided by the agent; (iii) the term of the agreement is not less than 1 year; (iv) the methodology for determining compensation paid to the agent is set in advance, consistent with fair market value in arm’s-length transactions, and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under Federal health care programs; (v) the services performed do not involve the counseling or promotion of a business arrangement or other activity that violates any State or Federal law; and (vi) the aggregate services contracted for do not exceed those which are reasonably necessary to accomplish the commercially reasonable business purpose of the services.

Legal Analysis

Because Requestor PC would pay a Service Fee to the Platform Entities, the OIG noted that the Proposed Arrangement would implicate the AKS when a Platform PC refers Platform Patients to Requestor PC for services that are reimbursable by a Federal health care program. Nevertheless, the OIG concluded that the Service Fee would be protected by the PSMC Safe Harbor because all conditions relative thereto would be met by the Requestors. The OIG found it of particular importance that Requestors would pay the hourly rate HCP Lease Fee for services rendered regardless of whether Requestor PC ultimately is reimbursed by third-party payors for telehealth services, which (according to the OIG) decreases the likelihood that the Service Fee would be determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties that is reimbursable by a Federal health care program.

Conclusion and Limitations

The OIG concluded that the Proposed Arrangement, if undertaken, would not generate prohibited remuneration under the AKS and the OIG would not impose administrative sanctions relative thereto under Sections 1128A(a)(7) or 1128(b)(7) of the Act.

It is important to note that the Opinion is limited in scope to the specific Arrangement and is not to be relied upon by any person other than the Requestor. The opinion is also subject to any additional limitations set forth at 42 C.F.R. Part 1008. While the Opinion may not be specifically relied upon for other arrangements, the reasoning stated therein is useful to keep in mind when considering different avenues in which to provide products, services, and incentives.

If you have any questions or if we may be of further assistance regarding compliance under the corporate practice of medicine 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] The Opinion cites to an example whereby a Platform PC may handle patients from a particular State, while referring other patients from a different state to Requestor PC.

[3] Though there exists several other agreements between and among the Requestors, Platform Entities, and the HCPs, the Opinion addresses only the financial arrangement pursuant to this Agreement.

[4] See 42 C.F.R. § 1001.952(d)(1).

[5] 42 U.S.C. § 1320a-7b(b).

[6] See 42 C.F.R. § 1001.952(d)(1).

Read the article on Legal Intelligencer / Law.com here.

Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, and other healthcare professionals and their businesses as to contractual, regulatory and transactional matters for 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 healthcare transactional matters and a broad range of healthcare regulatory-related issues on behalf of healthcare systems, physicians, dentists, and other healthcare 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.