Legal Intelligencer article by Lamb McErlane PC Health Law Attorneys Vasilios J. Kalogredis and Rachel E. (Lusk) Klebanoff.

On December 28, 2020, the Office of Inspector General for the U.S. Department of Health and Human Services (“OIG”) published Advisory Opinion 20-07, approving a proposal whereby certain health care facilities and clinicians could use an online platform to disburse, to patients and the patients’ payors, a portion of the reimbursement the facilities and clinicians receive for claims where Medicare is a secondary payor.

The requestor of Advisory Opinion 20-07 operates a web-based platform that lists, with certain categorical exceptions, all known healthcare facilities and clinicians with a National Provider Identifier (NPI), as well as certain information about each provider, including their specialties, services offered, and rates for specific services. Through its existing platform, the requestor allows providers to disburse a portion of paid claims to patients and non-governmental third-party payors for diagnostic, procedural, and surgical care that is both elective and episodic (“Eligible Care”). Under the current arrangement, the amount the providers disburse may be higher than the patients’ cost-sharing obligations for the Eligible Care.

The Proposed Arrangement

Under the proposed arrangement, the requestor would establish a separate user pathway exclusively for patients who have Medicare as a secondary payer through which: (i) providers could offer potential disbursements to such patients and their third-party payors for certain services that would be potentially payable by the Medicare program as a secondary payor; and (ii) patients could enter into agreements with providers, whereby the patients and their third-party payors could receive a portion of the disbursements from providers, after requestor deducts the portion of the remittances it would keep as a fee.

Patients who elect to join the new platform would provide their insurance information, which the requestor would use to provide estimates of the patients’ anticipated out-of-pocket costs for Eligible Care. Patients could use the platform to search for and compare providers and view potential disbursement amounts. The default sort order for search results would be based upon the provider’s distance from the patient’s address; patients would not be able to sort or filter results to view only those providers offering disbursements. Patients using the platform would also have access to a care concierge team that would, among other services, help patients identify available providers and book appointments. In addition, the platform would provide patients with a personalized dashboard that would display information including the patients’ deductible balances and the estimated amounts they would pay for a specified service, taking into account any potential disbursement.

The requestor would not charge patients any fee at the time they join the new platform, and the platform would continue to be free to patients who do not ultimately receive a disbursement from a provider.

Any provider health care facility that is accredited by a nationally recognized accrediting organization, and any provider clinician with state licensure, could use the new platform at no charge to post amounts for specified services that, upon the satisfaction of certain payment requirements, the provider would remit to the patient and patient’s primary payor through a check sent to the requestor. Providers could offer disbursements to patients only for Eligible Care that a practitioner has determined is medically necessary.

Disbursements could be calculated through one of three methodologies: (i) as a percentage of the total amount the provider would be entitled to receive for the Eligible Care from the patient’s primary payor, the Medicare program (as a secondary payor), and the patient; (ii) a fixed dollar amount; or (iii) a fixed amount that is subtracted from the amount the provider is entitled to receive for the Eligible Care.

Patients who wish to receive Eligible Care for which a provider has offered a disbursement would notify the provider through the platform. If the provider agrees to provide the Eligible Care with the potential disbursement, the patient and provider would enter into an agreement through the platform that would obligate the provider to send the disbursement to the requestor if all of the patient’s payors responsible for payment satisfy certain prompt payment and hassle-free processing requirements. The requestor would retain 33% of the disbursement as payment for its services, and would then distribute 50% of the remaining balance to the patient, and the other 50% to the patient’s payors.

Importantly, in contrast to the requestor’s current arrangement, under the proposed arrangement the amount a patient could receive as a disbursement would be capped at the amount of the patient’s cost-sharing obligations for the Eligible Care. The requestor stated that it would donate any amounts due to the patient that exceeded the patient’s cost-sharing obligation to a health care-related charity.

OIG’s Analysis

OIG noted that the proposed arrangement would generate three remuneration streams that implicate the federal anti-kickback statute, which makes it a criminal offense to knowingly and willfully offer or receive remuneration to induce or reward the referral of federally reimbursable items or services. First, the disbursements the providers offer to patients would constitute remuneration from the providers to patients and their primary payors, and that such disbursements may be offered to induce patients to self-refer to the providers. Second, requestor would keep 33% of each disbursement as an administrative fee for the services it provides to patients that would constitute remuneration from the patients to the requestor in return for the requestor’s arranging for the purchasing or ordering of federally reimbursable services. Finally, the free use of the new platform – including care concierge team and personalized dashboard – would constitute remuneration from the requestor to patients who do not receive disbursements, and that such remuneration could be an inducement to purchase services through the platform in the future.

Despite finding that the proposed arrangement could potentially generate prohibited remuneration under the Federal anti-kickback statute and constitute grounds for the imposition of sanctions under the beneficiary inducement provisions of the Civil Monetary Penalty Law (which prohibits a person or entity from offering or providing any remuneration to a Medicare or Medicaid beneficiary that the offeror knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier), OIG concluded that it would not impose administrative sanctions on the requestor based on the following:

1. The risk that the arrangement would result in increased costs to Federal health care programs through overutilization or inappropriate utilization would be low.
2. The structure of the payments would reduce the potential for overutilization or inappropriate utilization and would reduce the potential for interference with clinical decision making.
3. The arrangement would mitigate provider incentives to increase prices to induce patients to receive services.
4. The risk that the arrangement would have anti-competitive effects is low.
5. The arrangement would not steer patients to certain providers.

Takeaways

This advisory opinion represents a notable departure from OIG’s typical approach to providers’ waiver or reduction of cost-sharing amounts, which OIG historically has limited to circumstances in which patients have demonstrated financial need. With this opinion, OIG appears to have shown a willingness to open the door for certain health care providers and clinicians to compete for patients’ business based on price, albeit with respect to only a very limited subset of federal health care program beneficiaries.

Of particular importance was OIG’s cautionary footnote that it likely would have reached a different conclusion if the proposed arrangement allowed for disbursements to patients in excess of patients’ cost-sharing amounts.

As we have concluded in many in of our previous articles, it is imperative that providers and those contracting with them also consider other laws, including any applicable state laws, including any applicable state anti-kickback provisions, that could impact the arrangements that are similar in nature to the requestor’s proposed arrangement.

_______________________________________________

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.

Rachel E. (Lusk) Klebanoff, Esq. is a senior associate at Lamb McErlane PC who focuses on health law and health care litigation. She represents physicians, dentists, medical group practices, and other health-related entities in transactional, regulatory, and compliance matters. rlusk@lambmcerlane.com. 610-701-4416.

Click here for the 1/25/2021 Legal Intelligencer article. 

 

#healthcarelaw #healthlaw #healthlawattorney