Summary of new OIG Advisory Opinion 07-19

From the American Health Lawyers Association (www.healthlawyers.org); p.s. You don't have to be a lawyer to join this excellent organization:

On January 3, 2008, the OIG posted Advisory Opinion 07-19, in which the OIG indicated that it would not impose administrative sanctions with respect to an arrangement pursuant to which a radiology group provides a critical access hospital with free radiology test interpretations.

Under the arrangement, the physician group—which furnishes radiology services to the hospital on an exclusive basis—(1) receives digitized images of hospital patients from the hospital; (2) interprets the images; (3) prepares a written report documenting the interpretation, which it provides to the hospital free of charge to be included in the hospital's medical records; and (4) bills third-party payors for its professional radiology services. As part of the advisory opinion process, the hospital certified that its relationship with the group "is and will continue to be at fair market value in an arm's-length transaction, including the value of the exclusivity (but not including the value attributable to referrals to the [g]roup)." The hospital also indicated, however, that the group has requested that the hospital pay for the written reports.

In analyzing the arrangement, the OIG noted (as it has several times in the past) that "[a]rrangements between [hospitals and] traditional hospital-based physicians (such as radiologists) may implicate the anti-kickback statute if the hospital solicits or receives something of value—or the physicians offer or pay something of value—for access to the hospital's Federal health care program business." (See also, Supplemental Hospital Compliance Program Guidance, 70 Fed. Reg. 4858, 4867 (January 31, 2005)).

According to the OIG, however, written reports provided by the group to the hospital for Medicare patients do not constitute "remuneration" and, as such, cannot implicate the anti-kickback law. The OIG's reasoning is as follows:

• CMS will not pay the group for its interpretation unless the radiologist at issue prepares a written report for inclusion in the hospital's medical record. Thus, preparation of the report "is part of the covered professional service that is reimbursed to the radiologist under Medicare Part B."
• Under these circumstances, if the hospital "reimbursed the [g]roup for costs incurred for preparing the written report, the [g]roup would receive double payment for the same incurred costs, that is, a payment from the [h]ospital and a payment from Medicare."
• "Moreover, by preparing a written report for inclusion within the
  [h]ospital's records, the [g]roup is not relieving the [h]ospital of any financial cost the [h]ospital is otherwise obligated to incur for Medicare patients."
• "Thus, the free reports for Medicare patients do not constitute remuneration to the [h]ospital."

Although the OIG could not reach the same definitive conclusion with respect to whether or not reports prepared for non-Medicare patients by the group and provided to the hospital constitute remuneration, the agency nonetheless concluded that the arrangement poses a low risk under the anti-kickback law. First, preparation of the reports at issue—like certain other services provided by hospital-based physicians under exclusive arrangements"—appears to be a reasonable and limited service that directly relates to the professional radiology services" provided by the group to the hospital. Second, the arrangement is unlikely to result in overutilization, as the group's ability to "generate additional Medicare Part B billings to recoup the costs it incurs for the written reports for non-Medicare beneficiaries provided to the [h]ospital is limited by the nature of its hospital-based specialty."