In a recent advisory opinion, the Office of Inspector General determined that a hospital shouldn't be penalized under the federal Anti-Kickback Statute if it provides bonuses to a physician group in exchange for the implementation of certain patient care, quality and cost-saving measures.
The OIG issued the advisory opinion to a large, rural acute-care hospital in a medically underserved area. The hospital operates four cardiac catheterization labs, all of which are located in its main facility, as part of a three-year co-management agreement.
Under the co-management agreement, the physician group provides medical direction for the labs in exchange for a fee comprised of two parts: a fixed fee and a performance fee, which is an annual performance-based payment. The performance fee is based on employee satisfaction, patient satisfaction, improved quality of care and the implementation of certain cost-cutting measures. Each component involves its own specific metrics.
The OIG analyzed whether this payment model is compliant with the Anti-Kickback Statute, which makes it a criminal offense to knowingly pay remuneration to induce referrals for services reimbursed by federal healthcare programs. The agency identified five reasons it found the payment model "poses a low risk of fraud or abuse under the Anti-Kickback Statute."
1. The hospital certified the compensation paid to the physician group — both the fixed fee and performance fee — is fair market value. Also, "the fact that the [physician group] provides substantial services under the management agreement reduces the risk that the compensation paid by [the hospital] is a payment for referrals, rather than for actual services rendered," according to the opinion.
2. Compensation paid to the physician group does not change depending on the number of patients treated.
3. The hospital operates the only cardiac cath labs within a 55-mile radius, and the physician group does not provide cardiac cath services at other locations. Thus, it is unlikely the payment arrangement is intended to induce referrals to the hospital instead of competing facilities.
4. The specific nature of the measures within the payment agreement "helps ensure that its purpose is to improve quality, rather than reward referrals," according to the opinion.
5. The management agreement is written with a three-year term, making it limited in duration.
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The OIG issued the advisory opinion to a large, rural acute-care hospital in a medically underserved area. The hospital operates four cardiac catheterization labs, all of which are located in its main facility, as part of a three-year co-management agreement.
Under the co-management agreement, the physician group provides medical direction for the labs in exchange for a fee comprised of two parts: a fixed fee and a performance fee, which is an annual performance-based payment. The performance fee is based on employee satisfaction, patient satisfaction, improved quality of care and the implementation of certain cost-cutting measures. Each component involves its own specific metrics.
The OIG analyzed whether this payment model is compliant with the Anti-Kickback Statute, which makes it a criminal offense to knowingly pay remuneration to induce referrals for services reimbursed by federal healthcare programs. The agency identified five reasons it found the payment model "poses a low risk of fraud or abuse under the Anti-Kickback Statute."
1. The hospital certified the compensation paid to the physician group — both the fixed fee and performance fee — is fair market value. Also, "the fact that the [physician group] provides substantial services under the management agreement reduces the risk that the compensation paid by [the hospital] is a payment for referrals, rather than for actual services rendered," according to the opinion.
2. Compensation paid to the physician group does not change depending on the number of patients treated.
3. The hospital operates the only cardiac cath labs within a 55-mile radius, and the physician group does not provide cardiac cath services at other locations. Thus, it is unlikely the payment arrangement is intended to induce referrals to the hospital instead of competing facilities.
4. The specific nature of the measures within the payment agreement "helps ensure that its purpose is to improve quality, rather than reward referrals," according to the opinion.
5. The management agreement is written with a three-year term, making it limited in duration.
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