HHS-OIG Kicks Off the New Year by Posting Four New Advisory Opinions

 In Blog, Healthcare

Some of us celebrate a new year by partying in the streets. Others prefer to spend the evening at home reflecting on the year gone by. The Department of Health and Human Services Office of Inspector General (HHS-OIG), it seems, prefers to bring in the new year by posting new Advisory Opinions (AOs).

HHS-OIG posted the four AOs on January 3, 2024. Each opinion was favorable to the requesting party. Three determined that the federal Anti-Kickback Statute (AKS) was implicated, but concluded that HHS-OIG would not impose administrative sanctions, while the fourth opined that the AKS was not implicated. The AOs are summarized below.

AO 23-12

The request for this AO came from a limited liability partnership that operates a hospital and wholly owns an entity that operates a second hospital. The partnership has two classes of partners, including one of “individual physicians with direct partnership interests.” The partnership, in an effort to make physician retirements more predictable (and thereby easier to handle from a business perspective), proposed an arrangement involving a one-time, voluntary partnership unit redemption offer to physician partners reaching age 67. If accepted by the physician, the physician’s partnership units would be repurchased by the partnership over a 2-year period, contingent upon the physician’s agreement to retire from the practice of medicine.

HHS-OIG determined that “[t]he Arrangement implicates the [AKS] because Requestor offers remuneration in the form of the Redemption Offer to eligible Physician Partners who refer patients, including Federal health care program beneficiaries, to [the partnership], and who would continue to make such referrals for up to 6 months after the Physician Partners receive the first redemption payment under the Redemption Offer Agreement.” Despite implicating the AKS, HHS-OIG concluded that it would not impose sanctions because (1) “the Redemption Offer is made on an objective basis unrelated to the volume or value of referrals or other business generated by the Physician Partners;” and (2) “remuneration paid pursuant to the Redemption Offer Agreement is unlikely to result in unfair competition.”

AO 23-13 and AO 23-14

These AOs involve use of a “preferred hospital” network as part of Medicare Supplemental Health Insurance (“Medigap”) policies. In the arrangement, an insurance company would contract with a preferred hospital to provide discounts on Medicare inpatient deductibles for its policyholders. In turn, the insurance company would provide a $100 premium credit off the next renewal premium to policyholders who used a network hospital for an inpatient stay.

HHS-OIG determined that the AKS was implemented by all of the remuneration streams involved in the arrangement. Nevertheless, it concluded that it would not impose sanctions because (1) “it is unlikely that these two streams of remuneration would result in overutilization of health care items or services or pose a risk of increased costs to Federal health care programs;” (2) the arrangement resulted in a minimal risk of patient harm; and (3) the arrangement was unlikely to have a significant impact on competition.

AO 23-15

The requesting physician consulting company “provides consulting services . . . includ[ing] practice optimization services such as helping practices uncover workflow issues, data analytics services, electronic health record consulting services, compliance monitoring services, bi-annual Medicare Merit-Based Incentive Payment System (‘MIPS’) eligibility checks, annual MIPS-related training, auditing MIPS-related performance measures, and assistance with submitting MIPS data.” The company proposed to “offer physician practices that are current customers [] certain gift cards for referring potential new physician practice customers . . . ”

The requesting consultant “acknowledged that some of these services could result in customers receiving higher MIPS reimbursements from Medicare,” but also certified that “it does not advise its customers to take any action, or otherwise promote any activity, that would violate applicable billing or other rules or regulations” and that “it receives a fee for its services that is unrelated to whether a customer receives a greater or lesser reimbursement as a result of Requestor’s services.”

Unlike the other three AOs, HHS-OIG determined that the proposed arrangement did not implicate the AKS. It concluded that the gift cards provided by the requesting consulting company to its current customers did “not implicate the Federal anti-kickback statute because the gift cards Requestor would provide to its customers would not be in return for the physician practices making referrals of, purchasing, arranging for, or recommending services that are reimbursable in whole or in part by a Federal health care program.” HHS-OIG further concluded that the potential for physician customers to earn an increased fee (higher MIPS payments) as a result of the consulting services did not implicate the AKS because “any remuneration those customers would receive under the Proposed Arrangement would not be in return for referrals for, the purchase of, or arranging for or recommending the purchase of, any item or service for which payment may be made in whole or in part under a Federal health care program.”


AO 23-12 is certainly welcome news for physician practices and healthcare providers with physician partners. The AO recognizes the importance of retirement and succession planning, and may provide guidance on how to craft arrangements that address these business needs without running afoul of the AKS. AOs 23-13 and 23-14 are a bit more specific, but demonstrate HHS-OIG’s general willingness to consider otherwise problematic arrangements that may result in decreased costs to patients for healthcare services.

AO 23-15 might be the most interesting of the four. This AO does not just refrain from levying sanctions for payments to physicians who refer other physicians to the consultant, it says that the AKS does not apply to the subject remuneration at all because it “would not be in return for referrals for, the purchase of, or arranging for or recommending the purchase of, any item or service for which payment may be made in whole or in part under a Federal health care program.” HHS-OIG says this despite the consultant’s acknowledgement that its services “might result in higher MIPS-related payments from the Medicare program.”

This seems analogous to physician referral payments that the Department of Justice has considered kickback violations in the electronic health records (EHR) context, where the EHR system obtained by the referred physician resulted in increased meaningful use (MU) payments from the federal government. Why is one a kickback violation and the other not? Perhaps this is the beginning of a trend away from a more expansive theory of AKS enforcement toward clarification that items and services that are not reimbursable under federal healthcare programs are not within the scope of the AKS. As always, any physician or healthcare company with questions or concerns relating to these AOs should contact an attorney before taking any actions that may implicate the AKS.

We continue to monitor developments in the False Claims Act, kickback, and government investigations space. Subscribe to the SRVH blog and follow us on LinkedIn for future updates. Contact the lawyers in our Government Compliance & Investigations or Healthcare groups with any questions or concerns.

Chris Sabis is an SRVH member and healthcare and procurement fraud lawyer specializing in Government Compliance and Investigations, Healthcare, Litigation, and Alternative Dispute Resolution.

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