The OIG opinion states that while the proposed arrangement could potentially generate prohibited remuneration under the Anti-Kickback Statue, the OIG would not impose administrative sanctions in connection with the relationship — a determination that was driven largely by the fact that the hospitals have long provided free care as part of a charitable mission and by the fact that the waivers would not be advertised or made known to patients until after they had selected the hospitals for treatment.
Proposed arrangement
Under the proposed arrangement, the non-profit, tax-exempt hospital network, which has a “long history of providing free, charitable, pediatric care,” would begin billing health insurers, both private and public, for medical care but would waive cost-sharing amounts. Previously the hospitals had provided all care free of charge, but losses to the foundation’s endowment and increasing costs of medical care, among other reasons, have created a need to bill insurers or risk shutting down facilities.
Under the proposed policy, the hospitals would continue to treat uninsured patients free of charge, and insurance coverage would not be a factor in deciding who would be offered care. Further:
“The Requestors have certified that under the Insurance-Only Billing Policy, the waiver of cost-sharing amounts would not be a part of price reduction agreements with third party payers. The Hospitals would not report unbilled cost-sharing amounts as bad debt on Medicare or Medicaid cost reports, nor would these costs be shifted to other third-party payers in the form of higher charges or rates.The Hospitals would disclose their policy to waive all cost-sharing amounts to all non-governmental third-party payers.”
Additionally, a newly proposed financial assistance program would provide assistance for certain patients’ and families’ lodging and travel costs associated with treatment at the hospitals.
OIG analysis
While the OIG cautions against the waiving of cost sharing, stating “providers who routinely waive Medicare cost-sharing amounts for reasons unrelated to individualized, good faith assessments of financial hardship may be held liable under the anti-kickback statute,” in this particular instance it determined it would not impose monetary penalties under the Anti-Kickback Statute based on the fact that the “plan to routinely waive cost-sharing under the Insurance-Only Billing Policy represents a singular vestige of the Requestors’ founding and continuing charitable care mission. Here, a policy of providing free care predates the Medicare and Medicaid program by decades and has at all times been applied uniformly to all patients.”
The OIG determined that administrative sanctions would not be pursued as a result of key three determinations:
1. The highly specialized nature of the services offered at the hospitals reduces the risk of unnecessary services.
2. The Insurance-Only Billing Policy would be discussed with patients after they were already admitted for care. That is, it would likely not be a factor in their selection of a facility.
3. Compensation for employed and contracted physicians does not take into account the volume or value of services the physicians provide or order.
4. The hospital network has certified that they would bear the costs of the forgone cost-sharing waivers and would not claim the waived amount as bad debt or otherwise shift the burden to any payor or individual.
5. The hospitals would offer the cost-sharing waivers to all patients, regardless of which facility in the network would perform treatment, or the nature of the individual patient’s condition.
6. Cost-sharing waivers would not be advertised or marketed.
7. The hospital already has more patient applicants than it can accommodate, so it is unlikely waiving co-payments would be an attempt to generate additional referrals.
8. Public benefits are obtained by the specialized care provided by the hospitals and it appears the Insurance-Only Billing Policy “would permit the fullest possible preservation of those benefits.”
The OIG further determined it would not impose sanctions related the proposed lodging and transportation assistance program because the program improves access to care, would not be advertised, assistance would not be limited to patients receiving certain treatments and costs would not be shifted to payors.
To read the full OIG advisory opinion on cost-sharing waivers, click here (pdf).
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