Scott Becker, JD, CPA, partner at McGuireWoods, warns, however, that this specific OIG opinion has little applicability for most “under arrangement” agreements. “This opinion may be misread initially to give comfort to ‘under arrangements’ and per click arrangements. However, it is critical to understand that this opinion doesn’t involve directly or indirectly physicians as part of the sleep lab or other arrangements. Thus, the advisory opinion has very little real applicability for most situations.
Proposed arrangement
Under the proposed an arrangement, the sleep testing provider, which has no physician ownership, would provide equipment and staffing for a sleep testing facility, while the hospital would own and maintain the space and bill for the “under arrangement” services. The sleep testing provider would also provide marketing and educational services to benefit the hospital by marketing the hospital’s sleep testing services to referring physicians and the community.
The sleep testing provider would be paid in three ways: 1) the hospital would pay an annual, fixed fee for the use of the equipment at fair market value, 2) the hospital would pay a second annual, pre-determined fee for marketing services at fair market value and 3) the hospital would pay a pre-determined fee for other services, including staffing, and supplies “as needed” (e.g., the service of sleep technician is only needed when a test is scheduled).
OIG analysis
Although the OIG determined that the arrangement would not meet safe harbors for equipment leases or personal services and management contracts because the precise schedule or interval length of “as needed” services cannot be determined in advance, the opinion states that the inability to meet safe harbor protection “is not fatal.”
Instead, the OIG determined that administrative sanctions would not be pursued as a result of key three determinations:
1. The proposed arrangement includes many safeguard present in the safe harbors. The “agreement incorporates many key safeguard enumerated in the…safe harbors, including the use of aggregate, fixed fees that are consistent with fair market value in arm’s-length transactions and that do not take into account the volume or value of federal healthcare program business.”
2. The proposed arrangement lacks characteristics of a suspect under-arrangement. The OIG states the arrangement does not appear to include suspect characteristics of problematic “under arrangements.” For example, no referral source or physician has any interest in the entity. Additionally, while the entity would be in a position to generate referrals to the hospital’s sleep services because of its marketing function, “the provision of full-time services, combined with the aggregate, set in advance, fair market value fee structure of the proposed arrangement…would mitigate any undue or additional incentive to general unnecessary or an increased volume of sleep tests.”
3. Other characteristics also reduce risk under the Anti-Kickback Statute. Additionally, the OIG states the arrangement has “an acceptably low risk of improperly influencing or rewarding referrals,” due to the fact that 1) no physician has any financial interest in the sleep testing provider, 2) remuneration would be at fair market value and fees would not take into account referrals, 3) the hospital would assume business risk for the testing services and 4) fees charges for equipment and services would be set in advance.
To read the full OIG advisory opinion on sleep testing services, click here (pdf).
