The Advisory Opinion addressed the OIG’s concerns regarding compliance with the Civil Monetary Penalty law, which prohibits reductions or limitations of services provided to Medicare and Medicaid beneficiaries; and (ii) the anti-kickback statute, which prohibits intentional payment for referrals of Federal program business. The OIG noted some specific areas of concern with this type of arrangement, including: “(i) stinting on patient care, (ii) ‘cherry picking’ healthy patients and steering sicker (and more costly) patients to hospitals that do not offer such arrangements, (iii) payments to induce patient referrals, and (iv) unfair competition among hospitals offering incentive compensation programs to foster physician loyalty and to attract more referrals.” Ultimately, the OIG determined that it would not impose sanctions for the reasons set forth below.
With respect to the AKS, the OIG noted the following factors in its determination: (i) the hospital’s certification and independent analysis determining that the compensation is fair market value for the services provided; (ii) the group provides substantial services, thereby reducing the risk that the compensation is intended to reward referrals; (iii) pay does not vary with the number of patients treated; (iv) the hospital’s cardiac catheterization lab is the only one within a 50-mile radius, and the group does not provide services at any other labs, making it unlikely that the compensation is intended as incentive to induce referrals; and (v) the specificity of the measures and the limited duration of the arrangement. Furthermore, the OIG noted that rebasing metrics would be critical, if the arrangement is renewed, stating in a footnote:
We would expect that quality improvement and cost saving measures under the Arrangement would be subject to adjustment over time, to avoid payment for improvements achieved in prior years and to provide incentives for additional improvements in the future. Continuing compensation for conduct that has come to represent the accepted standard of care could, depending on the circumstances, implicate the anti-kickback statute.
FMV pitfall
Performance-based compensation should primarily reward physicians for improvement, as opposed to maintenance, of cost savings and/or quality metrics. Furthermore, as applicable, metrics that are achieved in whole or in-part, should either be re-based or replaced with new metrics that focus on continued improvements.
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For more information on this FMVantage Point, please contact:
Scott Safriet, MBA, AVA – Partner
HealthCare Appraisers, Inc.
(561) 330-3488 / ssafriet@hcfmv.com
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