The Department of Health and Human Services Office of Inspector General (“OIG”) has terminated an advisory opinion (No. 11-18) that found a low risk of improper inducement of referrals resulting from a fee arrangement in an electronic patient-referral service.

The OIG previously stated that the requesting service provider’s proposed arrangement, which included discounts based on referrals to “trading partner” providers within its network, was too small to induce improper referrals.  Under the arrangement, ordering health professionals would receive a discount on their monthly Electronic Health Record Service subscription fees, but each time that a referral was made to a non-trading partner, the discount would be reduced by an amount equal to or less than $1, until it disappeared entirely.  In 2011, the OIG found that this fee structure – even though it could provide a financial incentive to refer to trading partners rather than non-trading partners – had various factors that mitigated the risk, such as the low-value reductions in the discount that were capped at the amount of the discount.

The OIG’s notice of termination said that it had reconsidered its approach and no longer viewed the circumstances as “sufficient to mitigate against the risk that the discount could be an improper payment to induce referrals of Federal health care program business” to trading partners instead of non-trading partners for certain high-volume referral services, including laboratory testing.

The OIG’s shift in position may suggest heightened scrutiny for even low-value amounts that could potentially be construed as inducing referrals.  Read the termination, issued on April 8, 2014, of OIG Advisory Opinion No. 14-03 (Nov. 30, 2011).

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