physicianlabIn an Advisory Opinion posted on March 25, 2015, the Office of Inspector General for the Department of Health and Human Services stated that a proposed fee-waiving arrangement between a laboratory and physician practice could violate the federal anti-kickback statute and result in administrative sanctions, as well exclusion from participation in federal health care programs, when that arrangement provided free services to certain patients in exchange for exclusive dealings with that laboratory.

Under the proposed arrangement, the laboratory would enter into contracts with physician practices to provide all laboratory services required by the practices’ patients, regardless of the patients’ health plan coverage. When a physician orders a test from the contracting laboratory for a patient who has insurance with an exclusive arrangement with another laboratory, the contracting laboratory would not bill the patient or anyone else for the test. The contracting laboratory would bill all other patients, whether privately insured or covered by a federal health care program, in accordance with fee schedules or contracted rates.

The anti-kickback statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program. See 42 U.S.C. § 1320a-7b. Where remuneration is paid purposefully to induce or reward referrals of items or services payable by a federal health care program, the anti-kickback statute is violated.

The OIG opined that this proposed arrangement would potentially violate the anti-kickback statute because, although the physicians would not receive direct payments under the proposed arrangement, the physicians would obtain other forms of remuneration. For example, by declining to charge certain patients, the contracting laboratory would offer physicians a means to work solely with the contracting laboratory, thereby reducing administrative and possibly financial burdens associated with using multiple laboratories. The OIG noted that the proposed arrangement could further result in inappropriate steering of patients, including federal health care program beneficiaries.

The OIG also opined that the proposed arrangement could also result in the prohibited practice of submitting bills or payments to federal health care programs substantially in excess of such individual’s or entity’s usual charges. Specifically, the OIG noted that the proposed arrangement would completely relieve certain patients of any obligation to pay in order to pull through all of the federal health care program business, which would then be charged at the full rate. The OIG also noted that the goal of this proposed arrangement was not to provide discounts or free services to uninsured or underinsured patients, which would potentially be permitted under the statue.

This opinion appears to expand what the OIG identified as its longstanding position on the provision of free or below-market goods or services to actual or potential referral sources. The OIG reiterated in this opinion that “such arrangements are suspect and may violate the anti-kickback statute, depending on the circumstances.”

Nevertheless, given the rather broad view of what constitutes “remuneration” in this opinion, it raises the question of what service arrangements between physicians and secondary health care providers would not be suspect. This is particularly true when, as here, the arrangement results in what could otherwise be seen as commendable cost savings to certain patients and administrative efficiencies to a physician’s practice.

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