The Department of Health and Human Services Office of Inspector General (OIG) kicked off the new year with four new advisory opinions covering retiring physicians, preferred hospital organization discounts for Medigap patients, and gift cards for the referral of potential physician practice customers of a non-clinical consulting company. While OIG published the favorable opinions last week, it issued them on December 28, 2023 to cap off a busy 2023 season.

Two opinions, Opinion 23-13 and Opinion 23-14, are substantially similar to each other and to two other opinions  issued earlier in the year (Opinion 23-09 and Opinion 23-10). All four opinions approve the use of discounts by a preferred hospital organization (PHO) within a “preferred hospital” network as part of Medicare Supplemental Health Insurance (Medigap) policies.

Specifically, the opinions approved of an insurance company contracting with the PHO to provide discounts on the otherwise-applicable Medicare inpatient deductibles for its policyholders and, in turn, the insurer providing a premium credit of $100 off the next renewal premium to those policyholders who used a network hospital for an inpatient stay. This flurry of PHO Medigap discount opinions likely reflects the fact that an OIG advisory opinion is binding only on its requestor, leading different PHOs to seek approval for the same proposal.

The other two opinions include Opinion 23-12, a favorable review of a one-time, voluntary redemption offer to physician partners reaching age 67 to have their partnership units repurchased by a partnership over a 2-year period, contingent upon the physician partners’ agreement to retire from the practice of medicine,  and Opinion 23-15, a favorable review of a consulting company’s gift card offer to physician practices for the referral of potential new customers.

Notable among the four opinions is the latter one, OIG’s approval of the provision of a $25 gift card per lead – i.e., a potential prospective physician practice customer – and an additional $50 gift card per converted lead – i.e., a prospective practice customer that actually converts – by a consulting company that provides practice optimization services common to management companies in the physician practice space.

The requesting company provides support to practices for workflow issues, data analytics services, electronic health record consulting services, compliance monitoring services, and Medicare Merit-Based Incentive Payment System (MIPS) eligibility checks, training, evaluation, and assistance with submitting MIPS data. In seeking the opinion, the requestor certified that, while some of those services may result in customers receiving higher MIPS reimbursement, its fee did not relate to the amount of reimbursement the customers receive. Further, the requestor certified that it would not recommend purchasing, leasing, or ordering any item or service payable by a federal health care program, did not itself provide items or services paid in any part by such a program, and did not have an ownership or investment interest in any other entity that provided such items or services.

The OIG evaluated the three remuneration streams created by the requestor’s proposal, including the gift cards, the practice consulting fees, and the potential for higher MIPS reimbursement, but ultimately relied on the requestor’s certification that the gift cards would not be in return for any federal program business and none of its services or ownership interests otherwise involve the provision of items or services paid by a federal health care program to find the proposed arrangement would not implicate the federal anti-kickback statute.

Of note, the requestor did not provide certain services often provided by turn-key management companies, such as contracting for or assisting in the selection of devices or drugs reimbursable by federal programs or third-party payor contracting assistance, potentially limiting its applicability outside of a more limited data and informatics consulting arrangement. Thus, while OIG’s advisory opinions are binding only on the requestor, this opinion provides guidance to those considering a reward for the referral of potential business to consult with counsel and carefully consider the parties, streams of remuneration, and proposed arrangement before proceeding.

Reed Smith will continue to follow developments with the OIG’s fraud and abuse enforcement efforts. For more information on this opinion or the impact of OIG’s guidance on your business, please contact the author or a member of your Reed Smith health care team.