OIG okays incentives in union contracts

Hospitals that want to reward employees based on admissions — without running afoul of the anti-kickback statute — can take comfort from the latest OIG advisory opinion (No. 98-9).

The opinion concerns a contract being negotiated by a Delaware hospital and the union representing its nurses, aides and service employees. The union is part of a coalition of six unions that help members and their dependents gain access to various health plans.

The hospital proposed paying its nurses a bonus, as part of their hourly wages, that would be pegged to the number of coalition members admitted as hospital inpatients every six months. Compensation would be decided by a formula that would vary with total admissions, plus an additional 1% of hourly wages at each of several thresholds. The bonus would be capped at 4% of the base hourly wage rate. Admissions would be counted on an aggregate basis rather than by specific services. No employee in a position to make referrals would be eligible for the bonus, and the proposed contract would include guidelines that bar union members from paying anyone in the coalition health plans to use the hospital.

The hospital asked OIG whether this arrangement would violate the anti-kickback statute’s ban on payments to induce referrals. The agency concluded the compensation meets a safe harbor that exempts "any amount paid by an employer to an employee ... for employment in the provision of covered services," according to the opinion.

OIG also gave a thumbs-up regarding whether the deal would violate the rule against paying beneficiaries to use a particular provider. The law frowns on payments that would affect a patient’s choice, but not nominal payments, the opinion says.