OIG opinion OKs hospital cost-savings program

In its second advisory opinion of the year, the Department of Health and Human Services’ Office of Inspector General (OIG) gave a qualified "thumbs up" to a hospital’s cost-savings program for non-physician employees. The OIG concluded that while certain payments made under the proposed program might implicate the antikickback statute, the program itself would not.

"What I find most troubling about this advisory is that the OIG gives a favorable opinion for the arrangement but not for the individual payment under the arrangement," says Thomas Bartrum, a health care attorney with Baker Donelson in Nashville."

The OIG warned that it could not "pre-approve every possible payment" under the proposed arrangement. "Basically, they are saying the concept works but we are not going to give you any protection for individual payments under the concept," argues Bartrum, "and that is where your liability exposure is going to rest."

Under the proposed arrangement, the hospital will award employees a percentage of the cost savings generated by their suggestion. But the hospital certified that no payments will be made directly or indirectly to physicians. It would also prohibit suggestions that identify specific vendors or shift costs to any federal health care program.

Those assurances tilted the scales in the hospital’s favor. "This program had a lot of safeguards built into it and those safeguards are important," says Bartrum. "But I wish they would not have redacted the dollar amount because there is a big difference between sharing 3% of the cost-savings and 70% of the cost savings."