Kickback safe harbor doesn’t apply with co-management

In the recent Office of Inspector General (OIG) opinion regarding co-management, the OIG noted that the arrangement was not protected by any Anti-Kickback Statute safe harbor because the aggregate payment to the group was not set in advance, explains Janice Anderson, JD, shareholder with the law firm of Polsinelli Shughar in Chicago.

Despite the arrangement failing to meet a safe harbor, however, the OIG concluded that it would not impose any Anti-Kickback Statute sanctions for several reasons:

  • The hospital certified that payments made to the group were based on a fair market valuation and were provided in exchange for a substantial amount of services.
  • Payments to the group did not vary with the number of patients treated by the group, so there was no financial incentive for the group to increase patient referrals.
  • It was unlikely that the hospital was compensating the group for referrals to the labs because the labs were in a rural area where no competing services were available within a 50-mile radius, and the group’s physicians already performed all of their cardiac catheterization procedures at the labs.
  • The agreement reflected a defined quality component, with measures based upon nationally recognized standards and supported by particular actions.
  • The measures represented specific changes in the labs’ procedures, which the group’s physicians were responsible for implementing.
  • Payments could not be earned, even at the minimum level, unless there was improvement over the baseline measure.
  • The agreement was a written agreement with a three-year term and thus was limited in duration.