Health Law Alert: OIG Okays Purchasing Structure Outside of Strict Compliance with Discount and GPO Safe Harbors

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The OIG, in Advisory Opinion 12-01, approved a proposed purchasing structure involving a GPO that would be wholly owned by an entity that also wholly owns many of the potential GPO participants, and under which a portion of the vendor payments received by the GPO would be passed through to GPO participants. Bill Mathias and Aaron Rabinowitz offer further details and discuss the OIG's analysis the proposed arrangement.

On March 8, 2012, the OIG issued a favorable advisory opinion (OIG Advisory Opinion 12-01 [PDF]) relating to a proposed purchasing structure outside of the narrow confines of the discount and group purchasing organization (GPO) safe harbors. Under the proposed arrangement, a GPO would be wholly owned by an entity that also wholly owns many of the potential participants in the GPO, and a portion of the payments received by the GPO from vendors would be passed through to participants in the GPO. While finding that the proposed GPO arrangement potentially implicated the antikickback statute, the OIG refused to impose administrative sanctions against the health system or its subsidiaries (the Requestor).

Please see full alert below for more information.

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