The Office of Inspector General (OIG) recently issued Advisory Opinion 12-09, concluding that reduced-rate arrangements for therapy care at state-run veterans' homes would not be subject to administrative sanctions from the OIG's civil monetary penalty authority of 42 U.S.C. § 1320a-7a or the OIG's administrative enforcement of the anti-kickback statute, 42 U.S.C. § 1320a-7b. The arrangements included a provision that therapy service providers would charge Medicare beneficiaries for therapy in accordance with the Medicare Physician Fee Schedule (PFS) and charge the state for the same therapy services at a rate less than the Medicare PFS. Although the OIG expressed concern that "swapping" arrangements of discounted fees for non-Medicare services to capture federal health care program referrals could result in administrative sanctions, the OIG concluded that the payment rates were greater than the providers' costs and that the state run nature of the veterans' homes were sufficient in this case for the OIG to conclude that the arrangements had a low risk of implicating the anti-kickback statute.

The Arrangements -

The four veterans' homes in this arrangement were managed by a state board (the Board) that sought therapy providers for the veterans' homes. The veterans' homes are long term care facilities that provide medical, clinical and nursing services to resident veterans.

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