On September 30, 2021, OIG posted Advisory Opinion No. 21-14 regarding a chiropractor’s proposal to extend an existing discount program covering a package of services to include federal health care program beneficiaries. OIG concluded that it would not impose administrative sanctions under either the Federal Anti-Kickback Statute (AKS) or the beneficiary inducement provision of the civil monetary penalties law, as the proposed arrangement, while not meeting the definition of a “discount” for purposes of the safe harbor, did not implicate the concerns OIG expressed when excluding bundled discounts from the safe harbor protections.
The requestor of this advisory opinion operates chiropractic clinics (the Clinics). The chiropractors who provide services at those Clinics do not participate as in-network providers with any third-party payors, including the Medicare program. Accordingly, patients, including federal Health care program beneficiaries, pay the Clinics directly for services received, and the Clinics provide them with an itemized receipt to submit to their insurance plan for any reimbursement that may be owed under their plans’ out-of-network coverage. In accord with the proposed arrangement and the Medicare program requirements, patients who have Medicare as their primary insurance pay the Clinics directly at the time of service and the Clinics submit the claims to Medicare on the patients’ behalf. Medicare’s reimbursement decision is sent directly to the patient. Thus, if the services furnished are covered by Medicare, that patient may be reimbursed by Medicare, in whole or in part, for the amount the patient initially paid the Clinics.
The Clinics currently offer various discounts to the general public but prohibit federal health care program beneficiaries from receiving these discounts. Under the proposed arrangement, the Clinics would permit federal health care program beneficiaries to utilize any offered discounts on the same terms as other member of the general public, which would be offered and advertised to the general public and not targeted to federal health care program beneficiaries. The discounts would be offered throughout the year and limited in supply, expire on a specific date, or both. To receive a discount, patients would have to affirmatively ask for the discount when presenting for an appointment; the Clinics do not and would not notify patients of any outstanding discount offers while patients are at the Clinics.
The discounts offered by Clinics are typically on a package of services. Those packages may consist of services reimbursable by federal health care programs and non-reimbursable services. Under the proposed arrangement, the Clinics would allocate the discount proportionally across each of the services in the package, with the same percentage discount applied to each service. Thus, the discounted charges would be reflected on the billing statement or receipt, and claims submitted to Medicare would reflect the discounted amounts for the covered service(s).
OIG concluded that the proposed arrangement implicates the AKS because the discount program may induce referrals for services reimbursable by a federal health care program. It considered whether any statutory exceptions to the AKS applied, including the safe harbor for discounts. OIG noted that it had previously expressed concerns about discounts on bundled items and services. Particularly where the bundled goods and services were reimbursed under different payment methodologies, discounts on those bundled goods and services might shift costs among reimbursement systems and distort the true cost of items and services. Due to the bundling in the proposed arrangement, OIG concluded that the discounted price would not meet the definition of a “discount” for purposes of the safe harbor. Accordingly, the proposed arrangement implicated the AKS and would not be protected under the discount safe harbor. However, because the bundled services reimbursable under the Medicare program would all be reimbursed under the same payment methodology, Medicare Part B, OIG also found that its concerns expressed when excluding bundled discounts from safe harbor protection were not implicated here. Concluding that the proposed arrangement presents a low risk under the AKS, OIG determined not to impose administrative sanctions on the Clinics.
OIG also noted that the proposed arrangement would implicate the beneficiary inducement provision of the civil monetary penalties law and would not meet the exception to that statute for any permissible practice specified in an exception to the AKS or a safe harbor regulation. For the same reasons set out in its assessment of the proposed arrangement under the AKS, OIG determined, in the exercise of its discretion, not to impose administrative sanctions under the beneficiary inducement provision of the civil monetary penalties law.
The OIG Advisory Opinion is available here.
