Inspector General Will Not Penalize Rural Hospital for Obtaining Free Radiology Reports
The U.S Department of Health and Human Services’ Office of Inspector General (OIG) has issued an advisory opinion that could have a dramatic impact on hospital-based radiologists and their practices around the U.S. In Advisory Opinion 07-19, released on Jan. 3, the OIG decided not to penalize a small, rural critical access hospital in a medically underserved area for receiving without charge written reports from the radiology group practice that holds an exclusive contract at the hospital.
The hospital is a small and rural critical access facility in a federally-designated medically underserved area. It certified these facts to the OIG: Via teleradiology, the hospital sends digital images of hospital patients to the contracted radiology group to interpret. The group interprets the images, prepares a written report and bills third-party payers, including Medicare and Medicaid, for its PC services.
Under the arrangement with the hospital, the group puts its reports in a patient’s medical record that the hospital maintains, without charge to the hospital. The hospital disclosed to the OIG that the radiologists had requested a per-report payment. However, the OIG did not opine on that issue. Rather, the hospital wanted to know whether it risked being excluded from participating in Medicare and/or incurring anti-kickback civil penalties by accepting free written reports from the radiology group in exchange for referring federal-pay patients to the group through the exclusive contract.
The OIG noted that the arrangement could implicate the kickback law because hospital-based radiologists and hospitals exchange something of value: written reports and patient referrals. However, as it has done in many other advisory opinions, the OIG concluded that merely because an arrangement has potential for anti-kickback liability does not translate into targeting it for sanctions. The OIG stated, without specifying any legal authority, that Medicare payment rules do not obligate the hospital to incur the costs of preparing a written report of radiology services rendered to its patients.
According to the OIG’s understanding of those payment rules, the group properly assumed the cost of preparing, or dictating and transcribing, reports. The OIG stated that preparing reports is encompassed within the covered Medicare Part B professional service. Had the hospital reimbursed the radiology group for such costs, the group would have received “double payment” for the same costs — from the hospital and from Medicare. Thus, OIG found that the hospital did not receive any illegal “remuneration” that would violate the anti-kickback statute.
Notably, the OIG also identified the radiologists’ exclusive contract as another reason for not penalizing this arrangement. The OIG concluded that giving the hospital free radiology reports “appears to be a reasonable and limited service” directly related to the group’s exclusive deal with the hospital. That statement could have strong implications for hospital-based radiology practices.
This opinion, like all OIG advisory opinions, only applies to the parties that requested it. The OIG has told the health care industry throughout the 11-year history of the advisory process that the opinions should not be relied upon by anyone else for any other transaction. Indeed, OIG could reach a different conclusion in another fact pattern, such as radiologists reading and reporting studies to non-critical access facilities.
However, the fact that the OIG won’t exclude or pursue civil penalties against at least one hospital that received free reports from one radiology practice could be very significant. The OIG’s statement that the radiologists would be “double dipping” if the hospital reimbursed them for the transcription costs is at odds with what the ACR has understood from Medicare for the last 15 years, e.g., transcription costs for hospitals fall under the hospital’s Part A charge, not the physician’s Part B professional component. Additionally, the OIG has cautioned repeatedly in public documents that hospitals should not use exclusive contracts to demand remuneration from hospital-based physicians, including radiologists, that could run afoul of the anti-kickback law.
The ACR will attempt to clarify the reimbursement questions this opinion raises with the OIG, and discuss its import for hospital-based radiology practices nationwide.
Click here to read the entire OIG opinion.