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The Health and Human Services Office of the Inspector General (OIG) recently issued two noteworthy advisory opinions on financial arrangements of interest to radiologists under fraud and abuse laws. Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the OIG must issue advisory opinions on matters regarding application of the antikickback statute, safe harbor provisions, and other OIG fraud and abuse sanctions to existing or proposed arrangements.
One advisory opinion relates to a hospital-radiology practice joint venture for an outpatient imaging center. The OIG found that a particular radiology-hospital joint venture does not violate the Medicare and Medicaid antikickback statute because no illegal remuneration for referrals existed between the radiology group and a hospital system. The opinion's value for radiologists may be limited because the OIG relied on several representations by the hospital that could inhibit the business justifications for such ventures. A second opinion reaffirms that routine waiver of copayments for Medicare beneficiaries, a common professional courtesy, may violate the HIPAA and the antikickback statute.
In Advisory Opinion 97-5, dated Oct. 6, 1997, the OIG scrutinized a type of business arrangement frequently undertaken by many radiologists: joint ventures by imaging centers with other entities. A group provided professional radiology services to the largest of a system's three hospitals, while the hospital provided the technical component. The radiology group and the hospital system proposed to create a limited liability company to operate an outpatient radiology imaging center, offering a full range of imaging modalities, including x-ray services, fluoroscopy, an open MRI system, CT, and ultrasound. The radiology group owned 51 percent of the entity and provided the professional services to the venture. Under the proposed billing arrangement, a "bundled" payment was not contemplated: The imaging center would bill separately its technical component to patients and third-party payers, and the radiology group would bill separately for its professional component.
The OIG concluded that neither the radiology group nor the hospital system would generate "referrals" to the joint venture. Significantly, the hospital represented to the OIG that:
- its employed physicians will make no referrals to the imaging center, and the imaging center will accept no referrals from those physicians.
- it will take no actions, either overt or covert, financial or otherwise, to induce its medical staff to use the imaging center.
- it will inform its medical staff that it will not take action to induce referrals.
- there will be no tracking of referrals to the imaging center by the hospital system.
- the hospital system will continue to operate its own radiology departments.
Radiologists contemplating imaging center joint ventures with hospitals should carefully consider whether they would agree to these restrictions, including an agreement not to encourage any referrals from a hospital's nonemployed medical staff (the hospital system that sought this advisory opinion agreed not to accept any referrals from its employed physicians). However, the OIG's opinion notes that diagnostic radiologists do not "order" the radiological tests they perform. Even in situations in which a radiologist recommends additional testing to the attending physician during the course of a consultation, which, as a practical matter, may indirectly generate some additional business for the radiologist, the OIG found that those additional tests do not constitute a "referral." The patient's attending physician, with whom the radiologist has no financial arrangements, must approve the tests, and they are performed pursuant to a bona fide medical consultation. Thus, the radiologist's recommendation is not prohibited under the antikickback statute.
Finally, the OIG analyzed whether the hospital system's opportunity to invest-and consequently receive profit distribution from the investment-might constitute an illegal remuneration offered in exchange for past or future referrals. The advisory opinion noted that both parties received a return on their investments commensurate with their capital outlay. Because both have made a substantial investment, the OIG found no evidence that mere opportunity to participate as an investor in the imaging center constitutes illegal remuneration. Yet the OIG stated that arrangements in which one or several investors has an "established track record with similar ventures" might be suspect. Conversely, this transaction did not violate fraud and abuse laws because neither party had successfully operated a freestanding imaging center before. Therefore, radiologists with prior experience in such joint ventures may take little comfort from the OIG's admonition.
The advisory opinion included the OIG's customary disclaimer that the opinion has no application to other arrangements and may not be used as evidence in any matter involving any party that is not a requestor of the opinion. Furthermore, it remains uncertain whether the OIG will expect that all such radiology-hospital joint ventures will essentially forego customary marketing activity to stay in compliance with anti-fraud requirements. Although the opinion would seem to constrain some ventures, it should be helpful in that it affirms the long-standing opinion of most attorneys that certain hospital-radiology joint ventures do not risk fraud and abuse problems. When hospitals and radiologists partner in ventures that provide a return on the technical component proportional to such partners' investment, such ventures should not run afoul of the antikickback statute.
Advisory Opinion 97-4
In Advisory Opinion 97-4, dated Sept. 25, 1997, the OIG concluded that an ambulatory surgical center (ASC) could be liable for civil and criminal penalties if it sought Medicare complementary coverage for denied coinsurance and deductible claims but did not also seek payment from a patient. The ASC expressed concern to the OIG that this arrangement could represent a prohibited waiver of the coinsurance in violation of HIPAA and the antikickback statute. Waiving a Medicare beneficiary's copayment obligation, the OIG confirmed, constitutes prohibited remuneration that a provider knows or should know is likely to influence a beneficiary's choice of a particular provider. By proposing to not pursue collection of the coinsurance from the beneficiary, the ASC acknowledged its proposal partially intended to encourage covered beneficiaries to obtain services at its facility. The OIG found that the arrangement did not meet a statutory exception because it failed to provide for individualized determinations of financial hardship and did not constitute "reasonable collection efforts." Such efforts "should include a bona fide attempt to bill and collect from a patient if the patient's insurer refused to pay." The OIG indicated that a provider's continued submission to an insurer of claims, including subsequent appeals, that previously were denied as not covered is not a bona fide collection effort.
Regarding the antikickback statute, the OIG reiterated that providers who routinely waive Medicare copayments might be found liable under the statute. The failure to collect copayments for a specific group of Medicare patients for reasons unrelated to indigence indicates that the waiver is suspect. The ASC's proposed arrangement effectively waived the Medicare coinsurance for the group of beneficiaries covered by the complementary coverage if the insurer continued to deny payment. Moreover, the OIG concluded that an inference might be drawn that the arrangement's waiver may unlawfully induce patients to purchase services from the ASC that Medicare reimburses. Advisory Opinion 97-4 counsels that the fraud and abuse laws require physicians and other providers to pursue copayment collection if other coverage routinely and consistently denies a claim. Thus, radiologists should be careful about routinely waiving a patient's copayment and should also be cognizant of this concern when considering professional courtesy. |
