Medicare Compliance & Reimbursement

Hospitals:

CHARITABLE PROGRAMS CAN EVADE KICKBACK PERILS

Published on Sat Apr 12, 2003

Hospitals with a charitable mission have to take care that their efforts to help indigent patients don't run afoul of the anti-kickback statute. But facilities that carefully structure their programs can get a clean bill of health from the HHS Office of Inspector General.

Two advisory opinions released March 26 make the point. In the first opinion (No. 03-6), the OIG weighs in on a medical center's proposal to provide physician services to a county-owned women's health clinic - a clinic that primarily serves low-income patients - at an annual below-fair-market-value fee. The hospital also would provide certain inpatient services at no charge.

The problem with the arrangement, the OIG says, is that the hospital could conceivably be providing the low-cost care in order to gain access to referrals of Medicaid business. However, despite the theoretical kickback concerns, the watchdog agency concluded that the arrangement poses little risk of fraud and abuse. The programs saving graces were:

the low annual fee was not unreasonable in the particular circumstances, especially given the fact that the program will benefit the hospital in non-monetary ways by strengthening its residency program and exposing residents to a wider range of patients;

the potential benefit from Medicaid referrals is offset by the fact that many of the referrals would be low-income, self-paying patients whom the hospital has committed to care for;

the program works to public, not private, benefit; and

the contract was secured through a competitive bidding process and is limited to two years.

The second opinion (No. 03-7) elicits a similar lesson. In it, the OIG approves a hospital district's arrangement with an end-stage renal disease provider that could raise kickback concerns in connection with the provision of free care to indigent patients. The OIG nevertheless approved the deal, noting that the arrangement "inures to the public, not private, benefit.

Lesson Learned: Health care providers with charitable missions should take special care to ensure that their efforts don't run afoul of the sweeping anti-kickback statute.

To see the advisory opinions, go to http://oig.hhs.gov/.