OIG Issues Favorable Opinion Regarding Shared Services of an Air Force Medical Group and Community Hospital

The Office of the Inspector General issued a favorable opinion regarding an affiliation between an Air Force medical group and a community hospital. The arrangement involves an Air Force medical group (medical group) located on a military base and a community hospital located near the base. As a result of hurricane Katrina, the medical group no longer has the patient population to maintain certain residency and training programs. The community hospital has a need for certain physician specialists. Under the proposed arrangement, certain specialists from the medical group would treat the hospital’s patients; these patients would include Medicare/Medicaid beneficiaries. The medical group specialists would utilize hospital equipment and facilities to treat patients and be covered under the hospitals malpractice insurance.

The specialists will only provide services if the hospital has an identified need for a particular specialists’ services. The hospital has determined that the costs associated with this arrangement would be offset by the expenses that would be incurred by bringing in a physician specialist from a different source. The services provided by the medical group specialists will be free to the patients. The hospital will bill the appropriate party for any technical fees that are appropriate given the services provided.

The OIG noted that the arrangement’s risk of violating the Anti-Kickback statute is low for the following reasons: the medical group physicians do not bill for their services; the hospital rarely serves as a referral source for the medical group; this arrangement is in the best interest of the public; the referrals are not required to be to medical group physicians; and the arrangement’s costs are offset by expenses avoided by utilizing the arrangement. The OIG stated that since federal healthcare program beneficiaries were not improperly influenced under the arrangement, civil monetary penalties would not be applicable. Specifically, the OIG looked to the following factors: there is no advertisement that the medical groups physicians services are free of charge; the hospital bills patients for technical fees; and the patients come to the hospital fully expecting to pay for the services and it is unlikely that learning the services are free after the fact will induce patients to solicit these services.

If you have any question or concerns about the anti-kickback statute or the prohibition on beneficiary inducement found in the Civil Monetary Penalties law, please contact an attorney at Wachler & Associates at 248-544-0888.