No. 01-7: OIG Approves Insurance-only Billing for Services of Employed Physicians But Not Private Practice Physicians
On July 2, 2001, the OIG issued Advisory Opinion 01-7, regarding a hospital's insurance-only billing policy whereby the hospital accepts reimbursement from third-party payors without billing patients for copayments and deductibles. Instead, the hospital is reimbursed for the unbilled copayments and deductibles by the hospital's foundation. The OIG analyzed the arrangement under the antikickback statute, 42 U.S.C. § 1320a-7b(b), and the civil monetary penalty provision against inducements to beneficiaries, 42 U.S.C. § 1320a-7a(a)(5). While finding that the hospital's insurance-only billing policy could potentially generate prohibited remuneration, the OIG refused to impose administrative sanctions for services provided by full-time employed physicians, but not for private practice physicians.

The hospital is a 161-bed specialty teaching hospital and tertiary-care facility, specializing in treatment of heart, lung, and vascular diseases in adults and congenital and acquired heart defects in children. The hospital does not maintain an emergency room. It provides substantial amounts of free care. The hospital's foundation provides substantial financial support to the hospital through grants to cover operating losses.

Initially, the hospital funded the entire cost of care entirely through private contributions. In the 1960's, the hospital instituted a new policy of accepting reimbursement from third-party payors, including Medicare and Medicaid, without billing patients or their families for copayments and deductibles. The hospital continues to treat uninsured patients free of charge. On a quarterly basis, the hospital submits a bill to its foundation for an amount equal to the waived copayments. The foundation pays the bill as part of its charitable contribution to the hospital.

Historically, almost all inpatient and outpatient services at the hospital were provided by a closed medical staff of physicians who practiced exclusively at the hospital. The physicians were paid a salary that was fixed in advance on an annual basis and that did not vary directly or indirectly based on the volume or value of tests. The full-time physicians were not permitted to have outside medical practices.

Recently, the hospital began permitting full-time physicians to enter into part-time employment arrangements with medical groups in private practice and extending hospital staff privileges to physicians in private practice in surrounding communities. The OIG refers to these physicians as the private practice physicians.

The OIG began its analysis by reiterating its long-standing concern about waivers of copayments and deductibles under the antikickback statute and the civil monetary penalty against inducements to beneficiaries. The OIG cautioned that waivers of copayments and deductibles make beneficiaries less conscientious health care consumers.

The hospital attempted to argue that copayments and deductibles are not waived under its insurance-only billing policy because the foundation pays the hospital for the uncollected copayments and deductibles. The OIG rejected this argument, finding that the hospital and the foundation were one and the same, given the overlapping boards, joint annual statement, and the foundation's specific charitable mission. The OIG also made the point that payment by the foundation does not provide any meaningful check on overutilization.

With respect to inpatient services, the OIG concluded that the hospital's insurance-only billing policy satisfies the safe harbor for waivers of copayments and deductibles, 42 C.F.R. § 1001.952(k).

With respect to outpatient services, the OIG concluded that the hospital's insurance-only billing policy does not satisfy the safe harbor for waivers of copayments and deductibles. The OIG decided, however, not to impose administrative sanctions for outpatient services provided by full-time, employed physicians. The insurance-only billing policy is tied to the hospital's charitable origin and mission. Moreover, the policy predates the Medicare and Medicaid programs. The OIG warned that the hospital's institutional history is not sufficient by itself to justify the policy, but merits deference that would be inappropriate for an identical policy implemented today.

The OIG cited several additional safeguards. First, the full-time physicians do not have significant financial incentives to provide unnecessary services because the physicians are precluded from maintaining outside medical practices and are paid fair-market-value salaries that are not based directly or indirectly on the volume or value of referrals. Second, the hospital is a specialty hospital and patients are referred by community-based cardiologists who receive no financial benefit.

The OIG refused to offer similar protection to inpatient services provided by private practice physicians. The OIG noted that the hospital is one of several hospitals in the area competing for lucrative cardiology business. The waiver of copayments and deductibles would convey a competitive advantage on the hospital and the private practice physicians. Part of the OIG's concern with respect to services provided by private practice physicians was based on the fact that referrals from medical staff members who were allowed to join private practices have increased substantially.

Advisory Opinion 01-7 represents another case in which the OIG has granted protection to a long-standing arrangement, while warning that it would be unlikely to offer protection to a similar arrangement that lacked the institutional history. Nevertheless, institutional history by itself is not sufficient to ensure protection.

Another important aspect of Advisory Opinion 01-7 is that the OIG collapsed the hospital and foundation for purposes of its analysis under the antikickback statute. The OIG cited the overlapping boards, the joint annual statement, and the specific mission of the foundation to support the hospital.

Finally, Advisory Opinion 01-7 presents a fairly rare instance in which the OIG has issued an advisory opinion stating that an existing arrangement may violate the law. In most cases, the requestor withdraws the request once the OIG indicates that an arrangement may be subject to sanctions. Presumably, the OIG will not impose administrative sanctions if the parties move to change the policy expeditiously. However, the parties run the risk of sanctions given that the OIG is an enforcement agency.

No. 01-8: OIG Approves Pressure Ulcer Management Program
In Advisory Opinion 01-8, issued July 3, 2001, the OIG analyzed a comprehensive program to market and sell a pressure ulcer management program to nursing facilities under the antikickback statute. While finding that the pressure ulcer management program could potentially generate prohibited remuneration, the OIG concluded that it would not impose administrative sanctions.

A company that manufactures and sells therapeutic mattresses used for the treatment of pressure ulcers has developed a pressure ulcer management program for nursing facilities. The three-year program has three elements: (i) discounted therapeutic mattresses, (ii) prospectively fixed, per resident/per diem payment for skin and wound care products, and (iii) limited warranty for monetary liabilities from the program's failure to meet its objective of managing pressure ulcers.

The first element of the program involves the replacement of all of the mattresses in the nursing facility with therapeutic mattresses. The nursing facility pays a negotiated, fixed discounted price per bed, which represents fair market value for non-powered mattresses. In return, the facility receives therapeutic mattresses, wheelchair cushions, and therapy pads; some advanced powered therapeutic mattresses; and online access to a wound documentation system and certified wound care specialists. The facility obtains ownership of the non-powered mattresses. The company retains ownership of the powered mattresses.

The second element of the program requires the nursing facility to pay a fixed, daily fee per resident in exchange for an extensive skin and wound care program which includes all non-prescription skin and wound care products. The company also provides protocols and inservice training for facility staff. The capitated fee represents fair market value.

In the final element of the program, the company agrees to reimburse the facility for a certain amount of the liability insurance deductible paid by the facility per incident for skin and wound care deficiencies. The facility is required to comply with program obligations, including skin and wound care protocols, inservice training, online wound documentation tools, and use of the company's certified wound care specialists.

Most of the costs of the program are not directly reimbursable by the Medicare or Medicaid programs. Under Medicare Part A, the costs of the program are included in the per diem payment under the SNF PPS. Under Medicare Part B, some wound care products are reimbursed, but they represent less than 1 percent of the program's costs. Under most state Medicaid programs, the costs of the program are included in a per diem payment.

The OIG began its analysis by noting that with the advent of SNF PPS a variety of arrangements have developed between ancillary suppliers and nursing facilities to control and reduce the costs of PPS-covered items and services. The OIG concluded that the pressure ulcer management program does not fit within the discount safe harbor, 42 C.F.R. § 1001.952(h), because it bundles several distinct items and services.

Despite the OIG's long-standing concern about the provision of items for free or at less than fair market value to induce the purchase of another item or service, the OIG found that the program posed minimal risk of fraud and abuse. First, the program covers all beds and residents regardless of the payor. Second, facilities are reimbursed by federal health care programs on a global, all-inclusive rate for most of the items under the program. Third, only surgical wound supplies are separately reimbursed under Medicare Part B. Finally, the program is the only financial arrangement between the parties.

The OIG then analyzed the program's warranty provision under the safe harbor for warranties, 42 C.F.R. § 1001.952(g). The OIG noted that payments made by a manufacturer to settle claims or satisfy judgments arising out of product liability claims were protected by the warranty safe harbor. The OIG found that all of the conditions of the safe harbor were satisfied, except that the warranty safe harbor only applies to items. The program, however, involves a combination of items and services. Nevertheless, the OIG provided protection, in part because of its reluctance to "chill innovative and potentially beneficial arrangements." The OIG noted that if it becomes aware of problems, it has the right to modify the opinion at a later date.

Advisory Opinion 01-8 represents another challenge posed to the OIG by the advent of the various Medicare prospective payment systems. It also shows the OIG's willingness to encourage innovative programs to combat costs when adequate protections are present.

>No. 01-9: OIG Approves Grant to Defray the Costs of Providing Services to Uninsured Patients
On July 19, 2001, the OIG issued Advisory Opinion 01-9, in which it analyzed a grant from a hospital to a nonprofit community health center to defray the costs of providing services to uninsured patients under the antikickback statute. While finding that the proposed grant could potentially generate prohibited remuneration, the OIG concluded that it would not impose administrative sanctions.

A nonprofit community health center (CHC), which receives grant funding under section 330 of the Public Health Services Act, provides a broad array of preventive and primary health care services in a medically underserved area (MUA). The CHC operates a federally qualified health center and employs five primary care physicians, all of whom have admitting privileges at a local hospital.

The local hospital is a public teaching hospital. It is owned by the City and receives no tax dollars. The hospital provides approximately 70 percent of the uncompensated health care in the community at a cost of over $18 million annually. The hospital provides services in several off-site locations, including a clinic. The clinic provides primary care and related support services, including transportation and translation services. The clinic also has a senior center, an urgent care center, and a site for graduate medical education activities. The clinic operates at a substantial loss.

The parties are considering changing the clinic to a CHC site. The CHC would assume operation of, and financial liability for, the clinic's primary care and urgent care services. The hospital would continue to operate the senior center and medical education activities. The hospital would lease the space and equipment in the clinic used for the primary care and urgent care services at fair market value rent. The CHC would also purchase certain clinical services from the hospital at fair market value.

To defray the CHC's cost of providing uncompensated care to needy patients at the clinic, the hospital has proposed making a grant to the CHC on an annual basis for a period of three years. The maximum amount available under the grant will be set in advance. The grant will approximate the CHC's cost of providing uncompensated services for uninsured patients at the clinic and will have no significant restrictions. The parties have certified that the grant will not vary with the volume or value of referrals between the parties.

The OIG began its analysis by noting that "charitable donations play an essential role in sustaining and strengthening the health care safety net for the uninsured and underinsured." Moreover, the majority of donors are motivated by bona fide charitable purposes. The existence of a business relationship between a donor and donee does not make the donation automatically suspect under the antikickback statute.

In the present scenario, the OIG found that the business relationship between the CHC and the hospital raised concerns. The clinic has a substantial volume of commercially insured patients, so the CHC could improve its current patient mix by taking over operations of the clinic. The grant is coupled with other ties between the CHC and the hospital to the detriment of competitors in the market.

Despite the concerns, the OIG refused to impose administrative sanctions. First, the grant ensures continuity of care for the hospital's patients. Second, the grant furthers the shared charitable mission of the CHC and the hospital. The conversion of the clinic to a CHC site should result in a substantial increase in underserved patients being seen, which will likely result in increased admissions of uninsured patients to the hospital. Third, the CHC will assume responsibility for the clinic only if the hospital provides some subsidy to cover the increased costs of uncompensated care. Finally, the grant has several features that minimize the risk of fraud and abuse. The grant does not vary with the volume or value of referrals between the parties. The lease for space and equipment and purchase of clinic services from the hospital are at fair market value. Clinic patients will be advised in writing of their freedom to choose providers.

As in Advisory Opinion 01-2, the OIG has recognized the beneficial role of charitable contributions in meeting the nation's health care needs. The OIG has taken pains in Advisory Opinion 01-9 to stress that the existence of a business relationship does not make a charitable contribution per se illegal. Rather, the arrangement must be evaluated as a whole. In this case, the OIG was willing to overlook the potential detriment to competition due to the overall benefit to the community, particularly to uninsured patients.

>Nos. 01-10, 01-11, 01-12: OIG Approves Insurance-only Billing for Government-operated Ambulance Services But Cautions Against Insurance-only Billing by Private Ambulance Company Under Contract with City
OIG Advisory Opinions 01-10, 01-11, and 01-12, all issued July 20, 2001, should be read in context with one another. They each analyze various permutations in the waiver of copayments and deductibles in the governmental operation of ambulance services under the antikickback statute and the civil monetary penalty provision against inducements to beneficiaries.

OIG Advisory Opinions 01-10 and 01-11 concern, respectively, a political subdivision of a state and a municipal corporation, each of which owns and operates an ambulance service and treats operating revenues from local taxes as payment of copayments and deductibles for area residents. The OIG found that the respective arrangements did not generate prohibited remuneration and, thus, they did not implicate the antikickback statute because neither the political subdivision of the state nor the municipal corporation has an obligation to collect copayments and deductibles. At the same time, the OIG found that both arrangements could implicate the civil monetary penalty provision against inducements to beneficiaries, but refused to impose administrative sanctions.

Advisory Opinion 01-12 analyzes an exclusive contract between a city and a private ambulance company that requires the ambulance company to waive copayments and deductibles for local residents. The OIG found that the arrangement could potentially generate prohibited remuneration and could be subject to administrative sanctions under the antikickback statute and the civil monetary penalty provision against inducements to beneficiaries.

Advisory Opinions 01-10 and 01-11 are identical except for the fact that the fire district providing ambulance services is operated by a political subdivision of a state in Advisory Opinion 01-10 and by a municipal corporation in Advisory Opinion 01-11. Advisory Opinion 01-12 is similar to Advisory Opinions 01-10 and 01-11 except for the fact that, in Advisory Opinion 01-12, the ambulance service is operated by a private company under contract with the local government.

Services Provided by Government Entity
In Advisory Opinion 01-10, the fire district is part of a political subdivision of a state that provides fire suppression, fire protection, and emergency medical services (EMS). It currently provides EMS free of charge to area residents, but bills people from outside the area and their insurers. The fire district is considering billing area residents and their insurers, including federal health care programs, but only to the extent of their insurance coverage. The fire district will treat revenues from local taxes as payment of any applicable copayments and deductibles for area residents.

In Advisory Opinion 01-11, the fire district is part of a municipal corporation that provides fire suppression, fire protection, and ambulance services. It currently provides ambulance services free of charge to area residents, but bills people from outside the area and their insurers. The municipal corporation has passed an ordinance requiring residents to pay for ambulance services to the extent of their insurance coverage. The fire district will treat revenues from local taxes as payment of any applicable copayments and deductibles for area residents.

In each advisory opinion, the OIG began its analysis by noting that the respective fire district's insurance-only billing constitutes a limited waiver of copayments and deductibles. The OIG reiterated its long-standing concern with routine waivers of copayments and deductibles. However, the OIG noted that special rules apply to providers and suppliers that are owned and operated by a state or political subdivision of a state. Specifically, the Medicare Carrier's Manual states:

a [State or local government] facility which reduces or waives its charges for patients unable to pay, or charges patients only to the extent of their Medicare and other health insurance coverage, is not viewed as furnishing free services and may therefore receive program payment.

MCM § 2309.4. Despite the use of the term "facility" in the Carrier's Manual, the provision applies to state or municipal ambulance companies that operate as Medicare Part B suppliers. Thus, the fire districts in the scenarios presented in Advisory Opinions 01-10 and 01-11 are not required to collect copayments and deductibles from Medicare beneficiaries. Consequently, the OIG concluded that the fire districts' insurance-only billing policies did not generate prohibited remuneration and thus, sanctions would not be imposed.

Services Provided by Private Entity
In the arrangement analyzed in Advisory Opinion 01-12, a private ambulance company responded to a request for proposal (RFP) to provide "911" emergency basic life support ambulance services within a city. The company offered to provide ambulance service at no cost to the city and was awarded an exclusive, three-year contract. The contract prohibits the ambulance company from billing any out-of-pocket copayments and deductibles to bona fide residents of the city.

The question presented in Advisory Opinion 01-12 is whether the city's failure to reimburse the ambulance company for the copayments owed by city residents resulted in waivers of copayments in violation of the antikickback statute. Reiterating its long-standing concern about routine waivers of copayments and deductibles, the OIG concluded that if the city wishes to assume the copayment obligations of city residents to a private ambulance company, it must pay the amounts owed. The OIG noted that the city's failure to make the payments implicated the antikickback statute, as well as the False Claims Act.

The OIG found a sharp distinction between the situation presented in Advisory Opinion 01-12 and the situations presented in Advisory Opinions 01-10 and 01-11. In contrast to the ambulance services operated by a political subdivision of a state and a municipal corporation in Advisory Opinions 01-10 and 01-11, the ambulance service in Advisory Opinion 01-12 is operated by a private company under contract with a local government. The exception for ambulance services operated by state and local governments does not extend to private ambulance services operated under contract with state or local government and the private ambulance company is therefore required to collect copayments. Absent an obligation to collect the copayments, no remuneration is generated by the governmental entities' failure to collect the copayments. However, the private company's failure to collect copayments either from the residents or the city generates remuneration in violation of the antikickback statute.

Advisory Opinions 01-10, 01-11, and 01-12 may produce some unintended consequences. First, they may lead state and local governments to operate their own ambulance services rather than contract with private ambulance companies. Operating their own ambulance services is the only way that state and local governments will be able to implement an insurance-only billing policy. Alternatively, Advisory Opinion 01-12 will limit the ability of state and local governments to conserve tax dollars by contracting with private ambulance companies to assume part of the cost of providing ambulance service to area residents.

No. 01-13: OIG Approves Coordination of Benefits Provision Between HMO and SNF, Modifies Advisory Opinion 98-5
On August 17, 2001, in Advisory Opinion 01-13, the OIG analyzed the coordination of benefits (COB) provisions of a provider agreement between a health maintenance organization (HMO) and a skilled nursing facility under the antikickback statute. The OIG's conclusions in Advisory Opinion 01-13 led it to simultaneously modify an existing advisory opinion for the first time.

The COB provision at issue in Advisory Opinion 01-13 is the same as that in Advisory Opinion 98-5, originally issued April 24, 1998. In Advisory Opinion 98-5, the OIG concluded that a COB provision requiring a nursing home to forgo certain Medicare cost-sharing amounts may involve prohibited remuneration under the antikickback statute and be subject to sanctions. In Advisory Opinion 01-13, however, based on additional facts presented in the advisory opinion request, the OIG found that the same COB program could potentially generate prohibited remuneration, but decided not to impose administrative sanctions.

Advisory Opinion 01-13
The HMO requesting Advisory Opinion 01-13 is a not-for-profit corporation whose primary business is a commercial HMO that provides coverage to 350,000 members, of whom less than 5 percent have primary coverage under Medicare. The HMO is subject to extensive regulation by the state insurance department. It is required to use community rate premiums, whereby insurance premiums are the same regardless of the enrollee's age, sex, health risk, etc. In addition, the state insurance department reviews and approves the HMO's premiums.

The HMO has established a contractual network of providers, including 63 nursing facilities. The 63 nursing facilities represent over 70 percent of the skilled nursing facilities in the region. The network is open to all skilled nursing facilities in the region that meet the plan's quality standards and agree to accept the plan's fee schedule. All of the plan's participating provider agreements with the nursing facilities are identical.

The participating provider agreements contain a COB provision that applies when an HMO member has two or more forms of medical coverage and the HMO is the secondary payor. Under the COB provision, the nursing facilities agree to accept the HMO's fee schedule as payment in full. Thus, if the HMO is secondary, it only pays a nursing facility when the HMO's fee schedule amount has not been paid by the primary payor. If the nursing facility has been paid the HMO's fee schedule amount by the primary payor, the nursing facility must hold the HMO member harmless against any charges and may not attempt to charge the member for any copayments and deductibles.

Under Medicare Part A, nursing facilities are paid the full amount of the facility's applicable per diem rate for the first 20 days of a beneficiary's stay. For days 21-100, nursing facilities are paid the applicable per diem less a coinsurance amount equal to one-eighth of the hospital inpatient deductible. For Medicare beneficiaries, the COB provision results in a full or partial waiver of coinsurance to the extent that the Medicare per diem exceeds the HMO's fee schedule amount. Advisory Opinion 01-13 includes an example of the operation of the COB provision in the context of a Medicare Part A nursing facility stay.

The OIG began its analysis by reiterating its long-standing concern about routine waivers of copayments and deductibles, even in the context of COB provisions in which insurers require providers to waive Medicare cost-sharing obligations as a condition of participating in the insurer's network. Such COB provisions potentially violate the antikickback statute and the False Claims Act. However, not every waiver of Medicare copayments violates the antikickback statute. Occasional waivers do not necessarily violate the statute.

The OIG seemed to indicate that a primary concern is that insurance plans may knowingly manipulate COB provisions to avoid paying Medicare copayments and use the "savings" to offer lower rates to enrollees with primary coverage under Medicare. Such actions could provide a significant commercial advantage.

In the situation presented in Advisory Opinion 01-13, the OIG concluded that it would not impose administrative sanctions for several reasons. First, the HMO does not appear to be manipulating the COB provisions. The COB provision is long-standing and is expressly approved by the state insurance department. The HMO's fee schedule applies to all HMO enrollees, not just Medicare beneficiaries. The effects of the COB provision are unpredictable because the Medicare coinsurance obligations only apply after day 20 and the amount of the waived copayment depends on the Medicare beneficiary's particular health status.

Second, the potential financial advantage to the HMO is limited because premiums are set by community rating. Any savings generated by the COB provision may not be passed on to Medicare beneficiaries so there is no competitive advantage. Third, the HMO has limited ability to influence a Medicare beneficiary's choice of nursing facility, given the wide choice of nursing facilities in the HMO network and the fact that the network is open to all nursing facilities in the area. Fourth, the COB provision is unlikely to have an adverse financial impact on the Medicare program given the nature of Medicare Part A SNF reimbursement. The OIG specifically warned that it might have reached a different result under Medicare Part B reimbursement. Finally, the OIG reevaluated its concerns about the threat of nursing facilities providing reduced services to Medicare beneficiaries. The OIG noted that the nursing facilities will receive the same reimbursement for Medicare beneficiaries as for other HMO members. Thus, any incentive to underserve residents would be the same for all HMO members.

In conclusion, the OIG indicated that it would not impose administrative sanctions against the COB provision presented in Advisory Opinions 98-5 and 01-13. However, the OIG took pains to stress the limited nature of the opinion. First, the opinion only addresses the antikickback statute, not the False Claims Act or any other provision of federal law. Second, the opinion is limited to a community-rated, state-regulated HMO. Finally, the opinion only relates to Medicare Part A reimbursement for skilled nursing facilities, not any other reimbursement scheme.

Modification of Advisory Opinion 98-5
Advisory Opinion 98-5 was requested by a nursing facility that had entered into a provider agreement with the HMO that requested Advisory Opinion 01-13. After changing its mind based on the additional information presented in the HMO's advisory opinion request, the OIG issued a notice that it was modifying the original advisory opinion issued to the nursing facility to conform with its conclusion in Advisory Opinion 01-13. Specifically, although the COB provision could result in prohibited remuneration, the OIG refused to impose administrative sanctions based on the facts presented.

The OIG did not repeat its discussion of the facts in modifying Advisory Opinion 98-5. Instead, it simply referred to the discussion in Advisory Opinion 01-13.

Consistent with its regulatory requirements, the OIG provided the nursing facility with notice of its intent to modify the advisory opinion and gave the nursing facility an opportunity to respond and provide additional information before issuing the Final Notice of Modification.

Contrasting Conclusions — Comparing the Requestors
Advisory Opinion 01-13 and the subsequent modification to Advisory Opinion 98-5 show the importance of presenting the entire picture to the OIG in an advisory opinion request. When first presented with the situation in Advisory Opinion 98-5, the OIG concluded that administrative sanctions could be imposed based on the facts presented in the request. However, in Advisory Opinion 01-13, the OIG was presented with additional facts about the arrangement and concluded that administrative sanctions would not be imposed.

Advisory Opinions 98-5 and 01-13 also illustrate the ability of a requestor to control the advisory opinion process through the content of its request. The nursing facility requesting Advisory Opinion 98-5 had a financial incentive in having the OIG find the COB provision violated the antikickback statute. If the COB provision was found to violate the law, then the HMO would be forced to pay the nursing facility the entire coinsurance amount for Medicare beneficiaries. Thus, it is not surprising that the nursing facility presented the arrangement to the OIG in such a way as to elicit a negative advisory opinion. In contrast, the requestor in Advisory Opinion 01-13 was the HMO, which had a financial incentive in having the OIG find that the COB provision did not violate the antikickback statute. If the COB provision was found not to violate the law, then the HMO would only be required to pay the limited amount provided under the COB provision and fee schedule. Thus, it is not surprising that the HMO presented the arrangement to the OIG in such a way as to elicit a positive advisory opinion.

Finally, Advisory Opinions 98-5 and 01-13 also provide an example of how a party that finds itself on the wrong side of an advisory opinion may be able to change the OIG's view by presenting additional information in a separate request. One wonders whether the HMO had been given a opportunity to participate in Advisory Opinion 98-5.

Advisory Opinions 98-5 and 01-13 show the limitations of an advisory opinion in which the requestor fails to provide a complete description of the facts in an effort to obtain a negative advisory opinion. A party that finds itself on the wrong side of an advisory opinion always has the opportunity to present additional facts in an attempt to obtain a positive advisory opinion from the OIG.

No. 01-14: OIG Approves Waivers of Copayments and Deductibles for Breast and Gynecological Cancer Screening
OIG Advisory Opinion 01-14, issued August 27, 2001, addresses a hospital's policy of waiving out-of-pocket copayments and deductibles for certain breast and gynecological cancer screening and follow-up services. The waiver policy was analyzed under the civil monetary penalty provision against inducements to beneficiaries and the antikickback statute. While finding that the hospital's waiver policy could potentially generate prohibited remuneration, the OIG concluded that it would not impose administrative sanctions.

The hospital operates a cancer hospital on its main campus and a center at a satellite location. The center offers an early detection program for breast and gynecological cancer at no out-of-pocket expense to patients. The program is financed through a combination of federal and state grants, private philanthropic support, and annual grants from the hospital.

Initially, the program provides screening services in the center that include a clinical breast examination, a screening mammogram, a screening pelvic examination, and a screening pap smear. If the screening services reveal any abnormal results, a center employee contacts the patient to schedule appropriate follow-up services at the hospital. For an abnormal mammogram, the follow-up services include an ultrasound or diagnostic mammogram and/or a needle biopsy or aspiration. For an abnormal pap smear, the follow-up services include an office visit with a gynecologist and any related, confirming procedures. If concerns persist, the patient is scheduled to see a surgeon at the center, who will schedule additional services usually at one of three hospitals with which the physician has admitting privileges and which are geographically closer. The additional services may be performed at the hospital affiliated with the center, but the waiver policy does not apply.

The OIG began its analysis by noting that waivers of copayments and deductibles implicate the civil monetary penalty provision against inducements to beneficiaries. The OIG noted that an exception excludes remuneration given to promote the delivery of preventive care services. 42 C.F.R. § 1003.101. Preventive care includes prenatal services, post-natal well-baby visits, and specific clinical services listed in the U.S. Preventive Services Task Force's Guide to Clinical Preventive Services. The Guide lists mammography and annual clinical breast examination and screening for cervical cancer. The OIG also noted that waivers of copayments and deductibles implicate the antikickback statute.

The OIG found that the hospital's waiver policy implicated the civil monetary penalty provision against inducements to beneficiaries. The waiver policy did not qualify for the preventive care exception because not all of the screening services qualify as preventive services and the policy extends to follow-up services. Nevertheless, the OIG concluded that sanctions would not be imposed because the risk of fraud and abuse was minimized by certain aspects of the program. First, the large majority of patients who benefit from the program are uninsured persons who might not otherwise receive screening services. Thus, the early detection program is essentially a charitable endeavor. Second, the follow-up services are limited to those necessary to confirm the initial screening results. Therapeutic services are neither covered by the waiver policy nor generally rendered by the hospital.

An interesting aspect of Advisory Opinion 01-14 is that the focus of the OIG's analysis was on the civil monetary penalty provision against inducements to beneficiaries, rather than the antikickback statute. This may have been due, at least in part, to the existence of the preventive care exception under the beneficiary inducement provision. No similar exception exists under the antikickback statute.