In response to an inquiry submitted by Ober|Kaler, the OIG recently provided its comments regarding the gravity of the mounting crisis in the medical malpractice insurance market and one hospital chain's efforts to manage the situation. Ober|Kaler, on behalf of its client, the hospital chain, solicited the OIG for confirmation that the chain's provision of temporary assistance in obtaining professional liability insurance to physicians on its hospitals' medical staffs would not be found to violate either the antikickback statute or the Stark law. In the response issued by Lewis Morris, Chief Counsel to the Inspector General, which was posted to the OIG's website on January 15, 2003, the OIG noted that it "historically has been concerned that malpractice premium subsidies paid to, or on behalf of, potential referral sources, including hospital medical staff, may be suspect under the anti-kickback statute." The OIG went on to point out that it nonetheless had established a fairly narrow safe harbor for malpractice premium subsidies provided to persons providing obstetrical care in primary health care shortage areas. Additionally, the OIG noted that malpractice premium support may fit into the employment or physician recruitment safe harbors. Of perhaps greatest importance, the OIG noted that "a payment practice that does not fall with-in the ambit of a safe harbor does not necessarily violate the anti-kickback statute."

The OIG acknowledged the current medical malpractice liability insurance crisis and indicated that it appreciated "the potential serious effects on federal health care beneficiaries' access to, and on the quality of, medical care if physicians curtail or cease practicing as a result of increased costs or access to malpractice insurance." The OIG then noted that it would take these considerations into account in evaluating temporary financial relationships designed to "help assure continued access to care" and that the OIG would "exercise [its] enforcement discretion accordingly."

The OIG concluded that it would not provide a binding determination with respect to any particular arrangement without evaluating the totality of the specific facts and circumstances. At the same time, however, the OIG did not take the position that any and all such practices would be violative of the law. Rather, the OIG noted the following safeguards which were contained in the proposed arrangements and which obviously were found to be of significant value by the OIG:

The assistance is provided on an interim basis for a fixed period in states experiencing the malpractice insurance crisis, although the program could be extended in the event of a continuation of the crisis.
Assistance will be offered only to currently active medical staff members or those who are joining the medical staff and either are new to the locality or have been in practice for less than one year. In other words, the assistance would not be used merely to convince physicians to move from one hospital in a community to another hospital in the same community.
The criteria for receiving assistance is not related to the volume or value of referrals or other business generated by the physicians for the hospitals.
Each physician receiving assistance will pay at least as much as he or she paid for malpractice insurance before the crisis.
The physicians will be required to perform services for the hospitals and to give up certain litigation rights. In other words, the physicians are receiving valuable financial assistance and, in exchange, are providing services and relinquishing rights of approximate equal value to the hospital.
The assistance is available to physicians regardless of the location at which the physicians provide services, including but not limited to, other hospitals. At the same time, the OIG did not appear to require that the assistance be identical at all sites of service.

Finally, the OIG noted that it has only limited jurisdiction with respect to the antikickback and Stark statutes and recommended direct contact with the DOJ (antikickback statute) and CMS (Stark II). Further, the OIG essentially solicited the filing of a formal request for an advisory opinion.

The issuance of this letter is important for a number of reasons. First, the letter acknowledges the existing medical malpractice insurance crisis and the critical need for hospitals to take actions which might otherwise not be appropriate in the absence of the crisis. Although the OIG did not specifically approve a particular program, by referring to the six safeguards, the OIG established guidance which will be valuable to hospitals as they develop necessary and appropriate malpractice insurance assistance.

Finally, although deferring to a more formal determination in the context of an advisory opinion request, counsel for the OIG apparently deemed this issue important enough to provide guidance on a more expedited basis. In any case, this letter constitutes important and concrete guidance with respect to a very real and imminent issue for hospitals and their physicians.