OIG Advisory Opinion Supports Remote Health Monitoring Arrangements

August 22, 2013

In an Advisory Opinion posted on Aug. 16, 2013, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) assessed an arrangement under which a vendor of technology platforms (the “Vendor”) proposed to contract with hospitals to provide services to certain patients following hospital discharge in an effort to reduce preventable hospital admissions (the “Arrangement”). The OIG concluded that it would not impose penalties under the Anti-Kickback Statute even though the Arrangement could potentially generate prohibited remuneration if the requisite intent was present. The OIG further concluded the Arrangement would not constitute grounds for the imposition of civil monetary penalties under a provision prohibiting inducements to beneficiaries.

The Proposed Arrangement

The Vendor, a wholly-owned subsidiary of a pharmaceutical manufacturer, has developed technology platforms and services that are designed to help hospitals avoid payment reductions associated with excess readmissions by coordinating care and facilitating patient adherence to discharge plans. The Vendor will offer the Arrangement to hospitals either directly or indirectly through a group purchasing organization (GPO), patient-centered medical home (PCMH) or managed care organization (MCO). Agreements for the Arrangement would be in writing, for a term of at least one year, fees would be set at fair-market value and discounts would be structured in compliance with the discount exception to the Anti-Kickback Statute. Fees for the Arrangement will include (1) an initial flat fee; (2) an annual fee, based on patient volume, which can only be adjusted and increased if the actual use exceeds the baseline use already paid for by the annual fee; and (3) additional fees for additional services requested by a hospital.

Services provided by the Arrangement (the “Services”) include the availability of patient liaisons to monitor a participating patient’s adherence to the hospital discharge plan and his or her current health status. The Services would also include scheduling follow-up appointments, the provision of refill reminders, transportation support and the generation of reports to help the hospitals monitor the use of the Services and readmission rates. Finally, the Vendor certified that neither the Vendor nor nurses contracted by the Vendor would promote the pharmaceutical manufacturer’s products. In addition, regardless of the patient’s question or symptom, the nurses contracted by the Vendor would not refer the patient to any provider or supplier other than the patient’s established providers and suppliers.

Minimal Risk Under the Anti-Kickback Statute

Although the parties to the Arrangement are potential referral sources (i.e., the hospital’s staff is in a position to order drugs manufactured by the Vendor’s parent company and the Vendor’s employees could refer patients to the hospital), the OIG concluded the Arrangement posed a low risk of fraud and abuse under the Anti-Kickback Statute for the following reasons:

  1. The Arrangement is unlikely to lead to increased costs or overutilization. In contrast, the Services could actually save federal healthcare programs money if the Arrangement is successful in furthering its goal of decreasing hospital readmissions.
  2. The Arrangement is unlikely to interfere with clinical decision-making. The Services would be rendered after a participating patient is diagnosed and discharged from the hospital.
  3. The purpose of the Arrangement is to promote compliance with a participating patient’s discharge plan and all prescribed therapies, regardless of which drugs are prescribed to the patient. The Vendor certified that it would implement a number of safeguards to prevent the Arrangement from being used to increase drug sales by the pharmaceutical manufacturer. Further, the Vendor certified that the fees charged would be consistent with fair market value in an arm’s length transaction.
  4. The Arrangement is unlikely to result in inappropriate patient steering. Individuals contracted by the Vendor to interact with participating patients would be prohibited from referring the patients to any provider, practitioner or supplier other than a patient’s established provider, practitioner or supplier.

Beneficiary Inducement Concerns Do Not Exist

The OIG may assess civil monetary penalties against an individual if the individual offered or transferred remuneration to Medicare or Medicaid beneficiaries and the individual knows, or should have known, that the remuneration is likely to influence a beneficiary to order or receive a federally payable item or service from a particular provider, practitioner or supplier. The OIG found that although the participating patients would receive a valuable service without cost under the Arrangement, the Arrangement is a low-risk method of guiding patients through the post-discharge period without influencing a participating patient to order or receive a federally payable item or service or limiting a participating patient’s choice of provider, practitioner or supplier.

If you have any questions regarding remote health management and compliance with the Anti-Kickback Statute or civil monetary penalty provisions, please contact one of the authors.