On December 8, 2017, the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) issued Advisory Opinion 17-08, in which it concluded that certain arrangements for nursing home discounts do not violate the federal Anti-Kickback Statute (“AKS”) or Civil Monetary Penalties Law (“CMPL”).

The advisory opinion analyzed a proposed arrangement submitted by an unidentified startup company that intends to establish a network of nursing homes that would offer discounts to private long-term care insurers and their policyholders. The private insurance companies would pay the startup company administrative fees for creating and maintaining the network. The OIG found that while the proposed arrangement would implicate the AKS and CMPL, the OIG would not impose administrative sanctions due to a “sufficiently low” risk of fraud and abuse. The OIG noted that the arrangement had possible concerns because the discounts might lead patients to the specific nursing homes in the network, and Medicare or Medicaid might at some point pay for some of the services the beneficiaries would receive at those nursing homes.

Despite these concerns, the OIG noted multiple factors that mitigated the potential risks. First, the OIG noted that nursing homes do not have control over the circumstances that would trigger Medicare or Medicaid taking over payment for a patient’s care. Further, the discounts were not dependent on patients using items paid for by Medicare or Medicaid. Additionally, the OIG noted that any nursing home that meets the quality standards of the network could choose to join the network, and so the arrangement “should not unfairly affect competition among nursing facilities.” Finally, the OIG concluded that beneficiaries still had the freedom to choose nursing homes not in the discount network, and that a beneficiary’s decision-making process would involve many other factors unrelated to the discounts.

For those reasons, combined with the proposed arrangement’s potential savings to beneficiaries, the OIG concluded that it would not impose administrative sanctions under the CMPL, and that the proposed arrangement would not trigger liability under the AKS.

The attorneys at Chilivis Grubman represent healthcare providers of all types and sizes in connection with a wide-variety of regulatory and compliance matters. For any questions, or if we can assist you in connection with a healthcare regulatory or compliance issue or audit/investigation, please contact us at (404) 262-6505 or sgrubman@cglawfirm.com.