In Advisory Opinion 11-06, the Office of Inspector General ("OIG") concluded that a referral service's proposal to provide post-acute care providers electronic referral requests from hospitals for a fee could potentially violate the anti-kickback statute.  The OIG was concerned that post-acute care providers who did not pay for electronic referrals would be at a significant competitive disadvantage compared to paying providers.  For this reason, the OIG found some post-acute care providers would pay for referral services they could not afford and in turn all of the providers could feel pressure to recoup the cost by engaging in acts that could increase costs to the Federal health care program.

The Advisory Opinion was requested by the operator of an online referral service ("Online Referral Service") that provides discharge planning support services to hospitals and provides hospitals access to a listing of all licensed post-acute providers, including skilled nursing facilities, home health agencies, and assisted living facilities.  Hospitals use the Online Referral Service to identify and select post-acute care providers to meet the needs of hospital patients who are ready to be discharged.  The hospital initiates the referral process by providing the Online Referral Service patient information, which in turn is given to the post-acute care provider who then makes the decision whether to accept a patient.  According to the Online Referral Service, many hospitals provide referrals to post-acute providers on a first-come-first-served basis, with the result that the first provider who responds to the hospital's inquiry will receive the patient.

Post-acute care providers were not being charged a fee to electronically use the Online Referral Service to receive or respond to hospital referral requests.  However, the Online Referral Service was proposing to begin charging post-acute care providers a one-time implementation fee and an ongoing monthly fee for online access. 

Post-acute care providers who did not pay the fees would continue to be listed in the referral system but could not electronically receive or respond to the hospitals' referral requests.  Instead, the non-paying post-acute care providers would receive requests via facsimile and then would call or fax the hospital.  According to the Online Referral Service, the non-paying providers would be significantly disadvantaged because they would not be able to communicate with the hospitals and accept referrals in a timely manner. Also, once it recouped its development costs, the online service certified it would become more expensive to fax referral requests to non-paying providers than to transmit them electronically.

The OIG began its analysis by finding that the proposed arrangement would implicate the anti-kickback statute because the Online Referral Service would be soliciting and accepting referrals, and the acute-care providers would be paying remuneration in return for referrals.  The OIG then noted that the arrangement would not qualify for protection under the safe harbor for referral services because it failed to satisfy the safe harbor requirements that referral fees be assessed uniformly against all participants and be based only on the cost of operating the referral service (fees paid by the hospitals to the referral service exceed the costs of operating the service).

Because the proposed arrangement did not fit within a safe harbor, the OIG examined whether the arrangement would only pose a minimal risk under the anti-kickback statute.  The OIG concluded it did not pose only a minimal risk for several reasons.  First, the OIG found that the post-acute care providers who paid for electronic access to referrals would have a significant advantage over non-paying providers.  As a result, providers paying for referrals would be more likely to get patients not due to superior care but due to their payments to the Online Referral Service.

Second, the cost the service would incur to fax requests to non-paying post-acute care providers would exceed the cost to provide the referrals electronically.  Thus, the Online Referral Service would be faxing referral requests to post-acute care providers to provide paying providers a competitive advantage rather than because it was cheaper or easier to fax requests.

Finally, the Online Referral Service reported that some post-acute care providers indicated they could not afford to pay for online access to the referral system.  These providers would be required to pay fees they could not afford in order to remain competitive or risk a substantial loss of business.  For this reason, the OIG determined all of the post-acute care providers would face pressure to recoup the cost associated with paying for online referrals by engaging in acts such as prolonging patient stays, billing unnecessary services, or upcoding Resource Utilization Group assignments that could increase costs to the Federal health care program.

In summary, the OIG found that the Online Referral Service's proposal could potentially violate the anti-kickback statute.

Advisory Opinion No. 11-06 is available at:

http://oig.hhs.gov/fraud/docs/advisoryopinions/2011/AdvOpn11-06.pdf 

For more information concerning OIG Advisory Opinion No. 11-06 or if you have any questions, please contact Bill Prince (803.255.9327), Cindy Hutto (843.720.4307), or Alice Harris (803.255.9487).