October 19, 2021

Volume XI, Number 292

Advertisement
Advertisement

October 18, 2021

Subscribe to Latest Legal News and Analysis
Advertisement

OIG Advisory Opinion Allows Proposed “Preferred Hospital” Network Arrangement for Medigap Insurance Policies

On July 21, 2011, the Office of Inspector General (OIG) posted Advisory Opinion 11-09, a favorable opinion regarding a Proposed Arrangement to utilize a “preferred hospital” network as part of Medicare Supplemental Health Insurance (“Medigap”) policies.  Providers would indirectly contract with hospitals for discounts on otherwise applicable Medicare inpatient deductibles for their policyholders, in turn providing a $100 premium credit to policyholders who used a network hospital for an inpatient stay.

The OIG concluded that even though the Proposed Arrangement would not qualify under statutory safe harbors, based on the totality of facts and circumstances, including a low risk of fraud or abuse and a potential for significant savings for beneficiaries, sanctions under the Anti-Kickback law would not be warranted.

In particular, the OIG pointed out that the discounts offered on inpatient deductibles by the network hospitals would present a low risk of fraud or abuse because:

(1) per service Medicare payments would not be increased or affected,

(2) the discounts should not increase utilization,

(3) because membership would be open to any accredited, Medicare-certified hospital meeting applicable state laws, competition among hospitals should not be unfairly affected, and

(4) professional medical judgment would not likely be affected because the physician or surgeon receives no remuneration.

Further, the OIG recognized that the premium credit to patients would have substantially the same purpose and effect as a differential in coinsurance or deductible amounts. These are allowed under a statutory exception as part of a benefit plan design if the differential has been properly disclosed and otherwise meets the requirements of any corresponding regulations.  In addition, the OIG noted that the Proposed Arrangement not only has the potential to lower Medigap costs for policyholders who utilize the network, but may also potentially lower costs for all policyholders.

The entire Advisory Opinion is here.

Thank you to Julie Bernard, Summer Associate, for her help in preparing this blog post.

©2021 von Briesen & Roper, s.cNational Law Review, Volume I, Number 207
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

von Briesen & Roper’s Health Law Section provides comprehensive legal services to the health care industry nationwide as both general counsel and special project counsel. Our clients include integrated delivery systems, academic medical centers, community hospitals, Catholic-sponsored hospitals, rural and critical access hospitals, imaging centers, physicians and multi-specialty clinics, specialty hospitals, ancillary suppliers, home health agencies, nursing homes, hospices, assisted living facilities, mental health and AODA facilities, DME suppliers, laboratories,...

414-287-1514
Advertisement
Advertisement
Advertisement