OIG Advisory Opinion Warns of Compliance Risk with Employed NP Arrangements
December 20, 2022
By Taylor Anderson, CVA, Taylor Harville, and Trent Fritzsche
The Department of Health and Human Services Office of Inspector General (OIG) posted Advisory Opinion No. 23-07 on October 13, 2023 (“Opinion”). The Opinion was related to the request submitted by a redacted requestor (“Requestor”) to pay bonuses to its employed physicians based on net profits derived from certain procedures performed by the physicians at ambulatory surgery centers (ASCs) operated by the Requestor (“Proposed Arrangement”). More precisely, the Requestor was seeking the opinion of the OIG about whether the Proposed Arrangement would lead to sanctions under the federal Anti-Kickback Statute (AKS).
Based on the relevant facts detailed in the Opinion, the Proposed Arrangement consisted of the following key facts and circumstances:
Ultimately, the OIG concluded the quarterly bonus structure would not generate prohibited remuneration under the federal AKS.
In the analysis summarized in the Opinion, the OIG highlighted several considerations that ultimately led to the conclusion. These included the following:
The OIG also noted that a compensation structure tied to profits generated from services provided to patients referred by the compensated party is suspect under the federal AKS, particularly in arrangements where the physician is an independent contractor or there is a different corporate structure. However, because the Proposed Arrangement satisfied the regulatory safe harbor for employees, the compensation would not be prohibited.
Lastly, the OIG noted that while the Proposed Arrangement would not generate prohibited remuneration under the federal AKS, it was clear that it expressed no opinion as to whether the Proposed Arrangement would implicate the physician self-referral law.
When developing unique compensation structures with physicians or any service provider it is important to be mindful of the various laws and statutes in place. Proper review and consideration of the federal AKS and other healthcare regulations is essential for any organization when structuring compensation plans to ensure proper regulatory compliance. Additionally, documentation of fair market value and commercial reasonableness is another key element of any provider compensation arrangement, especially if those providers are a source of potential referrals.
For additional guidance related to structuring and valuing provider compensation arrangements, please reach out to Managing Director Jonathan Helm at email@example.com to learn more.
*The Opinion noted there were two ASCs operating as corporate divisions of Requestor.