HHS Enforcer OKs Barred Kickbacks in Insurer-Hospital Agreement


July 19, 2021 11:21 am

Federal health inspectors green-lit a financial arrangement that will allow a company selling insurance plans that supplement Medicare to offer policyholders incentives for being treated at certain hospitals.

In an advisory opinion released Monday, the Office of Inspector General (OIG) for the Department of Health and Human Services said a licensed offeror of Medicare Supplemental Health Insurance, otherwise known as Medigap, and a preferred hospital organization could encourage policyholders to seek inpatient care from a hospital within the organization’s network.

The unnamed companies sought an advisory opinion because the financial arrangement could violate the federal Anti-Kickback statute. Under the law, it’s a felony for anyone to knowingly and willfully offer, pay, solicit, or receive kickbacks to encourage or reward referrals for health services paid for by federal health programs like Medicare.

The OIG said this particular arrangement poses a sufficiently low risk of fraud and abuse, so the office won’t sanction the companies involved. The OIG was careful to note that its advisory opinion is limited to the parties involved. 

By making the opinion public, other compliance officers can get a sense of the enforcement agency’s approach and perhaps seek guidance for their own arrangements.

“This advisory opinion is limited in scope to the arrangement and has no applicability to any other arrangements that may have been disclosed or referenced in your request for an advisory opinion or supplemental submissions,” the OIG said.

Under the arrangement, the Medigap plan would offer a $100 premium credit to each policyholder who selects a network hospital for a Medicare-covered inpatient stay. The premium credit would be applied to the next premium payment due to the Medigap plan after the policyholder’s inpatient stay, reducing the amount that person would owe.

The OIG said it’s unlikely this arrangement would result in overutilization of health-care items or services or pose a risk of increased costs to federal health-care programs.

“The Medigap Plan is an offeror of Medigap policies, with financial responsibility for all Policyholder costs that its policies may cover,” the OIG said. “Because it is generally in the Medigap Plan’s financial interest to ensure appropriate utilization and costs, we believe it is unlikely that it would use either the offer of a premium credit to its Policyholders or savings realized from the Network Hospitals’ discounts on the Medicare Part A inpatient deductibles to promote inappropriate utilization by its Policyholders.”