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July 6, 2020

Health Headlines – July 6, 2020


OIG Issues Advisory Opinion on Discount Medical Plan Organization Arrangement – On July 1, 2020, OIG published an advisory opinion regarding a discount medical plan organization (DMPO).  A DMPO is not an insurer but contracts with providers who agree to reduce their fees for the DMPO’s members.  Under the arrangement at issue, the DMPO would pay a $5.00 referral fee to chiropractors for each new DMPO member referred by the chiropractor.  OIG concluded that, although the arrangement could potentially violate the Anti-Kickback Statute, OIG would not impose administrative sanctions.

The DMPO at issue in the advisory opinion was limited to chiropractic services and would contract with all willing chiropractors that met minimum requirements for participation.  Chiropractors did not pay the DMPO to participate in its network, but the DMPO’s members paid an annual membership fee to the DMPO to be entitled to receive the discounted rates from chiropractors in the DMPO network.  DMPO members may choose to participate for a variety of reasons, including if they were uninsured, did not have chiropractic benefits under their insurance plan, or had a high deductible or other cost-sharing obligations under their insurance plan. 

Medicare provides only limited coverage for chiropractic services and the DMPO requesting the advisory opinion certified that Medicare beneficiaries may only use the DMPO for non-covered services because chiropractors that participate in Medicare are legally obligated to submit claims to Medicare for covered services. 

Although the requestor only sought an opinion related to the $5.00 referral fee, OIG analyzed both the $5.00 referral fee and the DMPO structure.  With respect to the $5.00 referral fee, OIG noted that although the fee is a payment to reward a referral, the referral was to the DMPO, which neither furnishes or arranges for the furnishing of federally reimbursable items or services.  OIG distinguished this arrangement from a Medicare Advantage plan because, while the DMPO operated a network that could influence its members to choose a particular chiropractor who provides federally reimbursable services (i.e., “arrange for” referrals), the DMPO, unlike a Medicare Advantage plan, is not arranging for federally reimbursable services.  OIG noted that the chiropractor “is both the potential referral recipient and the payment recipient” or, “[i]n other words, the referral and the payment go to the same person.”  OIG concluded that, accordingly, the $5.00 referral fee did not implicate the Anti-Kickback Statute.

With respect to the DMPO discounted rates and membership fees, OIG recognized that the DMPO business model is expressly recognized and permitted by several states (although OIG noted that this was not dispositive to its analysis).  OIG found that the arrangement could be viewed as the chiropractors providing renumeration (in the form of the opportunity to earn membership fees) to the DMPO, and the DMPO could be viewed as recommending its network chiropractors to its members.  However, OIG ultimately found that the arrangement presented a low risk of fraud and abuse under the Anti-Kickback Statute based on several factors.  First, OIG noted that the discounted rates only apply to services not covered by Medicare for Medicare patients.  Such so-called “carveouts” of federal healthcare program services often are viewed with suspicion by OIG because of the potential for such arrangements to create referral and service patterns that inevitably “pull through” government program business. With regard to the proposed arrangement, however, OIG noted that if a patient’s insurance covered a particular service, then the patient would likely pay the cost-sharing amount for the service rather than paying cash for the entire service at the time of service—even at discounted rates.  Second, OIG emphasized that, rather than advertising to patients, the DMPO markets its services to chiropractors, and the patient will generally learn about the DMPO from a chiropractor that the patient has already selected.  Third, OIG based its favorable opinion on the fact that the DMPO is essentially an intermediary; it does not provide health care items or services, bill federal healthcare programs, receive any payment from federal healthcare programs, or recommend any particular items or services.  Instead, the DMPO builds a network of any willing chiropractors, enters into agreements with those chiropractors to arrange for discounted rates, and charges an annual fee to its members. 

While the advisory opinion is, of course, limited to the specific facts and circumstances presented by the requestor, OIG’s analysis offers instructive guidance for other DMPOs.

To view the OIG Advisory Opinion, click here.

Reporter, Isabella E. Wood, Atlanta, +1 404 572 3527, iwood@kslaw.com.

ALSO IN THE NEWS

King & Spalding Webinar: Managing Provider Risk: Return-to-Work for Non-Essential Employees and the Resumption of Elective Procedures – King & Spalding will host a webinar on Friday, July 10, 2020 from 1:00 to 2:00 p.m. ET about the compliance risks and considerations associated with the resumption of elective procedures and bringing “non-essential” employees back on campus from remote work. Specifically, the discussion will focus on the compliance and litigation landscape for providers, including:

  • Evaluation of compliance risks and considerations associated with bringing “non-essential” employees back on campus from remote work.
  • Potential litigation considerations associated with returning “non-essential” employees to the healthcare campus.
  • Potential litigation considerations associated with resuming elective procedures.
  • Developments in state and federal liability protections for COVID-related care.
  • Key class action and compliance considerations before and during the pandemic.

Registration for the event is available here. You do not need to be a client, and there is no charge to attend

Stephanie Johnson and Chris Kenny Named Among Law360’s Rising Stars for 2020 – King & Spalding partners Stephanie Johnson and Chris Kenny earned spots on Law360’s list of Top Attorneys Under 40.  Stephanie Johnson, who practices out of the firm’s Atlanta Office, is listed as one of four rising stars in Compliance.   Chris Kenny, who practices out of the firm’s Washington D.C. office, is listed as one of four rising stars in Health Care.