On September 15, 2021, the Office of the Inspector General of the Ministry of Health and Social Services (OIG) issued a favorable opinion Advisory opinion regarding a hospital’s proposal to implement a program whereby patients who experience complications after specific joint replacement procedures can receive free items and services to treat the complications. The OIG likened the program to a guarantee for joint replacement procedures.
The proposed arrangement
The applicant is a non-profit critical access hospital located in a rural area with the nearest hospital more than 40 miles away. The hospital offers to offer a guarantee program (the guarantee program) to patients undergoing a specific arthroplasty (i.e. the guarantee program is only applicable if a patient develops certain common complications (for example, specific infections. , loosening or dislocation of the prosthesis and other mechanical complications of the prosthesis) resulting from the procedures and that the patient meets certain clinical criteria developed by orthopedic surgeons at the hospital.
Under the warranty program, the hospital would not bill the patient or the patient’s insurer, including federal health care programs, for certain items and services provided to treat complications that arise within 90 days of an eligible joint replacement procedure. The hospital would cover up to $ 50,000 in total costs, which the certified hospital would be enough to cover the total costs for the vast majority of cases.
The hospital would advertise and market the guarantee program to current and prospective patients and referring physicians through newspapers, television advertisements, the hospital’s website, and one-on-one discussions with prospective patients and care providers. .
It is important to note that the hospital would rely on its employed orthopedic surgeons for all clinical decisions related to patients undergoing joint replacement procedures, and the hospital would implement a number of quality of care measures, including standards of practice and evidence-based protocols, a quality assurance performance improvement program, and an interdisciplinary team to perform monthly reviews of joint replacement procedures.
The OIG noted that the warranty program would involve both the Federal Anti-Recoil Law (AKS) and the CMP on Recipient Incentives, as the warranty program involves the offering and provision of free items and services. federal health care program recipients who may prompt patients to choose the hospital for joint replacement procedures or other items and services. The guarantee program would also involve compensation to payers, including Medicare Advantage plans, in the form of items and services up to a value of $ 50,000 not billed to the affected payor, and the compensation could induce payers to refer the beneficiaries to the hospital.
The OIG found that the warranty program would not meet the safe harbor of warranties, which is only available to a “manufacturer or supplier” offering a warranty on one or more related items and services if certain disclosure obligations and report are met. Here, of course, the hospital is not a “manufacturer or supplier”.
Nonetheless, the OIG concluded that the guarantee program presented minimal risk under the AKS and chose not to exercise its execution discretion under the CMP on the benefits to beneficiaries for the following reasons. :
Designed to provide a financial incentive for the hospital to improve health outcomes. The warranty program is designed to encourage the hospital to reduce its financial exposure by trying to prevent complications from joint replacement procedures. The warranty program could result in lower costs for federal health care programs and beneficiaries, as the hospital would not bill for items and services up to $ 50,000 in the event of a covered complication.
No financial incentive that could distort clinical decision making. The OIG said that guarantee programs have the potential to influence the judgment of physicians by offering incentives to “pick patients” the healthiest patients and “lemon” for patients with more complicated and older cases. expensive. But the guarantee program does not provide such financial incentives. The compensation of orthopedic surgeons in the hospital would not be affected if the hospital provides free items and services under the guarantee program. Surgeons would be remunerated for the provision of items and services in the same way that they are remunerated for other services provided in the hospital. The hospital would also implement a number of quality of care measures to reduce the likelihood that the guarantee program will lead to a decrease in the quality of care.
Unlikely to lead to overuse or improper use. Patients would only be eligible for joint replacement procedures based on the independent medical judgment of orthopedic surgeons, and hospital monitoring protocols would further reduce the risk of overuse of the procedures.
Low risk of inappropriate leadership due to potential patients’ limited options for health care providers. The OIG noted that the guarantee program could potentially encourage patients to receive joint replacement procedures at the hospital rather than other health care providers, particularly because the hospital intends to market and to make the guarantee program known to patients and treating physicians. But the hospital serves a rural community with the nearest hospital over 40 miles away. Given the lack of competition for the hospital, the risk that the guarantee program will cause patients to choose the hospital is low.
Key points to remember
Joint replacement procedures are the most common inpatient hospital surgery procedure for Medicare beneficiaries nationwide, and they accounted for nearly $ 7 billion in health insurance spending in 2014. But complications from these procedures are not uncommon and often result in expensive follow-up care. This advisory opinion illustrates a hospital’s proposal to tackle the pervasive problem.
This advisory opinion is remarkable because it is one of the few advisory opinions that deals with the safe harbor of the guarantee. (See our discussion of the other advisory opinion regarding a warranty program for joint replacement products.) However, the OIG’s succinct analysis of the Safe Harbor of Guarantee simply confirmed that the Safe Harbor is not available to healthcare providers.
Ultimately, this advisory opinion may be of limited use to the majority of healthcare providers who might be interested in comparable warranty programs. A crucial factor in the OIG’s determination that the warranty program posed a low risk of fraud and abuse is the fact that the hospital serves a rural community and has no competitors within a 40 mile radius. As with all advisory opinions, this advisory opinion is limited to its facts and is only binding on the requesting party. Health care providers in less rural areas where competition is more intense should exercise caution before adopting similar guarantee programs by refraining, for example, from advertising and marketing such programs and / or to implement a consolidated program with all of its competitors.
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