The Office of Inspector General (OIG) for the U.S. Department of Health and Human Services recently posted Advisory Opinion 22-20, approving an acute care hospital’s arrangement under which its employed nurse practitioners perform certain services that the patients’ primary care physicians traditionally perform. While limited in scope, this favorable opinion is noteworthy because it represents a departure from OIG’s typical approach to arrangements involving remuneration from a hospital to a referring physician and demonstrates OIG’s emphasis on healthcare providers offering quality care to federal healthcare program beneficiaries. Importantly, the advisory opinion addresses only the federal Anti-Kickback Statute. Other laws – such as the federal physician self-referral law, commonly referred to as the Stark Law – may pose major obstacles to similar arrangements.

The Arrangement

The requestor is an acute care hospital that provides inpatient and outpatient hospital-based services. Under the arrangement, the hospital uses its employed nurse practitioners to perform various tasks for the patients of participating physicians who are inpatients or in observation status in two designated medical units. The participating physicians are predominantly primary care physicians, though the hospital makes the services available for all physicians who regularly admit patients to the designated medical units. The hospital does not take into account a physician’s volume or value of expected or past referrals in considering the physician for participation.

The arrangement is limited to two general care units and does not extend to surgical or specialty care units. Under the arrangement, the nurse practitioners perform various tasks in communication and collaboration with the physicians that the physicians normally would perform. The tasks include the following:

  • Initiating plans of care through existing protocols.
  • Implementing care protocols.
  • Arranging for follow-up laboratory or imaging studies.
  • Educating patients and families.
  • Supporting other nurses on the unit.
  • Supporting quality improvement projects.
  • Discharge planning.

The patients seen by the nurse practitioners are under active evaluation and require ongoing medical attention, and the arrangement allows them to be treated and diagnosed more quickly. The treating physicians remain ultimately responsible for the patients’ care and must still round on their patients daily. The physicians also cannot bill for the nurse practitioners’ services. The hospital neither makes payments to the treating physicians under the arrangement nor separately bills any payor for the nurse practitioners’ services.

OIG’s Analysis

OIG concludes the arrangement implicates the Anti-Kickback Statute because the hospital is, in OIG’s view, providing remuneration, in the form of the nurse practitioners’ services, to the treating physicians, who are referral sources to the hospital and who usually are responsible for the tasks the nurse practitioners provide.

Nevertheless, OIG concludes this arrangement is low risk for the following reasons:

  1. The arrangement is limited to non-surgical and non-specialty hospital units. OIG views the arrangement’s focus on general, primary care as mitigating the risk that the arrangement is designed to induce referrals and states it might reach a different conclusion if the arrangement was offered for patients in surgical or specialty units. In addition, the hospital does not target specific referring physicians but offers the service to all physicians with privileges. The hospital also does not take any physician’s volume or value of referrals into account when offering the arrangement.
  2. The arrangement has safeguards. OIG lists several safeguards that lower the arrangement’s fraud and abuse risk. For example, nurse practitioners perform their duties in communication and collaboration with physicians, and the physicians must still round daily and remain ultimately responsible for the patient. Further, physicians may bill only for their own personally performed services and may not bill for the work performed by the nurse practitioners. OIG noted the arrangement is distinguishable from suspect arrangements that permit physicians to bill payors, including federal healthcare programs, for services performed by a nurse practitioner at no cost to the physician.
  3. The arrangement is unlikely to increase costs and improves care to patients. The fact that the hospital does not bill any payor, including federal healthcare programs, for the nurse practitioners’ services mitigates the risk that the arrangement inappropriately increases costs to federal healthcare programs while improving patient care. Further, the nurse practitioners’ active monitoring of the care units may improve patient care through more timely evaluations.

Key Takeaways

This favorable advisory opinion is a departure from OIG’s typical approach to limit arrangements involving potential remuneration from a hospital to its referring physicians. However, the arrangement’s scope and focus on promoting quality patient care allow the requesting hospital to provide more timely access to patients needing medical attention and therefore are consistent with OIG’s general push toward value-based care.

While OIG ultimately concludes that this arrangement’s fraud and abuse risk is low, it is limited in several aspects, which narrows its potential relevance to other scenarios. For example, the arrangement is limited to general care units and specifically excludes surgical or specialty care units. This limitation is understandable when considering the factors supporting OIG’s analysis. Not only are surgery procedures more lucrative, surgeons generally are paid a global surgery fee that already includes post-surgery follow-up requiring the physicians to conduct follow-up hospital visits. Physicians providing care in general care units are typically compensated differently, reducing the risk associated with the arrangement.

In addition, based on its conclusion that the provision of nurse practitioner services constitutes remuneration under the arrangement at issue, the advisory opinion potentially raises questions about whether similar arrangements primarily done for the benefit of the hospital and patients but incidentally benefitting physicians constitute remuneration to the physicians.

Lastly, Advisory Opinion 22-20 resolves questions of enforcement risk under the Anti-Kickback Statute, but it does not address the Stark Law. If the provision of nurse practitioner services to the participating physicians constitutes remuneration under the Stark Law, as OIG asserts it does under the Anti-Kickback Statute, then, in all likelihood, the arrangement must be structured to fit within an applicable Stark Law exception. Doing so would likely require consideration of the value of the nurse practitioner services and may, in some cases, require the physician to pay the hospital fair market value compensation for the services.

If you have any questions on this advisory opinion or its impact, please contact the authors.