Clinic consultation

Opinion on possible bribes between the health system and the clinic – Health

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This opinion concerns a project to restructure financial relations, which includes the cancellation of debt, between a health system and a neighboring clinic.

The full text of Advisory Opinion 22-17, including a statement of the facts considered by the OIG, can be viewed here: https://oig.hhs.gov/compliance/advisory-opinions/22-17/.

The OIG decides that it will not impose administrative penalties on the Requestors in connection with the Arrangement.

The agreement proposes (the following is a high-level summary of the proposed agreement):

  • The Healthcare System will cancel – in full – the unpaid amount owed (principal and accrued interest) by the Clinic on the Ticket through a donation of such amount to the Clinic (“Ticket Donation”). The Ticket Donation would include all amounts due under the Lease and Management Services Agreement (“MSA”) that are reflected on the Ticket balance.

  • The Plaintiffs would enter into new agreements to address the Clinic’s use of premises, furniture, fixtures and equipment covered by the lease (“New Lease”) and a revised scope of administrative and medical services to be provided by the healthcare system to the clinic.

  • The New Lease would allow the Clinic to use the premises, furniture, fixtures and equipment covered by the Lease free of charge.

  • The new MSA would require the clinic to pay fair market value to the health system for the services the health system provides to the clinic under the new MSA.

We are of the view that OIG’s conclusion is based on the existence of all the factors of the Arrangement. We expect that the OIG may reach a different conclusion if one or more of these factors did not exist.

Here is a summary of the OIG’s legal analysis:

The proposed arrangement involves the federal anti-kickback law (“AKS”) because it involves compensation from the healthcare system to the clinic that could induce the clinic to refer to the healthcare system. Specifically, the note donation would alleviate a significant financial debt of the clinic to the health care system, and the terms of the new lease would provide for the free use of the premises (including its furniture, fixtures and equipment) that the clinic currently uses. . as one of its main locations. The proposed arrangement does not qualify for protection under the Federal Qualified Health Center (“FQHC”) Safe Harbor, as Safe Harbor only applies to FQHCs, not FQHC lookalikes , what is the clinic.

The OIG concludes that the proposed arrangement presents a sufficiently low risk of fraud and abuse under the federal AKS:

  1. The proposed arrangement is structured and operated in a manner that aligns with all FQHC Safe Harbor requirements, except that the clinic is not an FQHC and does not receive Section 330 grants of the Public Health Services Act (“PHSA”). When assessed in combination with other factors (below), the proposed arrangement mitigates the risk of fraud and abuse.

  2. Although the clinic does not receive Section 330 funding, HRSA has designated the clinic as an FQHC look-alike, and under this designation, HRSA conducts regular oversight of the clinic’s operations and finances. The grants the clinic previously received had similar monitoring and reporting obligations as Section 330 funds. The OIG determines that the risk of fraud and abuse of health system support to the clinic under the proposed arrangement is reduced by:
    1. surveillance associated with HRSA’s designation of the clinic as an FQHC look-alike;

    2. government oversight associated with federal grant funds the clinic receives; and

    3. the clinic’s certification that it will continue to apply for additional federal grant funds, including Section 330 grant funds.


  3. The proposed arrangement has features that reduce the risk that it will result in inappropriate transfer of patients from the clinic to the healthcare system. The OIG cites: Neither claimant is required to make referrals to the other claimant; the Clinic may enter into agreements with other service providers or suppliers; The Clinic would employ a reasonable methodology to determine with which individuals or entities to select and document its decision when using other providers or vendors; and one of the stated health system goals for the clinic is to reduce overuse of emergency departments in health system hospitals.

  4. The compensation for the proposed arrangement is a continuation of the health system’s long-standing support for the clinic as part of their shared mission, which is cited in the advisory opinion.

To note:
OIG advisory opinions are highly fact-specific and, by their terms, are limited to the facts presented, specific claimants, and are subject to specific limitations set forth in the advisory opinions.
The above is a high level summary and consultation with an attorney is recommended for a fuller review and discussion of the advisory opinion.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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