COMPLIANCE GUIDANCE

Kickbacks: OIG Okays Incentivizing MDs to Order More Early Screening Tests

Proactive rather than reactive has become a mantra of the modern health care model. Early and periodic testing of patients is a critical element in this strategy. The problem is that not a lot of physicians have gotten the “memo.” Consequently, payors may have to prod physicians out of their old school ordering patterns by offering incentives to increase early and periodic screenings, diagnostic and treatment (EPSDT) services. The problem, of course, is that paying physicians incentives to order tests is a blatant kickback violation. So it might surprise you to know that a new OIG Advisory Opinion signals the government’s willingness to accept this practice provided that proper safeguards are in place.

The Proposed Arrangement
A Managed Care Organization (MCO) wants to pay providers incentives to increase EPSDT services to enrolled Medicaid patients under age 21.

Other key details of the arrangement: The MCO pays on a capitation basis, i.e., providers receive a set amount for each enrolled Medicaid patient regardless of services actually utilized. The MCO would provide per-enrollee incentive payments to providers that meet benchmarks for increases in EPSDT services provided. Providers would be eligible for one of three different levels of incentive payments, based on the percentage increase:

Incentive Amount Incentive Trigger
$1 per patient 10% to 19% year-over-year increase in screenings
$2 per patient 20% to 29% year-over-year increase in screenings
$3 per patient 30% or higher year-over-year increase in screenings

Although the arrangement clearly incentivizes higher utilization of testing, it does so to further the state’s objective of detecting ailments early before they become more complex and expensive to treat. The arrangement provides no incentives to providers for recruiting new Medicaid beneficiaries nor for participating in the MCO’s Medicare Advantage Plan or other lines of business. The MCO would also cover the payments out of its own pocket and not pass them on to the state Medicaid agency.

Question
The MCO asks the OIG for an advisory opinion on whether the proposed arrangement would violate anti-kickback rules.

OIG Response
While it would certainly implicate the Anti-kickback Statute, the OIG gives the green light.

OIG Reasoning
The OIG says the proposed arrangement is allowed under the Eligible Managed Care Organization (EMCO) safe harbor because:

  • Payments would be based solely on the provision of Medicaid services to existing enrollees; and
  • The arrangement wouldn’t inappropriately increase or shift costs to federal health care programs.

Takeaway: While not technically binding (nor applicable to the Stark Law), the new Advisory Opinion is potentially significant to not just payors but also labs and other providers considering arrangements incentivizing utilization of EPTSD testing. The OIG has now provided a blueprint on how to structure these arrangements so as to fall into the EMCO safe harbor, notes Henry Casale, partner with the Pittsburgh law firm of Horty, Springer & Mattern, P.C.

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