OIG Green Lights Potential “Reverse Kickback” Compensation Arrangement

On Nov. 5, the OIG issued Advisory Opinion 21-15, signing off on a compensation arrangement between a practice and part-time nurse that raised issues of liability for reverse kickbacks. Here’s a look at the Advisory Opinion and what it may portend.

The Proposed Arrangement

A pain management practice owned by a physician wanted to hire a certified registered nurse anesthetist (CRNA) to deliver anesthesia services to two of its locations on a part-time basis. Under the agreement, the CRNA would reassign his right to receive reimbursement for the services he performs to the practice and get a salary instead. The practice would then bill for all separately billable services the CRNA provided. The question: What if the income from the CRNA’s billings exceeded the salary the practice paid the CRNA for those services? Could the practice keep those excess monies as a profit?

Risk 1: Salary Payments to the CRNA

The first stream of payments implicating the Anti-Kickback Statute (AKS), which bans offering or receiving anything of value in exchange for referring a Medicare, Medicaid or other federal health insurance patient, was the salary payments from the practice to the CRNA for the ordering and furnishing of anesthesia items and services. The practice assured the OIG that the employment agreement met the requirements for the AKS bona fide employment arrangement safe harbor. As long as this assurance was true, the salary payments wouldn’t violate the AKS, the OIG concluded.

Risk 2: The Practice’s Potential to Earn a Profit from the CRNA’s Services

The other AKS issue was that the profit retention plan could constitute what’s called a “reverse kickback” arrangement. A reverse kickback occurs when a hospital, medical group or other provider provides payment beyond the value received under a clinical arrangement as an inducement. In exchange for the excess payment, the recipient provides the provider something of value based on Medicare, Medicaid or another federal health insurance program. In this case, that thing of value was the potential of the pain management practice to profit on billing of the CRNA’s services to Medicare patients. And that opportunity for profit raises a potential AKS red flag to the extent that the practice arranges for the purchase of or refers patients for anesthesia items and services furnished by the CRNA.

The OIG noted that the AKS bona fide employment arrangement safe harbor covers remuneration running in only one direction: from an employer to an employee. As a result, it wouldn’t offer protection against potential reverse kickback liability. Even so, the OIG gave the arrangement the green light, noting that such employment payment arrangements are common practice in the health care industry, and explicitly authorized by Medicare laws and regulations.

“The Proposed Arrangement appears to be a straightforward employment arrangement involving the reassignment of billing rights by the CRNA, where Requestor assumes certain duties that may be typical of an employer and where Requestor certified that the CRNA is a bona fide employee,” the OIG concluded.

Takeaway

Although it addresses a unique aspect of AKS liability, the OIG Advisory Opinion provides little in the way of guidance on how to structure payment reassignment and potential profit retention arrangements to avoid reverse kickback liability. For one thing, the OIG doesn’t say anything about whether the compensation the pain management practice paid the CRNA constituted fair market value (FMV) for his services. In the context of reverse kickback liability, compensation at less than FMV would likely raise a bright red flag of liability.