In a recent development this September, the US Department of Health and Human Services Office of Inspector General (OIG) provided an unfavorable advisory opinion to a pathology lab regarding a proposed service arrangement with referring pathology labs. This course of action was unsurprising as the contracted services hadn’t met the requirements of being commercially reasonable. You can read more about this report here.
The opinion once again allowed OIG to express its skepticism towards arrangements that separate federal healthcare program business due to the potential risks. The advisory stands as a clear reminder to all healthcare providers who engage in business with federal healthcare programs to take extra care when establishing contractual arrangements. The key concerns driving this advisory opinion were more about the structure of the business agreement rather than the nature of the services provided.
The OIG, through this incident, has reiterated its concerns about such business arrangements that can potentially create vulnerabilities for healthcare programs. Historically, in such cases, the OIG’s primary concern has been those agreements which purposefully segregate Federal healthcare program business, creating space for potential fraudulent activities.
With an advisory opinion like this one, it becomes paramount for laboratories as well as any healthcare service provider engaging with Federal healthcare programs to analyze the structure of their contractual agreements. Ensuring they are commercially reasonable, scrutinizing for any potential risks and fraud vulnerabilities, and putting necessary preventive measures in place may help avoid unfavorable opinions from regulatory bodies like the OIG in the future.
Mainstreaming this watchdog approach, incorporating commercial reasonability, and consistent regulation compliance should be top priority for healthcare organizations taking Federal healthcare business ventures. Remember, it is more cost-effective to prevent a crisis than to mitigate one.