On September 25, 2023, an advisory opinion unfavorable to the proposed arrangement was issued by the U.S. Department of Health and Human Services Office of Inspector General (“OIG”). According to the advisory, the proposed carve-out arrangement limited only to commercially insured patients potentially violates the federal Anti-Kickback Statute (“AKS”). This arrangement involves the purchase of the technical component of anatomic pathology services which are covered by commercial payors.
Entities looking to ensure compliance to the anti-kickback laws might need to reconsider the design and implementation of such carve-out schemes, as they could be seen as an attempt to evade the scrutiny of federal healthcare reimbursement programs. The opinion by the OIG clearly reiterates the fact that AKS and similar anti-kickback regulations apply to all federal health care programs, not just Medicare and Medicaid, as is often erroneously thought.
Given the heavy financial and penal consequences for breaching anti-kickback laws, which may include fines, jail time, and exclusion from federal health care programs, the need for careful analysis and structuring of commercial payor arrangements has never been more crucial.
In essence, the Advisory Opinion 23-06 is a strong reminder that all health-related payment schemes must undergo rigorous scrutiny, irrespective of the type of patients or payors involved. Companies in the healthcare sector are hence encouraged to seek legal advice when establishing payment strategies and to remain cautious with the choice of schemes that appear to ‘carve-out’ certain entities or individuals.
Corporations and law firms interested in working in full compliance with Anti-Kickback Statutes and similar regulations should reevaluate their internal practices, investing in rigorous legal evaluation and continual education for their teams to mitigate risks involved in commercial payor arrangements.