The Office of Inspector General (OIG) of the Department of Health and Human Services posted an Advisory Opinion today addressing a hospital system’s proposal to lease administrative employees and to provide operational and management services to a related psychiatric hospital for an amount equal to the hospital system’s fully loaded costs (i.e., salary plus benefits and overhead expense) plus a two percent administrative fee). Based on the facts presented by the requester of the opinion, the OIG determined that it would not impose sanctions under the federal anti-kickback statute.
In determining that the proposed arrangement closed a low risk of fraud and abuse, the OIG relied on the following three considerations:
1. Because the parties are related organizations, the requestors proposed that the psychiatric hospital would pay the hospital system only its allowable costs under Medicare cost reporting rules.
2. The requestors certified that the proposed arrangement would achieve (i) cost efficiencies between two related entities that are part of an integrated health system and (ii) a reduction in the Center’s labor and operational costs; and
3. Although the parties are related and therefore may have existing incentives to refer to each other, the OIG found no evidence suggesting that the proposed arrangement would increase these incentives, or that any purpose of the arrangement is to induce referrals.
The Advisory Opinion can be found here: OIG Advisory Opinion No. 15-10