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Summary of OIG Advisory Opinion 11-10 

Issued July 25, 2011, and posted August 1, 2011
Written by Catherine Martin, Reviewed by Claire Turcotte*

On July 25, 2011, the U.S. Department of Health and Human Services, Office of the Inspector General (OIG) issued Advisory Opinion 11-10, concluding that an arrangement whereby a provider of administrative services disburses pay-for-performance payments to physicians and dentists participating in a state's Medical Home Program on behalf of the state (Arrangement) does not implicate the Anti-Kickback Statute (AKS).

The Requestor provides a variety of healthcare management services including disease management and care coordination services and was selected by a state through a competitive bidding process to provide administrative services to the state's Medical Home Program (Program). The Program provides enhanced primary care and disease management services to Medicaid beneficiaries. Through the Medicaid waiver program at the Centers for Medicare & Medcaid Services (CMS), the Program was designed and approved to include a pay-for-performance component that uses payments by the state's Medicaid Program to induce physicians and dentists to arrange for, order, or recommend certain healthcare services in order to reduce medical costs and improve patient care. Under the Arrangement, the Requestor, via the Requestor's own bank account, is required to disburse the state-approved financial incentives to physicians and dentists participating in the Program and earning the pay-for-performance payments. The payments are funded by the state's Medicaid Program and the Requestor has no discretion or control over the payments. To avoid any confusion, the state and the Program are clearly identified as the source of the payments in the materials describing the Program and the checks issued identified the Requestor as the administrator of the Program.

OIG began its analysis by stating clearly that the opinion only addresses the narrow question of whether the Requestor's role as administrator and distributor of the Program's pay-for-performance payments to the participating physicians and dentists implicates AKS. OIG, noting that substance not form control AKS, concluded that the Arrangement did not implicate the statute for the following reasons:

  • Payments made to the physicians and dentists for earning the pay-for-performance incentives are funded by the state's Medicaid program;

  • Requestor has no control or discretion over the payments, is only acting as an agent of the state and there is no nexus between the payments and the use of the Requestor's services by the physicians and dentists;

  • Steps have been taken to reduce any misimpression by the physicians and dentists that the payments from the Requestor are for Medicaid referrals by clearly identifying the state as the payor of the financial incentives under the Program and the Requestor as the administrator of the Program; and

  • The state supervises all payments and has the ability to audit Requestor's performance as administrator of the Program.

*The Fraud and Abuse Practice Group Leadership would like to thank Advisory Opinion Task Force members Catherine Martin, Esquire (Adelman Sheff & Smith LLC, Annapolis, MD), and Claire Turcotte, Esquire (Bricker & Eckler LLP, Cincinnati-Dayton, OH) for respectively writing and reviewing this summary.

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