Senior living company can pay referral fees for new residents despite kickback concerns, OIG advisory opinion states

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A nonprofit senior housing and care provider can continue to pay an agency for referring new residents, despite concerns related to anti-kickback laws, according to a newly released government opinion.

The senior services company requested the guidance from the Department of Health and Human Services Office of the Inspector General. The OIG posted its advisory opinion Tuesday.

The long-term care provider in question — which is not named in the document — operates 11 senior residential communities and two skilled nursing facilities, according to the OIG report. Two of the residential communities pay a fee to a placement agency for each new resident referral.

These referral fees are remuneration that “implicates the anti-kickback statute,” which makes it a criminal offense to “induce or reward referrals of items or services” that are reimbursable through programs such as Medicare or Medicaid, the OIG opinion states.

Despite this, adequate safeguards are in place to reduce the risk that the payments will generate revenue for the provider paid out of federal healthcare funds, the OIG analysts determined.

One such safeguard is a contract provision that none of the referred residents from the placement agency will be paying for their initial stay through Medicare or Medicaid, according to the document. It is true that these residents might ultimately receive Medicaid-reimbursable skilled care from the provider; however, this possibility is “substantially speculative,” in particular because the provider does not limit the resident to receiving care from the provider's own SNFs, the OIG found.

Healthcare providers can request OIG advisory opinions to determine how current or prospective business arrangements comport with fraud and abuse provisions. The opinion is legally binding on HHS and the requesting parties. In this case, the provider in question is safe from administrative sanctions as long as the referral arrangement is conducted in accordance with the facts presented to the OIG, the opinion states.

The opinion is based on the facts as presented by the senior care provider, not on any independent investigation, and cannot be “relied on” in a binding legal sense by entities other than the provider in question, the OIG emphasized.

Click here to access the complete document. 

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