In an unprecedented move, on April 8, 2014, the Office of the Inspector General (“OIG”) posted a notice of termination of one of its previously issued advisory opinions. Specifically, the OIG issued a Final Notice of Termination of Advisory Opinion No. 11-18 (“Notice of Termination”). The OIG issued Advisory Opinion 11-18 on November 30, 2011 (“Advisory Opinion”). Under the proposed arrangement, the Requestor, a publicly traded company that provides web-based business services to physician practices, would provide a new service to its existing customers, called “Coordination Service,” to facilitate the exchange of information between the ordering (or referring) healthcare practitioners and providers (“Ordering Health Professionals”) and receiving healthcare practitioners and providers. Ordering Health Professionals could refer patients to other healthcare professionals who were existing subscribers of Requestor’s services (“Trade Partners”) or to healthcare professionals not currently receiving Requestor’s services (“Non-Trading Partner”).
The Ordering Health Professional who purchased the Coordination Service would receive a discount on its monthly fees associated with the EHR services provided by Requestor, which entailed automated and management of medical record-related functions for physicians practices. Each time an Ordering Health Professional uses the Coordination Service to make a referral to a Non-Trading Partner, the discount is reduced by an amount equal to or less than $1.00, until it disappears entirely. The OIG concluded in its Advisory Opinion that, although the arrangement’s fee structure could provide a financial incentive to the Ordering Health Professional to refer to Trading Partners rather than Non-Trading Partners, a number of factors, in combination, adequately reduced the risk that the financial incentive provided to the Ordering Health Professionals could be an improper payment to induce referral. Among these factors were that the discount, standing alone, would not induce an Ordering Health Professional to refer to any particular person or entity, because the per-referral reductions to the discount are low and are capped at the amount of the discount.
In its Notice of Termination, the OIG initially states that that “the OIG continues to believe that the efficient exchange of health information between health professionals is a laudable goal.” However, it went on to state that it had since reconsidered its Advisory Opinion conclusion. The OIG explained that the factors cited in the Advisory Opinion were insufficient to mitigate against the risk that the discount could be an improper payment to induce referrals of Federal health care program business, particularly in the context of high-volume services, such as laboratory tests. The OIG further stated that “[a]lthough the discount offered under the proposed arrangement may not influence an Ordering Health Professional to refer a patient to, for example a Trading Partner specialist versus a Non-Trading Partner specialist, it may influence an Ordering Health Professional to choose a Trading Partner for services the Ordering Health Professional orders with a high degree of frequency, because ordering those services from a Non-Trading Partner effectively would require the Ordering Health Professional to forfeit the amount of the discount.”
The OIG stated that it sent a notice to the Requestor of its intent to modify or terminate the Advisory Opinion, and the Requestor subsequently informed the OIG that it would not propose a modification to the financial incentive provided to the Ordering Health Professionals under the proposed arrangement. Following receipt of that correspondence, the OIG issued the Notice of Termination, terminating Advisory Opinion No. 11-18.
At this time, we are not aware of the reasons for the OIG’s “change of heart” for this particular Advisory Opinion. While advisory opinions are only applicable to, and can only be relied upon, by the particular requestor, they often serve as guidance to others in the industry. However, this Notice of Termination serves as a reminder that the positions and opinions of the federal regulators can change and, to the extent others have relied upon previous opinions, appropriate corrective action may be necessary. We will keep you updated as we learn more information.