OIG Guidance on Malpractice Subsidies

To AAEM members,

The HHS Office of Inspector General posted on 1/27 the final Supplemental Compliance Program Guidance for Hospitals on its website. The voluntary Supplemental Compliance Program Guidance for Hospitals outlines actions they can take to promote compliance with the rules and regulations of doing business with the Medicare, Medicaid and other Federal health care programs.

The full document is available here:
http://www.oig.hhs.gov/fraud/docs/complianceguidance/ 012705HospSupplementalGuidance.pdf

The below section that begins on page 46 of this document deals with hospital provision of malpractice subsidies and may be of interest to EM physicians.

g. Malpractice Insurance Subsidies
The OIG historically has been concerned that a hospital's subsidy of malpractice insurance premiums for potential referral sources, including hospital medical staff, may be suspect under the anti-kickback statute, because the payments may be used to influence referrals. The OIG has established a safe harbor for medical malpractice premium subsidies provided to obstetrical care practitioners in health professional shortage areas.(61) Depending on the circumstances, premium support may also be structured to fit in other safe harbors.

We are aware of the current disruption (i.e., dramatic premium increases, insurers' withdrawals from certain markets, and/or sudden termination of coverage based upon factors other than the physicians' claims history) in the medical malpractice liability insurance markets in some geographic areas.(62) Notwithstanding, hospitals should review malpractice insurance subsidy arrangements closely to ensure that there is no improper inducement to referral sources. Relevant factors include, without limitation:

• whether the subsidy is being provided on an interim basis (e.g., until an unrelated insurer is commercially available) for a reasonable fixed period in a geographic area experiencing severe access or affordability problems;
• whether the subsidy is being offered only to current active medical staff (or physicians new to the locality or in practice less than a year, i.e., physicians with no or few established patients);
• whether the criteria for receiving a subsidy is unrelated to the volume or value of referrals or other business generated by the subsidized physician or his practice;
• whether physicians receiving subsidies are paying at least as much as they currently pay for malpractice insurance (i.e., are windfalls to physicians avoided);
• whether physicians are required to perform services or relinquish rights, which have a value equal to the fair market value of the insurance assistance; and
• whether the insurance is available regardless of the location at which the physician provides services, including, but not limited to, other hospitals.

No one of these factors is determinative, and this list is illustrative, not exhaustive, of potential considerations in connection with the provision of malpractice insurance subsidies. Parties contemplating malpractice subsidy programs that do not fit into one of the safe harbors may want to consider obtaining an advisory opinion. Parties should also be mindful that these subsidy arrangements also implicate the Stark law.

References:
61. See 42 CFR 1001.952(o).
62. See the OIG's letter on a hospital corporation's medical malpractice insurance assistance program, available on our webpage at
http://oig.hhs.gov/fraud/docs/alertsandbulletins/MalpracticeProgram.pdf.