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OIG Advisory Opinion on Physician-Employee Bonuses

The Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) issued Advisory Opinion No. 23-07, which elaborated on which physician-employee bonuses based on profits do not violate the federal Anti-Kickback statute.

The Advisory Opinion assessed the regulatory implications under the federal Anti-Kickback statute and sanctions or penalties under the Social Security Act (the “Act”) for a multi-specialty physician practice (the “Requestor”) to implement an employment compensation bonus structure for their physician-employees (the “Physician Employees”) based on net profits from when they perform outpatient surgical procedures at one of the Requestor’s ambulatory surgical centers (“ASCs”) per calendar quarter (“the Proposed Arrangement”).

Under the federal Anti-Kickback statute, it is a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, the referral of an individual to a person for the furnishing of, or arranging for the furnishing of, any item or service reimbursable under a federal health care program. The OIG has interpreted the statute to cover any arrangement where only one purpose of the remuneration is to induce referrals for items or services reimbursable by a federal health care program.

Per the Advisory Opinion, the safe harbor for employees may be applicable. The regulation for the employee relationship exception provides that the term “remuneration” does not include “any amount paid by an employer to an employee, who has a bona fide employment relationship with the employer, for employment in the furnishing of any item or service for which payment may be made in whole or in part under Medicare, Medicaid or other federal health care programs.” 42 C.F.R. § 1001.952(i).

Under the Proposed Arrangement, the Physician Employee would receive a bonus of 30% of the Requestor’s net profits from the ASC’s fee collections attributable to that Physician Employee’s procedures performed at the ASC for that quarter, in addition to their base employment compensation.

According to the OIG, the Physician Employees under the Proposed Arrangement would be protected by the statutory exception and regulatory safe harbor because they would be bona fide employees of the Requestor and the bonus compensation would constitute an amount paid by the Requestor, as an employer, to the Physician Employees for furnishing any item or service for which payment may be made in whole or in part under Medicare, Medicaid, or other federal health care programs.

The OIG emphasized “payment structures that tie compensation to profits generated from services furnished to patients referred by the compensated party are suspect” under the federal Anti-Kickback statute. However, despite the potential risks, the Proposed Arrangement satisfied the statutory exception and regulatory safe harbor requirements. As such, the OIG found that the remuneration to the Physician Employees as bonuses was not prohibited under the Proposed Arrangement.

CMS Recognizes “Street Medicine” as Billable Care

Effective October 1, 2023, the Centers for Medicare and Medicaid Services ("CMS") began recognizing medical care given at a non-permanent location on the street, also known as “street medicine,” as a billable service for Medicare, Medicaid and other private insurers. The description for the new place of service ("POS") code includes care given at a “non-permanent location on the street or found environment, not described by any other POS code, where health professionals provide preventive, screening, diagnostic, and/or treatment services to unsheltered homeless individuals.” This change makes it easier for medical professionals to assist homeless individuals in the place where they are, rather than having to bring them to a medical facility. Before this change, medical professionals could treat a homeless person on the street, but such care would be on a volunteer basis. Now, providers may submit for reimbursement for such care.

CMS provides a process for requesting new codes or modification of existing codes, in which a CMS Place of Service Workgroup reviews such requests and analyzes whether a service code should be added or modified. According to the Street Medicine Institute, the addition of this service code for “Outreach Site/Street” was the result of a multi-year effort on the part of leaders of USC Street Medicine and the Street Medicine Institute to have CMS create a POS code for the street. The official submission to CMS was submitted in December 2021.

The CMS Transmittal containing the addition to the POS list can be found here.