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OIG Advisory Opinion on Specimen Collection and HIPAA Guidance

August 30, 2022

For more information about this blog post, please contact Ryan L. O’Neill or Labinot Alexander Berlajolli.

OIG Issues Advisory Opinion on Payments for Laboratory Specimen Collection

The Department of Health and Human Services ("HHS") Office of Inspector General ("OIG") issued Advisory Opinion Number 22-09 which reaffirmed the OIG’s restrictions on arrangements involving payment for specimen collection fees. This Advisory Opinion assessed the regulatory implications under the federal Anti-Kickback Statute with respect to a proposed arrangement whereby the operator of a laboratory network (the "Requestor") sought to provide compensation to various hospitals (the "Contract Hospitals") for certain specimen collection services (the "Collection Services") in connection with tests provided by the Requestor (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 healthcare program (such as Medicare, Medicaid, or TriCare). Per the OIG, the statute has been interpreted to cover any arrangement where one purpose of the remuneration is to induce referrals for items or services reimbursable by a federal healthcare program.

Under the Proposed Arrangement:

  • Requestor would enter into contracts with the Contract Hospital, pursuant to which Requestor would pay the Contract Hospitals on a per-patient-encounter basis to collect, process, and handle specimens that are then sent to Requestor’s clinical laboratories for testing;
  • The Requestor would compensate Contract Hospitals for the Collection Services performed by the Contract Hospitals in connection with individuals who present with orders for testing and who are not currently inpatients or registered outpatients of the Contract Hospitals;
  • The Requestor would not compensate Contract Hospitals if the Collection Services are performed in connection with individuals who are currently inpatients or registered outpatients of the Contract Hospitals;
  • When individuals present to a Contract Hospital with laboratory testing orders that do not specify which laboratory will conduct the testing, the Contract Hospital would have the opportunity to choose to which laboratory it would send the specimens; and
  • The per-patient encounter compensation rate would be consistent with fair market value for the Services in an arm’s-length transaction.

In this Advisory Opinion, the OIG opined that the Proposed Arrangement would implicate the federal Anti-Kickback Statute because "it would involve remuneration from a laboratory to a party that is in a position to make referrals to the laboratory for, or otherwise arrange for the laboratory to furnish, items and services that may be paid for in whole or in part by a Federal healthcare program." The OIG elaborated that "[s]pecifically, where an individual—who may be a Federal healthcare program beneficiary—presents to a Contract Hospital without a laboratory specified on the order for laboratory services, the Contract Hospital could refer specimens from that individual to Requestor for reimbursable testing."

Furthermore, according to the OIG, the Proposed Arrangement would not satisfy the personal services and management contracts and outcomes-based payment arrangements safe harbor of the Anti-Kickback Statute because "the per-patient-encounter compensation methodology would take into account the volume or value of referrals or other business generated for which payment may be made in whole or in part under a Federal healthcare program."

Ultimately, based on the facts surrounding the Proposed Arrangement, because of the possibility that the per-patient-encounter fee would be used to induce or reward referrals to the Requestor and the corresponding risk of inappropriate steering to the Requestor, the OIG concluded that the Proposed Arrangement would pose more than a minimal risk of fraud and abuse under the federal Anti-Kickback Statute.

CMS Issues Guidance on Business Associates' HIPAA Requirements Compliance and on Virtual Credit Cards for EFT and ERA Transactions

Earlier this year, the National Standards Group ("NSG"), on behalf of HHS, issued two guidance documents providing guidance on (1) HIPAA Covered Entities’ responsibility for ensuring Business Associates’ compliance with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") regulations (GL-2022-03), as well as guidance on (2) health plans’ payment of healthcare claims using Virtual Credit Cards ("VCCs") and adopted HIPAA standards for healthcare Electronic Funds Transfers ("EFT") and Remittance Advice ("ERA") transactions. (GL-2022-04).

  1. GL-2022-03 clarifies covered entities’ obligation to ensure their business associates comply with HIPAA regulations (see 45 C.F.R. § 162.923(c)). Since NSG receives frequent complaints regarding business associates in connection with their relationship with covered entities, NSG makes clear that the HIPAA covered entity is responsible for the compliance of its business associates.
  2. GL-2022-04 provides guidance on the following three questions:
    • Do the adopted HIPAA EFT and ERA standards permit health plans to pay claims by VCCs?
    • If a healthcare provider requests that a health plan pay the provider’s claims using the adopted HIPAA EFT and ERA standards, must the health plan comply?
    • Can a health plan require a provider to agree to receive payment or reassociation services from a vendor of the health plan’s choosing as condition of receiving EFT or ERA using the adopted standards?

In sum, the NSG concluded as follows, respectively:

  • Yes, the adopted HIPAA EFT and ERA standards permit health plans to pay claims by VCC;
  • Yes, the health plan must comply under 45 C.F.R. § 162.925(a)(1) which dictates that if an entity requests that a health plan conduct a transaction as a standard transaction, the health plan must do so.
  • No, a health plan may not require that a provider agree to receive payment or reassociation services from its business associate (nor may the business associate otherwise require the provider to do so) as a condition of receiving healthcare payments using the adopted EFT and ERA standards.

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Ryan Lee O'Neill

Ryan Lee O'Neill

Labinot Alexander Berlajolli

Labinot Alexander Berlajolli

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