Catherine Boerner (cboerner@boernerconsultingllc.com), President of Boerner Consulting LLC in New Berlin, WI.
Compliance officers often work with internal as well as external legal counsel to review existing and/or proposed contractual arrangements and/or joint venturers when a question or concern is raised, perhaps through the hotline. Sometimes these proposed new or even longstanding arrangements create more questions than answers. Relying on expert healthcare legal advice is key. Compliance officers may also want to read Office of Inspector General (OIG) advisory opinions to maybe help ask legal counsel questions, especially if a fact pattern may be similar.
I recently found it interesting that Advisory Opinion 21-18, “regarding a proposed joint venture for the provision of therapy services,” concluded that “based on the relevant facts certified in [the] request for an advisory opinion and supplemental submissions, [OIG concluded] that the Proposed Arrangement, if undertaken, would generate prohibited remuneration under the Federal anti-kickback statute, if the requisite intent were present, which would constitute grounds for the imposition of sanctions under sections 1128A(a)(7) and 1128(b)(7) of the Act.”[1]
Advisory opinions are a good source to explain safe harbors under the federal Anti-Kickback Statute. For example, in this advisory opinion, the OIG explains that because “the Proposed Arrangement would involve ownership of a non-public entity by interested investors, the small entity investment safe harbor is potentially applicable (the ‘Small Entity Investment Safe Harbor’)” (emphasis added).[2]
This safe harbor requires that, among other things: (i) no more than 40 percent of an entity’s investment interests are held by investors in a position to make or influence referrals to, furnish items or services to, or otherwise generate business for the entity (the ‘Investor Test’); (ii) no more than 40 percent of an entity’s gross revenues come from referrals or business otherwise generated from investors (the ‘Revenue Test’); and (iii) the terms on which an investment interest is offered to an investor who is in a position to make or influence referrals to, furnish items or services to, or otherwise generate business for the entity are not related to the previous or expected volume of referrals, items or services furnished, or the amount of business otherwise generated from that investor to the entity (the ‘Investment Offer Test’) (emphasis added).[3]
OIG concludes in this opinion that “the remuneration exchanged under the proposed arrangement would not qualify for protection under any safe harbor” and would implicate the federal Anti-Kickback Statute.
Just something to keep in mind as a place to look to help understand the law.