Medigap insurers and hospitals that enter preferred-network arrangements could run the risk of violating federal anti-kickback laws, but an HHS watchdog said it wouldn't fine those organizations due to low fraud risk.
In an advisory opinion released Thursday, HHS' Office of Inspector General said preferred-network arrangements—where insurers receive discounts on Medicare Part A deductibles from certain hospitals—don't fall under safe harbors for the federal anti-kickback statute and could be subject to civil monetary penalties. However, the watchdog says the deals have a “sufficiently low risk of fraud or abuse,” and it wouldn't enforce the potential violations.
“The proposed arrangement would be unlikely to increase utilization,” the OIG said in its advisory opinion. “In particular, the discounts effectively would be invisible to policyholders, because they would apply only to the portion of the individual's cost-sharing obligations that the individual's supplemental insurance otherwise would cover.”
The OIG looked into the Medigap deals after an unnamed insurer raised concerns that it could be penalized for scoring the discounts.
Under the analyzed arrangement, preferred hospitals would give the insurer discounts of up to 100% on policyholders' Medicare inpatient deductibles. In exchange, policyholders could receive a $100 credit on an inpatient stay in the preferred-network hospitals.
According to the watchdog, the deals wouldn't impact hospital competition because any hospital could join the proposed preferred-network arrangements and the premium credits for policyholders would act like differences in cost-sharing that are routine parts of plan design and have a low risk of fraud or abuse.
What's more, such agreements could reduce Medigap costs, both for policyholders using preferred-network hospitals and those who don't.
HHS' OIG warned that other enforcement agencies may not take the same approach toward preferred-hospital agreements, and other insurers may not get the same treatment.
