OIG describes how hospitals can use NPs to treat patients without violating the Anti-Kickback Statute

A recent advisory opinion issued by the federal watchdog is favorable to hospitals but may apply only in limited scenarios.

February 1, 2023 12:23 pm

An advisory opinion from the HHS Office of Inspector General (OIG) appears to give hospitals leeway to expand their use of nurse practitioners in specific situations without violating the Anti-Kickback Statute.

OIG issued the opinion in December in response to an inquiry from an unnamed acute care hospital. The hospital was seeking clarification on whether NPs could perform services that traditionally are the purview of a patient’s attending physician.

In the scenario described, “OIG will not impose administrative sanctions,” even though it added that the arrangement technically would constitute a form of physician compensation that’s prohibited by the statute.

Factors in the hospital’s favor

The activities in question, as performed by NPs, take place in two of the hospital’s med/surg units and don’t relate to care performed in “more lucrative” specialty units such as the OR, according to the report. The attending physicians generally work in primary care.

Patients in the scenario described have been admitted as inpatients or are undergoing observation. They need “active evaluation to determine the cause and extent of their illnesses and often require ongoing attention throughout the day, including real-time responses to changes in patient condition,” according to the advisory opinion.

The physicians still are required to make daily rounds and maintain the same level of accountability for their patients. They may not bill for the services performed by NPs or use the NPs’ documentation to bill for services. The hospital pays for the NPs’ services and does not bill Medicare or any other payer.

The mitigating factors that make the arrangement permissible include:

1. Restricted incentives. The arrangement is not used to induce valuable referrals from physicians because it is limited to two med/surg units. Any physician compensation does not account for services performed by the NPs nor hinge on the volume or value of referrals.

2. Compliance safeguards. The hospital requires participating physicians to round daily, communicate with the NPs regarding services provided to the patient, and bill for services only when they have documentation of work they personally have performed.

3. Impact on cost and quality. The arrangement is unlikely to increase federal healthcare costs because the hospital does not bill for the NPs’ services even when those services are separately reimbursable. Meanwhile, the availability of NPs allows patients to be diagnosed and treated more quickly — and thus improves care.

Hospitals should exercise caution

Based on the narrow context of the scenario described, hospitals should tread carefully if seeking to implement similar arrangements, according to expert counsel.

Attorneys with Baker Donelson note in an analysis that despite offering a reprieve to the hospital in question, the opinion “seemed to conceptualize remuneration very broadly, apparently extending the concept to the relief of burdens historically borne by the treating physicians even without explicit Medicare program guidance that such efforts were part of the applicable CPT code billed by the treating physician.” They said providing coffee in a break room theoretically could constitute such renumeration where Anti-Kickback Statute requirements are enforced.

In addition, billing protocols may differ from one scenario to the next. For example, hospitals might bill for hospitalist services that supplement services provided by a treating physician, and it’s unclear why NP services can be treated differently.

The distinction apparently drawn between arrangements in different units or specialties also raises “some concern and ambiguity,” according to the analysis, given that the safeguards receiving the green light in this instance should work regardless of setting.

An analysis by attorneys with Bass Berry & Simms highlights that the OIG opinion does not address Stark Law considerations, meaning hospitals may have to structure any such arrangement to fit within an applicable Stark exception.

“Doing so would likely require consideration of the value of the nurse practitioner services and may, in some cases, require the physician to pay the hospital fair market value compensation for the services,” the analysis states.


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