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OIG Advisory Opinion: AKS Risk Around Providing Employed NP Services at No Cost to Physicians

In December 2022, the Department of Health and Human Services (“HHS”) Office of the Inspector General (OIG) issued Advisory Opinion No. 22-20 (“AO”) to a health system (the "Requestor") inquiring about its use of health system-employed nurse practitioners (“NPs”) to perform services that an attending physician would typically provide to inpatients and patients in observation status in general care units at an acute care hospital. The program is made available to physicians who regularly admit patients to the relevant medical units, including those employed by affiliates of the health system and those employed by independent physician groups. The Requestor contended that the NP arrangement facilitates ongoing patient monitoring and evaluation, thereby improving the efficiency of patient diagnosis and treatment.

The requesting health system sought guidance to avoid violating the Anti-Kickback Statute (“AKS”) by “paying” physicians illegal remuneration in the form of the NPs’ labor. As noted in the AO, the OIG’s position on the provision of free or below-market-price goods or services to actual or potential referral sources is longstanding and clear: such arrangements are suspect and may violate the Federal anti-kickback statute, depending on the circumstances. One of the concerns was that the NPs’ services would be particularly valuable in the reviewed arrangement because, for inpatients, physicians are only permitted to bill Medicare for one evaluation and management (“E/M”) service per day (regardless of the number of E/M visits necessary per patient per day). Thus, the provision of these services by NPs would relieve the physicians from spending their own time and resources. Ultimately, while OIG acknowledged that, were the requisite intent present, the arrangement would implicate AKS based on the remunerative value of the NP services to the physicians, the advisory opinion stated that no administrative sanctions would be imposed given the specific circumstances of the arrangement.

Additional Details

In the subject arrangement, NPs provide ongoing care for patients of (predominately primary care) physicians who have chosen to participate in the arrangement (“participating physicians”). The subject patients must have been classified either as inpatients or “in observation status” in two specified general care units. The NPs provide real-time responses to changes in patient conditions while maintaining continual communication and collaboration with participating physicians. Additionally, participating physicians are required to conduct daily rounds and retain accountability for patients receiving NP services.

The OIG opinion cited specific examples of the services provided by the NPs :

  • Promptly initiating plans of care through existing protocols;

  • Implementing any applicable care protocols instituted by the health system;

  • Making rounds on assigned units, during which the NPs address concerns of patients, their families, nurses, and other clinicians (such as physical therapists and speech therapists);

  • Responding to laboratory or imaging studies, including arranging prompt follow-up testing and attending to abnormal results as needed;

  • Addressing rapid changes in patient condition, including adjusting care plans and ordering imaging, laboratory tests, or other diagnostic tools or interventions in real time;

  • Educating and supporting patients and families;

  • Coaching, educating, and otherwise supporting nurses on the unit, including providing certified continuing education;

  • Overseeing and supporting unit-based quality improvement projects; and

  • Discharge planning, which at times includes obtaining insurance authorizations for post-acute care (such as for home health care, skilled nursing, or acute inpatient rehabilitation) and scheduling follow-up testing and appointments.

The favorable opinion rested on the following reasons, which, when combined, represented a minimal risk of fraud or abuse of AKS to OIG.

  1. The arrangement is limited to non-surgical, non-specialty units and predominantly primary-care physicians. OIG explicitly stated that an alternate conclusion would likely be reached were the physicians operating in specialties where more lucrative referrals might be at play. Additionally, OIG weighed the Requestor’s certifications that any compensation paid to the participating physicians outside of the subject arrangement does not account for services performed by the NPs and that an affiliated physician’s invitation to participate does not take into account the volume or value of referrals.

  2. Participating physicians retain the same degree of patient accountability as non-participating physicians and are required to perform daily rounds on all patients. NPs are required to maintain continual communication and collaboration with the participating physician for each patient. Additionally, no payments are made to the participating physicians under the arrangement, and no ancillary agreements are made to induce or reward physician referrals. Participating physicians are allowed to bill only for services with documentation supporting their provision of services and are prohibited from billing for any services provided by NPs.

  3. The design of the arrangement seems unlikely to increase costs to Federal health care programs and may improve patient care in the subject units. The Requestor certified that no payors are billed for the NP-performed services, mitigating the risk of additional claims for reimbursement. OIG summarized that the services provided by the NPs seem reasonably designed to address the efficiency of active monitoring and evaluation toward the diagnosis and treatment of patients in these units.

Valuation Takeaway

Supplying physicians with items or services of value for less than fair market value, or relieving physicians from financial obligations they would otherwise incur, creates substantial risk for hospitals. Although the AO indicates that there is minimal risk of fraud and abuse in this arrangement, in order to meet a Stark Law exception, there may still be reason to obtain a fair market value opinion of the nurse practitioner services, and for the physicians to pay the hospital the FMV rate for the employed NPs services.

BFMV is experienced in the valuation of professional healthcare service arrangements, including compensation for nurse practitioners and other advanced practice providers. Contact us for more information or assistance.


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