Risky Business?

OIG won't penalize practices offering free pre-authorization of patients' behalf.Risky Business

Does a radiology practice violate the law if it obtains an insurer's pre-authorization of an imaging study on behalf of referring physicians and patients? In a scenario that one group posed, the U.S. Department of Health and Human Services' Office in Inspector General (OIG) recently came back with a verdict: no.

In the June 2012 ACR Bulletin, RADLAW generally described the OIG's issuance of advisory opinions. This month, we will discuss that OIG's latest advisory opinion on a key legal and clinical issue for ACR members.

The OIG concluded in its advisory opinion, No. 12-10, that it would not penalize a radiology group for offering free insurance pre-authorization services to physicians and patients.1 A physician-owned radiology group requested that the OIG opine whether such a proposal would cause the OIG to impose sanctions under either the OIG's civil monetary penalty authorities as those relate to committing anti-kickback violations or the OIG's administrative authorities to exclude the group from being eligible to participate in Medicare or other federal health-care programs.

The radiology group planned to offer to obtain any required pre-authorization for radiology services. On an insurer's request, the practice would provide any related information, including required documentation establishing an imaging study as medically necessary. The practice would offer its pre-authorization without charge to all patients and referring physicians using its radiology services, regardless of any physician's general volume or the value of anticipated or past referrals. The group certified to the OIG that it would not make payments to physicians under the proposed arrangement and had no express or implied arrangements with any referrers in connection with the arrangement. Additionally, the group certified that it had no ancillary agreements with referrers that would reward their referrals to the practice.

The OIG gave this radiology group legal immunity because of its long-standing position that many imaging pre-authorization arrangements do not entail major legal risk.

Low Risk of Leveraging

The OIG initially noted that this radiology pre-authorization proposal would not target any specific referring physicians. Importantly, the OIG stated that even if the radiology group alleviates the referrers' burden of doing pre-authorization, "such relief would occur by chance, not design." The pre-authorization service would exist equally for all patients and physicians. IT would not take into account the volume or value of referrals that a referring physician might send to the radiology group, which could violate the anti-kickback law because that would induce referrals. Taken together, these points convinced the OIG that there is a low risk the radiology practice could leverage its proposed arrangement to induce referrals.

Yet the critical factor in this opinion — and the OIG's three other advisory opinions that have decided not to penalize imaging pre-authorization — is transparency. The radiology group's representatives would identify themselves to insurers as such, would advise insurers about the particular type of pre-authorization program, and would provide referrers with a copy of all the information the practice submits to insurers. The OIG maintains that the radiology group would not engage in a "but for" arrangement, which often involves improper acts. That is, the radiologists would not offer pre-authorization services except for instances in which they have the opportunity to receive referrals from clinicians. Rather, the OIG indicated that the group lacked significant influence over referrals because patients already would have "selected" the group before the pre-authorization took place. This position leads to the OIG's ultimate justification: the radiology practice has a "legitimate business interest" in offering preauthorization services. Only the radiologists' payment — not the clinicians' — is on the line if insurers deny a request for an imaging study. The OIG fundamentally believes that this and other radiology groups have an independent motive for "ensuring that pre-authorization is diligently pursued."

Mixed Motives

We question whether the OIG's rationale — that any medical group has a "wholly distinct interest in pre-authorization — makes economic and legal sense. Doesn't any medical practice prioritize obtaining payment from an insurer for its services? Additionally, it is possible that a radiology practice may have "mixed" motives in offering pre-authorization. The group may well have a purely entrepreneurial and operational desire to receive payment for services rendered. However, the group also may harbor and expectation that if it relieves a referral source of the burden of pre-authorization, the source may remember such generosity and be inclined to send patients to that practice. For decades, the OIG has said that "mixed" motives may violate anti-kickback laws. We recognize that many members' practices conduct pre-authorization — or are pressured to do so. However, they should heed the OIG's statement that they do not have to offer or extend free pre-authorization services to patients or referrers. They should also keep in mind that some commercial insurers mandate that the ordering clinician conduct the pre-authorization process. Therefore, members need to act prudently when evaluating pre-authorization opportunities.

1. OIG Advisory Opinion No. 12-10. Available at https://oig.hhs.gov/fraud/docs/advisoryopinions/2012/AdvOpn12-10.pdf. Accessed Nov. 1, 2012.

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