What Does the OIG Say About Remuneration Between Entities with Common Ownership?

Providers may own multiple entities, and remuneration may be exchanged between entities with common ownership. What does the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services say about whether such exchanges violate the federal anti-kickback statute (AKS)?  The information in this article is based on “General Questions Regarding Certain Fraud and Abuse Authorities” in the form of FAQs published by the OIG in July of 2024.

Here’s what the OIG says:

The AKS is a criminal statute that generally prohibits payments in exchange for referrals or other federal health care program business. The AKS also requires enforcers to show that providers intended to violate the statute. As enacted by Congress, the AKS does not exempt remuneration exchanged between entities with common ownership from possible enforcement action. In addition, the OIG has previously declined to provide an exemption or safe harbor for remuneration exchanged between wholly-owned entities, including parent entities and their wholly-owned subsidiaries. This means that common ownership does not eliminate the risk of improper referrals under the statute.

Historically, the OIG’s position has been as follows:

“…we are concerned…that integrated delivery systems including arrangements involving wholly-owned subsidiaries ” [emphasis added], may present opportunities for the payment of improper financial incentives that result in overutilization of services and increased program costs and that may adversely affect quality of care and patient freedom of choice among providers (See 64 Fed. Reg. 63,518, 63,520, November 19, 1999).”

The OIG goes on to say that as the health care industry moves away from a fee-for-service payment model toward value-based care, providers may need additional flexibility to support legitimate, collaborative arrangements. In this regard, the safe harbor that provides additional flexibility to providers pursuing value-based arrangements may be helpful. Providers with common ownership may, for example, be able to establish a “value-based enterprise” and utilize safe harbors that are available to such entities. [For more information, see the final rule at 85 Fed. Reg. 77,684, December. 2, 2020, and 42 CFR 1001,952 (ee)-(gg)].

Suppose the entities that exchange remuneration aren’t involved in value-based payment arrangements. Then what? Well, says the OIG, compliance with a safe harbor is voluntary on the part of providers. Providers that want to obtain OIG review of particular arrangements involving common ownership can ask for advisory opinions. 

This recent guidance from the OIG undoubtedly leaves many important questions unanswered. Providers are left to continue without clear guidance and to speculate about whether their arrangements will pass muster under the AKS.