backCMS Issues Outpatient Prospective Payment System Proposed Rule for CY 2024
On July 13, 2023, CMS published a proposed rule to update the payment policies, payment rates, and other provisions for services furnished under the Medicare Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgery Center (ASC) Payment System in calendar year (CY) 2024 (the Proposed Rule). In the Proposed Rule, CMS is requesting comment as to whether it should adopt a payment adjustment to the OPPS and the Inpatient Prospective Payment System (IPPS) to subsidize the cost of maintaining buffer stock of essential medicines. CMS also proposes to implement the Intensive Outpatient Program (IOP), update the rates for intensive outpatient services, and add new ASC codes for dental services that are inextricably intertwined with covered Medicare services. Finally, CMS proposes updates to the hospital price transparency regulations, which, since January 1, 2021, have required hospitals to make public the standard charges of the items and services they provide. This article provides an overview of CMS’s proposals in the Proposed Rule. Comments are due by September 11, 2023.
Payment Rate Updates
In the Proposed Rule, CMS proposes to update the OPPS conversion factor by 2.8 percent, which includes a market basket increase of 3.0 percent and a productivity adjustment of negative 0.2 percent. CMS also proposes applying the 2.8 percent update to ASC payments in CY 2024 as it did in the five preceding years in order to gather additional claims data to analyze whether this adjustment tends to influence migration of services from the hospital to the ASC setting.
CMS proposes adjusting the OPPS conversion factor by 0.9974 to account for wage index budget neutrality, 0.9975 to budget neutralize the 5 percent annual cap for individual wage index reductions, 1.0280 for the proposed Outpatient Department (OPD) fee schedule increase and 0.9874 to remove additional drug and device pass-through spending. After all adjustments, the OPPS conversion factor for CY 2024 would be $87.488 (the CY 2023 conversion factor from the Final Rule was $85.858). The agency estimates that these updates would increase OPPS payments by $6 billion compared to CY 2023.
CMS also proposes adjusting the ASC conversion factor by 1.0017 for wage index budget neutrality. After all adjustments, the ASC conversion factor for CY 2024 would be 53.397.
Request for Comment: IPPS and OPPS Payment Adjustment for Maintaining Buffer Stock
CMS is soliciting comments as to whether it should establish a payment adjustment under IPPS and OPPS for hospitals that maintain a buffer stock of essential medicines. The agency suggests that the IPPS adjustment could be based on the IPPS share of the additional reasonable costs a hospital incurs maintaining these supplies. In other words, hospitals would be paid on a reasonable cost basis. CMS also suggests that this payment would be made in interim installments throughout the year, subject to reconciliation at audit. The agency notes that if it were to finalize a rule based on the comments received, the rule could take effect as early as cost reporting periods beginning on or after January 1, 2024. The agency also implies that the adjustment would be made in a budget neutral manner, which means CMS would reduce the IPPS rates to subsidize this adjustment.
Proposed Payment for Intensive Outpatient Program
Section 4124(b) of the Consolidated Appropriations Act of 2024 established coverage for intensive outpatient services effective January 1, 2024. CMS proposes to implement this directive by establishing the IOP. CMS proposes to define IOP services as a distinct and organized intensive ambulatory treatment program that offers less than 24 hours of daily care other than in an individual’s home or in an inpatient or residential setting.
CMS proposes that the scope of benefits for the IOP would include individual and group therapy with physicians or psychologists, occupational therapy, services of social workers, trained psychiatric nurses, and other staff trained to work with psychiatric patients, drugs and biologicals, family counseling, patient training and education, and diagnostic services. These services would be reimbursed on a per diem basis under the OPPS and would also be covered in the Rural Health Clinic (RHC) and Federally Qualified Health Center (FQHC) settings.
CMS further proposes that in order to qualify for IOP services, a physician must determine that each patient needs a minimum of nine hours of IOP services per week. This determination must be revisited on a monthly basis.
CMS also proposes extending coverage to the Opioid Treatment Program (OTP) by establishing a weekly payment adjustment for IOP services furnished by OTPs. If finalized, this adjustment would be updated based on the Medicare Economic Index and receive the Geographic Adjustment Factor.
Updates to Partial Hospitalization Program
CMS proposes to expand the rate structure of the Partial Hospitalization Program (PHP) to include an APC for three services a day and an APC for four services a day. In calculating these rates, CMS proposes to use the broader OPPS data set to capture claims not identified as PHP, but that include service codes and intensity required for a PHP day. According to CMS, this larger data set would expand the sample size to allow for more precise rate calculations.
OPPS Payment for Remote Mental Health Services
CMS is proposing to create a single, untimed HCPCS code that can be reported when a beneficiary receives multiple hours of group therapy per day. This proposal comes in response to stakeholders who have commented that the current HCPCS codes are administratively burdensome because providers are required to report and document each unit of time using multiple codes.
OPPS and ASC Payment for Dental Services
In the CY 2023 rule, CMS authorized Medicare coverage for dental procedures that are integral to other medically necessary services. In the CY 2024 Proposed Rule, CMS proposes to assign 229 dental codes to clinical APCs. The dental services that would be covered if this proposal is finalized are those services that are inextricably linked to other covered services, including but not limited to dental or oral examination as part of a comprehensive workup prior to organ transplant, and reconstruction of dental ridge following surgical removal of tumor.
OPPS Payment for Drugs Acquired Through the 340B Program
CMS proposes to continue to pay the statutory default rate for drugs acquired through the 340B program, which is ASP plus 6 percent. CMS applied this same rate in the CY 2023 final rule following the Supreme Court’s unanimous decision in American Hospital Association v. Becerra, in which the court held that CMS could not vary rates between different groups of hospitals without previously conducting a survey of hospital’s acquisition costs.
Hospital Price Transparency Updates
Machine-readable File Updates
Under the hospital price transparency regulations, a hospital must make public its standard charges for all items and services it provides in a comprehensive machine-readable file, among other requirements. Hospitals currently have discretion in how they choose to display the standard charges in the machine-readable file; however, CMS now proposes to require hospitals to display the required data using a CMS template, which would be offered as a CSV “wide” format, a CSV “tall” format, and a JSON schema. CMS also proposes that hospitals encode all standard charge information, as applicable, that corresponds to a set of required data elements, which would include (but are not limited to):
- Hospital name, license number, location name(s), and address(es) at which the public may obtain the items and services at the standard charge amount.
- A description of the item or service that corresponds to the standard charge established by the hospital, including a general description; whether the item or service is provided in connection with an inpatient admission or an outpatient department visit; and for drugs, the drug unit and type of measurement.
- Any codes used by the hospital for purposes of accounting or billing for the item or service, including modifier(s) and code type(s).
- For payer-specific negotiated charges: the payer and plan name (as specified in the contract); the type of contracting method used to establish the standard charge; whether the standard charge indicated should be interpreted by the user as a dollar amount, or if the standard charge is based on a percentage or algorithm, and what percentage or algorithm determines the dollar amount for the item or service. If the standard charge for an item or service is expressed as a percentage or algorithm, the hospital would be required to indicate a consumer-friendly expected allowed amount in dollars for the item or service.
Each hospital would also be required to affirm in its machine-readable file that the hospital, to the best of its knowledge and belief, has included all applicable standard charge information in accordance with the requirements of 45 C.F.R. Part 180 and that the information displayed is true, accurate, and complete as of the date indicated in the file. CMS also proposes hospitals
include a footer at the bottom of the hospital’s homepage that links to the webpage that includes the machine-readable file and requires hospitals to ensure that a .txt file is included in the root folder of the publicly available website chosen by the hospital for posting its machine-readable file.
Enforcement Updates
CMS proposes several updates to its enforcement capabilities including:
- CMS may require submission of certification by an authorized hospital official as to the accuracy and completeness of the data in the machine-readable file and submission of additional documentation as may be necessary to determine hospital compliance.
- If a hospital receives a warning notice for non-compliance, CMS proposes to require the hospital to submit an acknowledgement of receipt of the warning notice in the form and manner and by the deadline specified in the notice of violation issued by CMS to the hospital.
- In the event CMS takes an action to address hospital noncompliance and the hospital is determined by CMS to be part of a health system, CMS may notify health system leadership of the action and may work with health system leadership to address similar deficiencies for hospitals across the health system.
- CMS may publicize on the CMS website information related to: (1) CMS’s assessment of a hospital’s compliance; (2) any compliance action taken against a hospital, the status of such compliance action, and the outcome of such compliance action; and (3) notifications sent to health system leadership.
Request for Comments
Lastly, CMS is seeking public comment on the future evolution of the hospital price transparency regulations to better align the public disclosure regulations with the Transparency in Coverage Rule, which imposes disclosure requirements on issuers, and the No Surprises Act, which prohibits balance billing and provides a dispute resolution process for patients.
The proposed policies, if finalized, would be effective January 1, 2024. CMS proposes to give hospitals an enforcement grace period for adoption of the CMS template and other updates to the machine-readable file until March 1, 2024.
The Proposed Rule is available here, and a CMS fact sheet is available here. The Proposed Rule is scheduled to be published in the Federal Register on July 31, 2023.
Reporters, Alek Pivec, Washington D.C., +1 202 626 2914, apivec@kslaw.com and Ahsin Azim, Washington, D.C., + 1 202 626 5516, aazim@kslaw.com.
CMS Issues Proposed Rule with Changes to Medicare Physician Fee Schedule for CY 2024
On July 13, 2023, CMS issued a proposed rule that identifies and seeks public comments on a broad array of proposed changes to the Medicare Physician Fee Schedule (PFS) and Medicare Part B payments (the Proposed Rule). If finalized, the proposed changes would take effect January 1, 2024. Comments are due by September 11, 2023.
The Proposed Rule includes changes to dozens of areas affecting a wide range of practitioners and providers. Below is a summary of key proposed changes to the PFS under the Proposed Rule.
Rate and Conversion Factor
Although CMS is proposing increases in payment for primary care and other direct patient care, CMS proposes reducing overall payment rates under the PFS by 1.25% in 2024 compared to 2023. The proposed conversion factor for 2024 is $32.75, which is a decrease of 3.34% from the 2023 conversion factor of $33.89.
Caregiver Training Services
CMS proposes paying for services when furnished by a physician or non-physician practitioner, such as a nurse practitioner, clinical nurse specialist, certified nurse-midwife, physician assistant, or clinical psychologist under a therapy plan of care or individualized treatment plan. CMS’s stated goal for this payment is to support care for Medicare beneficiaries by better training caregivers.
Services for Health-Related Social Needs
CMS proposes coding and payment changes that will account for the resources involved in a multidisciplinary team of clinical staff and other auxiliary personnel furnishing services. Specifically, CMS proposes to pay separately for Community Health Integration, Social Determinants of Health (SDOH) Risk Assessment, and Principal Illness Navigation services. Separate payment as reflected in the proposed codes is specifically designed to include services involving community health workers, care navigators, and peer support specialists.
Community Health Integration services address unmet SDOH needs that affect a patient’s diagnosis and treatment. Principal Illness Navigation services assist Medicare beneficiaries diagnosed with high-risk conditions like cancer and substance use disorder by matching them with appropriate clinical resources. The Proposed Rule also clarifies that community health workers, care navigators, peer support specialists and other auxiliary personnel may be employed by Community-Based Organizations (CBOs), so long as the requisite supervision and billing requirements are met.
CMS also proposes coding and payment for SDOH risk assessments to account for time and resources practitioners spend in these assessments that may impact patient care. The Proposed Rule proposes making the SDOH assessment optional in a patient’s annual wellness visit. The Proposed Rule also includes codes and payment for SDOH risk assessments performed on the same day as an evaluation and management visit.
Evaluation and Management (E/M) Visits
Starting January 1, 2024, CMS proposes a separate add-on payment for healthcare common procedure coding system (HCPCS) code G2211. The add-on code is designed to capture resource costs associated with evaluation and management visits for primary care and longitudinal care of complex patients. The add-on code will generally be available for outpatient office visits. CMS estimates that, if the add-on code is finalized, it will have redistributive effects for all other 2024 payments. CMS originally finalized this policy in 2021, but Congress suspended its use and prohibited CMS from implementing it before 2024. Hence, CMS is proposing to implement the policy this year, but with refinements that would reduce the redistributive impact compared to the original proposal from 2021.
Split (or Shared) E/M Visits
CMS is proposing to delay the implementation of changes to how split/shared E/M visits are billed. CMS intends to modify the definition of “substantive portion” to mean more than half of the total time of the visit, but those changes may now be delayed until at least January 1, 2025. CMS plans to maintain current split (or shared) billing rules, which means the billing provider needs to perform one of the three key components (history, exam, or medical decision-making) or spend more than half of the total time performing the split (or shared) visit.
Telehealth Services Under the PFS
CMS proposes adding health and well-being coaching services to the Medicare Telehealth Services List temporarily for 2024 and permanently for Social Determinants of Health Risk Assessments. The Proposed Rule also seeks to implement telehealth-related provisions of the Consolidated Appropriations Act of 2023 (CAA). These changes include allowing telehealth originating sites to include any place where the patient is located, including their home; expanding the definition of telehealth practitioners to include qualified occupational therapists, qualified physical therapists, qualified speech-language pathologists, and qualified audiologists; continuing payment for telehealth services provided by Rural Health Clinics and Federally Qualified Health Centers; delaying the requirement for an in-person visit with a practitioner within six months of initiating mental health telehealth services; and the continuing coverage and payment for telehealth services included on the Medicare Telehealth Services List (as of March 15, 2020) until December 31, 2024.
CMS also proposes paying for telehealth services at the non-facility PFS rate for services provided to people in their homes. CMS’s goal is to protect access to mental health and other telehealth services first made available on an extended basis during the COVID-19 public health emergency (PHE).
CMS proposes to continue defining direct supervision to allow the supervising practitioner to be present through real-time audio and video interactive telecommunications through December 31, 2024. CMS seeks comment on whether it should consider extending its definition of direct supervision to allow virtual presence after December 31, 2024.
Telehealth Services Furnished in Teaching Settings
CMS proposes allowing teaching physicians to use audio/video real-time communications technology when providing Medicare telehealth services in all residency training locations
through the end of 2024. This is a change from the 2021 PFS final rule, which only allowed for virtual training in some locations, mostly when outside of a metropolitan statistical area. CMS seeks comment on clinical treatment situations where it should allow teaching physicians to train residents virtually, and CMS could consider finalizing these in 2024.
Payment for Outpatient Therapy Services, Diabetes Self-Management Training (DSMT), and Medical Nutrition Therapy (MNT) When Furnished by Institutional Staff to Beneficiaries in Their Homes Through Communication Technology
CMS is proposing to continue to allow institutional providers to bill for DSMT, outpatient therapy, and MNT services until the end of 2024. CMS seeks comments about the effectiveness of DSMT, outpatient therapy, and MNT services when provided remotely as opposed to in person.
Behavioral Health Services
The Proposed Rule implements Medicare Part B coverage and payment under the PFS for marriage and family therapists (MFTs) and mental health counselors (MHCs) who bill for services. CMS also proposes to allow addiction counselors who meet the applicable requirements for MHCs to enroll in Medicare as MHCs. Also, consistent with the CAA, the Proposed Rule would allow MFTs and MHCs to enroll in Medicare after the 2024 PFS is published, allowing them to bill for Medicare services as of January 1, 2024.
CMS also plans to implement a provision of the CAA that requires new HCPCS codes for psychotherapy crisis services provided in an applicable site of service after January 1, 2024. Section 4123 of the CAA states that payment for these psychotherapy crisis services must be 150% of the PFS amount for non-facility sites of service for each year the service is identified by HCPCS codes 90839 and 90840, as well as any succeeding codes.
CMS also proposes allowing Health Behavior Assessment and Intervention Services to be billed by MFTs, MHCs, and clinical social workers. In addition, CMS proposes to increase the valuation for timed behavioral health services under the PFS. The proposal, which would occur over four years, would address distortions in valuing time-based behavioral health services.
Because the CAA requires the hospice interdisciplinary group to include at least one social worker, MFT, or MHC, CMS proposes modifying the hospice Conditions of Participation to allow these caretakes to serve as part of the hospice interdisciplinary group. CMS seeks comment on ways to expand access to behavioral health services, digital therapies, and digital cognitive behavioral therapy.
Opioid Treatment Programs (OTPs)
The Proposed Rule would allow for periodic assessments that occur via audio-only telecommunications to continue through the end of 2024. The flexibilities to conduct audio-only assessments are available when video is not available to the beneficiary and all other requirements, including SAMHSA and DEA requirements, are met.
Supervision Policy for Physical and Occupational Therapists in Private Practice
Since 2005, CMS has required direction supervision of PTs and OTs. The proposed rule would allow for general supervision of therapy assistants for remote therapeutic monitoring
services. CMS seeks comments on whether it should revise its direct supervision regulatory policy to allow for general supervision of all services provided by PTs and OTs, rather than simply remote therapeutic monitoring services. CMS is interested in the effect of such a policy on patient care, patient safety, and changes in utilization, as well as any supporting data on these points.
Diabetes Self-Management Training (DSMT) Services Furnished by Registered Dietitians (RDs) and Nutrition Professionals
CMS proposes clarifying that an RD or nutrition professional must personally perform medical nutrition therapy services. The Proposed Rule would further clarify that the enrolled RD or nutrition professional may bill when acting on behalf of the entire DSMT entity, irrespective of which professional personally delivered each aspect of the services.
Telehealth Proposals for DSMT Services
CMS proposes eliminating the regulatory prohibition on providing Diabetes Self-Management Training entirely via telehealth.
Dental and Oral Health Services
CMS proposes to codify its previously finalized payment policy for dental services provided before or during treatment for head and neck cancer (both primary and metastatic). CMS also proposes allowing payment for certain dental services that are inextricably linked to other covered services used to treat cancer. CMS seeks comment on any evidence that shows circumstances in which dental services are integral to clinical success of covered medical services.
Skin Substitutes
CMS seeks comments on the best manner to incorporate skin substitutes as a supply within the PFS rate setting methodology.
Provisions from the Inflation Reduction Act Relating to Drugs and Biologicals Payable Under Medicare Part B
The Proposed Rule addresses the following provisions that affect payment limits or beneficiary out-of-pocket costs for drugs payable under Part B. CMS proposes to codify in regulation Section 11402, which amends the payment limit for new biosimilars furnished on or after January 1, 2024. CMS also proposes codifying Section 11407, which eliminates a patient’s deductible and limits a patient’s coinsurance to $35 for insulin furnished through an item of DME on or after July 1, 2023.
Drugs and Biologicals Which are Not Usually Self-Administered by the Patient, and Complex Drug Administration Coding
CMS seeks comment on its policies regarding the exclusion of coverage for certain drugs not covered by Part B when self-administered by the patient. CMS also seeks comment on coding and payment policies for complex non-chemotherapeutic drugs.
Clinical Laboratory Fee Schedule: Revised Data Reporting Period and Phase-In of Payment Reductions
CMS proposes making conforming changes to the data reporting and payment requirements for clinical diagnostic laboratory tests (CDLTs). Specifically, for the data reporting period of
January 1, 2024 through March 31, 2024, the data collection period is January 1, 2019 through June 30, 2019.
Ambulance Fee Schedule: Ambulance Extenders Provisions
CMS proposes to revise its regulations to align with existing law, enacted in the CAA, that extends three add-on payments to the ambulance base and mileage rates under the Ambulance Fee Schedule through December 31, 2024.
Medicare Ground Ambulance Data Collection System (GADCS)
The Bipartisan Budget Act (BBA) of 2018 required CMS to implement regulations for a ground ambulance data collection system by December 31, 2019. The GADCS portal went live on January 1, 2023, and CMS has identified opportunities to improve it with the assistance of stakeholders. CMS proposes the following changes to the GADCS instrument: enabling partial year responses from ground ambulance organizations, improving reporting consistency of hospital-based ambulance organizations through minor edits, and correcting four technical typos.
Medicare Part B Payment for Preventive Vaccine Administration Services
CMS is proposing to continue payment for COVID-19 vaccination administration in the home, which was established on a preliminary basis during the PHE. CMS also proposes extending this payment to three preventive vaccines in under Part B (pneumococcal, influenza, and hepatitis B) when provided at home. The payment amount would be updated annually, to reflect a percentage increase in the Medicare Economic Index and geographic cost variations. Under this proposal, the payment amount for all three vaccines would be identical effective January 1, 2024. The proposal would limit payment to one payment per visit, even when multiple vaccines are administered.
Appropriate Use Criteria (AUC) for Advanced Diagnostic Imaging Program
CMS proposes a pause on its efforts to implement the AUC program. The proposal would rescind the current AUC program regulations at 42 C.F.R. 414.94. CMS will reevaluate the program and continue its efforts to identify a workable solution, to be proposed in a future rulemaking.
Other topics addressed in the Proposed Rule
- CMS is soliciting comments on Histopathology, Cytology, and Clinical cytogenetics under the Clinical Laboratory Improvement Amendments of 1988;
- CMS is proposing to extend the PHE flexibility for the Medicare Diabetes Prevention Plan to allow virtual services through December 31, 2027 and also allow fee-for-service payments for attendance; and
- CMS is proposing regulatory revisions for Medicare and Medicaid Provider and Supplier Enrollment.
A copy of the Proposed Rule is available here. The Proposed Rule is expected to be published in the Federal Register on August 7, 2023.
Reporter, Doug Comin, Atlanta, +1 404 572 3525, dcomin@kslaw.com.
First Annual Report on the No Surprises Act’s Impact on the Health Care Market is Released
On July 6, 2023, the HHS Office of the Assistant Secretary for Planning and Evaluation (ASPE) released the first of five required annual reports on the impact of the No Surprises Act (NSA) on health care markets (the Report). The Report highlights baseline trends in the health care industry and notes that the empirical data to analyze the effects of the NSA on the health care market is not yet available. Nonetheless, the Report found that the NSA has already decreased the prevalence of out-of-network claims since it took effect in January 2022. ASPE will continue to collect and analyze data for these statutorily mandated reports through 2027.
The NSA directs the ASPE, in consultation with the FTC and the Attorney General, to study the effects of certain provisions of the NSA on market consolidation, overall health care costs, and access to health care services. The NSA also tasks the ASPE, in consultation with the Secretary of Labor and the Secretary of the Treasury, to make recommendations regarding the consolidation of health care providers, plans and issuers. The Report highlights baseline trends and identifies the factors that ASPE intends to evaluate for future reports.
State Surprise Billing Trends
The Report looked to prior research studies analyzing the impact of various state surprise billing laws for a baseline understanding of the market effects of various approaches to surprise billing and dispute resolution. The Report indicated that these state laws had varying impacts on the healthcare market and reimbursement, but generally found that the changes to out-of-network reimbursement impacted both in-network and out-of-network reimbursement across the state health care market. One factor causing market shifts is the outcome of an arbitration or other dispute process, to the extent state law provides for one. Studies found that, to the extent state law provided a benchmark to guide the arbitrators, the arbitration results were largely tethered to the benchmark, and the market was shifted to follow. The NSA largely defers to state law when a state has law on the issue, so these state law effects are expected to continue.
Out of Network Trends
Looking generally at the out-of-network billing trends prior to implementation of the NSA, the ASPE reported that out-of-network billing was trending downward between 2012 and 2020. Specifically, the prevalence of out-of-network claims decreased from 6.0 percent to 4.7 percent in this time frame, and the percent of total payments that were out-of-network decreased from 9.2 percent to 6.8 percent between 2012 and 2020. ASPE also reports that, in this time period, the largest volume of out-of-network billing was highly concentrated among a small percentage of physicians within certain specialties.
The Report acknowledged that the amounts paid to out-of-network providers for claims under the NSA has the potential to impact the health care market beyond out-of-network reimbursement. ASPE forecasted potential effects on contracted rate negotiations, total health care spending, provider and plan consolidations, patient access to care, and quality of care. However, the Report found that these effects will likely result from the outcomes of the NSA
Independent Dispute Resolution (IDR) process, and that there is not enough data available to understand how these effects will play out, as the Report states that the IDR process is still in early stages of utilization.
Market Consolidation Trends
The Report also looked more generally at market trends. ASPE found that there were more than 1,000 announced hospital mergers and acquisitions between 2010 and 2020 but no increasing overall trend in hospital ownership consolidation since 2017. In contrast, the Report found a significant increasing trend in the number of physician group mergers and acquisitions since 2010, with a noted large increase in volume in 2021. The Report flagged the growing focus on the impact of mergers across the health care industry—of commercial insurers, provider groups, and hospitals—on health care prices, health care spending, quality of care, patient access and health care wages. For example, the Report indicated that the horizontal consolidation of insurers has been shown to result in lower prices paid to providers and higher premiums charged to consumers, with no data to indicate an increase in patient access to care. ASPE noted a continued focus on these factors, and that NSA’s impact on these market factors is not yet apparent but will be considered in the 2024 report.
The Report is available here.
Reporter, Alana Broe, Atlanta, +1 404 572 2720, abroe@kslaw.com.
OIG Issues Favorable Advisory Opinion Regarding Use of Online Directory to Find Healthcare Providers
On July 11, 2023, OIG posted Advisory Opinion 23-04 regarding the use of an online healthcare directory for Federal healthcare program beneficiaries to find and book appointments with medical providers. Requestor sought OIG’s approval with respect to the use of the current version of the online directory as well as proposed changes to the platform. OIG determined that, although the arrangement would generate prohibited remuneration under the Anti-Kickback Statute (AKS) and the Beneficiary Inducements civil monetary penalty (CMP), it would not impose administrative sanctions in connection with the AKS or CMP.
The Arrangement
Requestor operates an online directory platform—through both its website and mobile application—that allows individuals to search for and book medical appointments with healthcare providers.
The platform does not charge users, but it charges providers “per-booking fees”—fees for each appointment booked through the platform where the user is a new patient of the provider and has not previously booked an appointment with that provider through the platform. Requestor sets the fee for each new-patient appointment booking based on valuations by an independent, third-party valuation firm. Users’ insurance status (i.e., whether the user is self-
insured, uninsured, commercially insured, or covered by a Federal program) is not a factor in determining the per-booking fees.
Under the existing platform, providers who pay the per-booking fees can set a limit on the number of new-patient appointment bookings they receive per month, which automatically resets at the start of the next month. Under this functionality, providers who have reached their monthly spending cap are removed from the search results, and users are not able to book new appointments with those providers.
Requestor proposed changes to the platform functionality that would allow providers who have reached their monthly spending cap to still appear in the search lists for users who identify as non-commercial users (i.e., users who either identify as Federal healthcare program beneficiaries or who decline to provide their insurance coverage information at the time of a search) as long as the providers meet the non-commercial users’ other criteria. The search results would show through an icon which providers have reached their monthly spending cap.
The platform also uses an algorithm that filters provider options shown to the users based on the criteria set by the users. The algorithm uses more than 180 different criteria, but the users’ historical engagement with specific providers is not a factor in determining the order in which those providers appear in the search results. Further, for non-commercial users, the algorithm does not factor in the amount providers pay to Requestor or whether providers have a monthly spending cap.
The platform also allows providers to pay a fee to purchase advertisements to be shown at the top of the results. The paid advertisements are displayed to all users, regardless of insurance status, and do not specifically target Federal healthcare program beneficiaries.
OIG’s Determination
First, OIG determined that the arrangement would generate prohibited remuneration because Requestor provides remuneration to users in the form of free access to the platform, and the remuneration induces users to purchase providers’ services, and the platform allows providers to pay Requestor—through the per-booking fees and/or the paid advertisements—to recommend providers’ services, some of which are reimbursable by a Federal healthcare program. OIG also determined that no safe harbor provisions apply to this arrangement.
Second, OIG determined that under the Beneficiary Inducements CMP, the free access to the platform could influence beneficiaries to select a provider for the receipt of services that are reimbursable by a Federal healthcare program.
Notwithstanding the above, OIG ultimately determined that it would not impose administrative sanctions under the AKS or the Beneficiary Inducements CMP for the following reasons:
- Requestor certified that the per-booking fees and the advertisement fees do not exceed fair market value for the services Requestor furnishes to providers in connection with the platform.
- Requestor is not a provider or supplier of any medical items or services and is not affiliated with any provider using the platform. Requestor is therefore unlikely to be in the position to exert undue influence when recommending healthcare providers to users.
- Requestor’s advertising activities are passive in nature and do not specifically target Federal healthcare program beneficiaries.
- Requestor’s marketing activities promote providers who purchase the advertisements but do not promote any particular item or service.
- The platform is accessible by any individual, regardless of insurance status. In other words, the platform does not target Federal healthcare program beneficiaries or otherwise influence their decision-making.
- Requestor’s proposed changes would implement transparency safeguards related to the appearance of providers’ monthly spending cap, allowing non-commercial users to find and book appointments with providers notwithstanding that the providers’ ability to book new patients may be temporarily unavailable due to the monthly spending cap.
- Requestor certified that the algorithm does not order search results based on the amount providers pay to Requestor or whether providers have a monthly spending cap.
- Requestor does not offer anything of value to Federal healthcare program beneficiaries to induce them to use the platform.
The Advisory Opinion is available here.
Reporter, Kristy Lundy, Atlanta, +1 404 572 4645, klundy@kslaw.com.