- September 19, 2024
- Alerts
OIG Nixes Medicare Advantage Gainsharing Payments
The U.S. Department of Health and Human Services, Office of Inspector General (the “OIG”) posted an unfavorable Advisory Opinion (24-08) prohibiting a Corporation offering Medicare Advantage (“MA”), MA-Prescription Drug (“PD”), and MA/MA-PD Employer Group Waiver Plans (“EGWPs”) from sharing a percentage of its savings with its covered groups via a gainshare payment (“Payment”).
Specifically, the Corporation proposed entering into agreements with employers, trusts, and union groups, among others (a “group”), to provide Medicare coverage, including language in the agreements outlining the conditions under which a group would be eligible to receive a Payment. These Payments would be based upon a negotiated “medical loss ratio”, calculated by dividing certain expenses the Corporation incurred by the revenues it received. The Corporation would make a Payment to a group if the group’s final medical loss ratio was below the negotiated target set forth in the agreement. The Corporation certified that it would not restrict how a group used a Payment it received, but acknowledged that federal or state fiduciary requirements could affect how a group used a Payment.
The OIG determined that this proposed arrangement implicates the Federal Anti-Kickback Statute (“AKS”) for which no safe harbor applies. While the OIG acknowledged that EGWPs offered greater flexibilities than other types of MA plans, it reasoned that sharing a percentage of savings could induce a group to refer its enrollees to the Corporation, and that the Corporation, through its EGWP, would arrange for the furnishing of items or services that are reimbursable by a federal health care program. Consequently, the OIG found that the risk of fraud and abuse was not sufficiently low enough to issue a favorable opinion because:
Despite this unfavorable opinion, the OIG left open the possibility that an arrangement between an MA organization offering an EGWP and a group could be sufficiently low risk under the AKS, despite having a Payment as one element of the negotiated arrangement.
A complete copy of the unfavorable advisory opinion is available at:
https://oig.hhs.gov/documents/advisory-opinions/9992/AO-24-08.pdf
Should you have any questions regarding the above, or would like to seek your own advisory opinion, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or email us at info@garfunkelwild.com.
Specifically, the Corporation proposed entering into agreements with employers, trusts, and union groups, among others (a “group”), to provide Medicare coverage, including language in the agreements outlining the conditions under which a group would be eligible to receive a Payment. These Payments would be based upon a negotiated “medical loss ratio”, calculated by dividing certain expenses the Corporation incurred by the revenues it received. The Corporation would make a Payment to a group if the group’s final medical loss ratio was below the negotiated target set forth in the agreement. The Corporation certified that it would not restrict how a group used a Payment it received, but acknowledged that federal or state fiduciary requirements could affect how a group used a Payment.
The OIG determined that this proposed arrangement implicates the Federal Anti-Kickback Statute (“AKS”) for which no safe harbor applies. While the OIG acknowledged that EGWPs offered greater flexibilities than other types of MA plans, it reasoned that sharing a percentage of savings could induce a group to refer its enrollees to the Corporation, and that the Corporation, through its EGWP, would arrange for the furnishing of items or services that are reimbursable by a federal health care program. Consequently, the OIG found that the risk of fraud and abuse was not sufficiently low enough to issue a favorable opinion because:
- The Corporation certified that the Payment could exceed the amount of any additional premiums a group paid and/or be paid to a group who did not pay any additional premiums;
- The Payments presented a risk of steering with an adverse impact on competition, particularly where, as here, the Payment did not have be used to benefit enrollees;
- The Corporation certified that one possible trigger for terminating a group’s arrangement that included a Payment would be if the number of enrollees fell below a negotiated threshold;
- The Payments could result in financial gain for a group while resulting in fewer benefits for enrollees; and
- The regulation controlling EGWPs did not expressly permit these Payments.
Despite this unfavorable opinion, the OIG left open the possibility that an arrangement between an MA organization offering an EGWP and a group could be sufficiently low risk under the AKS, despite having a Payment as one element of the negotiated arrangement.
A complete copy of the unfavorable advisory opinion is available at:
https://oig.hhs.gov/documents/advisory-opinions/9992/AO-24-08.pdf
Should you have any questions regarding the above, or would like to seek your own advisory opinion, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or email us at info@garfunkelwild.com.