OIG Advisory Opinion Summary
Federal Anti-Kickback Statute Implications of Arrangement Under Which Hospital Receives Free Radiology Reports

      On January 3, 2008, the Office of Inspector General (OIG) published an Advisory Opinion discussing whether, under specific circumstances, a radiology group's preparation of a written report of its interpretation for a hospital patient's medical record without charge to the hospital would violate the federal anti-kickback statute.  Ultimately, the OIG determined that it would not impose administrative sanctions on the hospital with regard to its arrangement with the group and the free written reports it receives.

      A small, rural, critical access hospital solicited an opinion from the OIG to examine an arrangement it has with a radiology group.  Under the arrangement, the group performs radiology services on an exclusive basis on behalf of the hospital and prepares written reports, which document the radiologists' interpretations, at no charge to the hospital.  The reports are included in the patient's medical record maintained by the hospital.  The hospital certified that the arrangement with the group represents the fair market value in an arm's-length transaction for the exclusive relationship and the arrangement does not take into account the value attributable to referrals to the group. 

      Arrangements between traditional hospital-based physicians (such as radiologists) may implicate the federal anti-kickback statute if the hospital solicits or receives something of value – or the physicians offer or pay something of value – for access to the hospital's federal health care program business.[1]   Therefore, the OIG analyzed whether the free written reports prepared by the group and maintained by the hospital in the patient medical records constitute something of value that the hospital receives from the group in exchange for referring federal payor patients to the group for professional radiology services pursuant to the hospital's exclusive arrangement with the group.

      According to the OIG, the free written reports prepared by the group for inclusion in the hospital-maintained patient records do not constitute remuneration to the hospital.  In order to be reimbursed under Medicare, radiologists are required to prepare written reports for radiology services furnished to hospital patients and such reports are considered part of the covered professional services.  In addition, hospitals are obligated to maintain patient medical records, but they are not required to incur costs associated with the radiologists' written reports.  Accordingly, by providing free written reports, the group is not relieving the hospital of any cost the hospital is obligated to incur on behalf of Medicare patients.  Moreover, if the hospital were to compensate the group for preparing the written reports, the group would receive double payment – payment from the hospital and from Medicare – for the same incurred cost.

      The OIG did not definitively state that free written reports for non-Medicare patients would not constitute remuneration to the hospital; however, it concluded that such an arrangement presents a low risk under the anti-kickback statute.  First, preparation of the free reports, like certain other services provided by hospital-based physicians under exclusive arrangements, appears to be a reasonable and limited service that directly relates to the professional radiology services provided by the group at the hospital.  Second, the arrangement is unlikely to result in overutilization because the group's ability to generate additional Medicare billings to recoup the costs it incurs for the written reports for non-Medicare beneficiaries provided to the hospital is limited by the nature of the hospital-based specialty.

      Read the entire Advisory Opinion 07-19.

      If you have questions about this opinion or how it may effect your healthcare organization, please contact Kevin Woodhouse or Lisa Gethers.