OIG concludes investigation of reporting at rural hospital. Source: The American College of Radiology

The U.S Department of Health and Human Services' Office of Inspector General (OIG) on Jan. 3 issued an advisory opinion and decided not to penalize a small, rural, critical access hospital in a medically underserved area for receiving written reports without charge from the radiology group practice that holds an exclusive contract at the hospital.

The ACR believes the OIG’s Advisory Opinion 07-19 could have a dramatic impact on hospital-based radiologists and their practices across the United States.

The hospital certified the facts to the OIG: Via teleradiology, the hospital sends digital images of hospital patients to the contracted radiology group to interpret. The group interprets the images, prepares a written report and bills third-party payors, including Medicare and Medicaid, for its services.

Under the arrangement with the hospital, the radiology group puts its reports in a patient’s medical record that the hospital maintains, without charge to the hospital. The hospital disclosed to the OIG that the radiologists had requested a per-report payment. The OIG did not approach that issue in their Advisory Opinon.

Instead, the hospital wanted to know whether it risked being excluded from participating in Medicare and/or incurring anti-kickback civil penalties by accepting free written reports from the radiology group in exchange for referring federal-pay patients to the group through the exclusive contract.

In the Advisory Opinion, the OIG noted that the arrangement could implicate the kickback law because hospital-based radiologists and hospitals exchange something of value: written reports and patient referrals. However, the OIG concluded that because an arrangement has potential for anti-kickback liability, it does not translate into targeting it for sanctions. The OIG stated that Medicare payment rules do not obligate the hospital to incur the costs of preparing a written report of radiology services rendered to its patients.

According to the OIG, the group properly assumed the cost of preparing, or dictating and transcribing, reports. The OIG stated that preparing reports is encompassed within the covered Medicare Part B professional service, and had the hospital reimbursed the radiology group for such costs, the group would have received “double payment” for the same costs — from the hospital and from Medicare. Thus, OIG found that the hospital did not receive any illegal “remuneration” that would violate the anti-kickback statute. 

The OIG also identified the radiologists’ exclusive contract as another reason for not penalizing the arrangement. The OIG concluded that giving the hospital free radiology reports “appears to be a reasonable and limited service” directly related to the group’s exclusive deal with the hospital. The ACR said that statement could have strong implications for hospital-based radiology practices.