OIG Legal Analysis Considers Allowing Hospitals to Subsidize Malpractice Premiums

     The Office of the Inspector General (OIG) and their Chief Counsel, is taking serious look at a longstanding policy against hospitals paying part or all of the malpractice insurance premiums of affiliated physicians.  Due in part to Morris’s legal analysis, an unnamed hospital chain may be able to subsidize premiums for their doctors.  The hospital chain includes hospitals in West Virginia, Florida, Texas and Nevada.

     Morris’ letter to the hospital chain indicates that the OIG has concerns that malpractice premium subsidies paid to, or on behalf of, potential referral sources, including hospital medical staff, may be suspect under the anti-kickback statute.  The OIG is aware of the current disruption in the medical malpractice liability insurance markets and they appreciate the potential serious effects on federal health care beneficiaries’ access to, and on the quality of, medical care if physicians curtail or cease to practice as a result of increased costs or access to malpractice insurance.  The arrangements proposed by the hospital chain include several safeguards:

1. The arrangements will be provided on an interim basis for a fixed period in state experiencing severe access or affordability problems;
2. In states where the assistance is offered, only current active medical staff will be eligible;
3. The criteria for receiving assistance will not be related to the volume or value of referrals or other business generated;
4. Each physician receiving assistance will pay at least as much as he or she currently pays for malpractice insurance;
5. Participating physicians will be required to perform services the hospital and give up certain litigation rights;
6. Insurance assistance will not be available regardless of the location at which the physicians provide the services, including, but not limited to other hospitals.

     The OIG has only limited jurisdiction with respect to anti-kickback and Stark statutes and the issue has been referred to the Centers for Medicare and Medicaid Services and the Dept. of Justice for additional input.  Any new developments on this issue will be provided to AMC/NOMA members as it becomes available.  For a complete copy of the OIG letter go to their web site at www.oig.hhs.gov