HHS-OIG Issues Favorable Advisory Opinion Regarding Healthcare Referral Service

HHS-OIG Advisory Opinion 26-18: Background on the Healthcare Referral Service 

HHS-OIG recently released Advisory Opinion No. 26-18, a favorable opinion regarding a proposed referral service (the Hearing Referral Service) that would be operated by a company (the Requestor) whose parent company manufactures an ear, nose, and throat medical device (the Hearing System). The Hearing System combines three assessment and treatment tools into one hand-held portable system: (1) a high-definition digital otoscope for examination of the ear canal and eardrum; (2) a microsuction pump for ear wax removal; and (3) a hearing check program that allows a primary care clinician to perform an initial assessment of potential hearing loss. 

Under the proposed arrangement, primary care clinicians would pay a set subscription fee to the Requestor for use of the Hearing System when treating patients. When a hearing check performed through the Hearing System produces results outside of normal hearing ranges, a software algorithm triggers an option for the primary care clinician to refer the patient to a specialist. If the clinician selects the referral option and the patient consents, the referral is transmitted to a licensed audiologist employed by the Requestor (the Referral Coordinator) who validates the referral using established criteria before forwarding the patient to a participating hearing professionals group (a Hearing Professionals Group) for specialized audiological care. 

Each participating Hearing Professionals Group would pay an annual fee, based on the estimated cost of operating the Hearing Referral Service, to participate in the service. The annual fee would be set in advance and paid regardless of the number of referrals a Hearing Professionals Group receives and regardless of whether any patients receive audiological care from the Hearing Professionals Group as a result of a referral. If more than one Hearing Professionals Group participates, the annual fee would be apportioned equally based on the number of hearing professionals affiliated with each group. 

The Requestor certified that it would implement an annual reconciliation process (the True-Up) to ensure that the annual fee reflects the actual operating costs of the Hearing Referral Service, including software maintenance, labor costs, and administrative overhead. The True-Up would be based on aggregate operating costs and would not be calculated or adjusted based on the number of patient referrals to any Hearing Professionals Group. 

The Requestor further certified that it would neither offer subscription fee discounts contingent on primary care clinicians using the referral option nor impose exclusivity requirements or minimum referral expectations. Additionally, the Requestor would not impose requirements on how hearing professionals furnish audiological care, such as clinical protocols, restrictions on products used (such as the brand of hearing aids), or pricing demands. 

Notably, HHS-OIG was not asked to opine on, and expressed no opinion regarding, the financial arrangement between the Requestor and the primary care clinicians. The advisory opinion addresses only the fees paid by Hearing Professionals Groups to participate in the Hearing Referral Service. 

HHS-OIG’s Findings Under the Anti-Kickback Statute Referral Services Safe Harbor 

HHS-OIG concluded that the proposed arrangement would implicate the AKS because Hearing Professionals Groups would pay fees to the Requestor and, in exchange, receive patient referrals for services reimbursable by federal healthcare programs. However, HHS-OIG determined that the arrangement would be protected by the referral services safe harbor at 42 C.F.R. § 1001.952(f) because it satisfied all of the safe harbor’s conditions. Specifically, HHS-OIG relied on the Requestor’s certifications that: 

• The criteria for a Hearing Professionals Group to participate in the Hearing Referral Service would be applied equally to all groups seeking to join, including requirements for licensure, credentialing, and removal of professionals for noncompliance, malpractice, quality concerns, or exclusion from federal healthcare programs. 
• Any payment a Hearing Professionals Group would make to the Hearing Referral Service would be assessed equally against and collected equally from all participating groups. Fees would be based only on the cost of operating the Hearing Referral Service and would bear no relationship to the volume or value of referrals or other business generated by either party for which payment may be made under federal healthcare programs. The annual True-Up process would ensure ongoing alignment between fees and actual operating costs. 
• The Hearing Referral Service would not impose requirements on the manner in which a Hearing Professionals Group provides services to referred patients, preserving full clinical autonomy for participating hearing professionals. 
• The Requestor would make all disclosures required under the safe harbor to each person seeking a referral, including the manner in which it selects participants, whether the participant has paid a fee, the manner in which it selects a particular participant for a given referral, the nature of the relationship between the Requestor and the participants, and any restrictions that would exclude a participant. Each disclosure would be maintained in a written record signed by the person seeking the referral. 

Key Takeaways for Healthcare Referral Service Arrangements 

Advisory Opinion No. 26-18 is significant because it provides a clear example of HHS-OIG approving a referral service arrangement that satisfies all of the criteria under the safe harbor at 42 C.F.R. § 1001.952(f). The opinion offers a roadmap for entities operating or considering similar referral models and emphasizes the importance of implementing safeguards that protect providers’ clinical independence and decision-making to the greatest extent possible.