Analysis of OIG Advisory Opinion No. 22-17
On September 6, 2022, the Health and Human Services Office of Inspector General (OIG) released Advisory Opinion No. 22-17. The OIG analyzed a proposal for a health system to forgive debt owed by a Federally Qualified Health Center (FQHC) Look-Alike clinic as part of a restructuring of a loan, office lease, and services agreement between the parties. The OIG concluded that the agreement did not violate the Anti-Kickback Statute (AKS) and posed a low risk for fraud and abuse. However, the OIG also determined that the AKS would not be applicable in this situation since the statute only applies to full FQHC grantees. This Opinion is significant for several programs around the country as many FQHC Look-Alikes struggle with financial viability and may never become a full FQHC grantee, relying more heavily on local health systems that provide support.
Restructuring Collaborative Agreement
The health system serves a five-county service area with designated medically underserved areas, shortage areas, and populations. The health system supported the establishment of the Clinic as a Free Clinic in 2015 and later as an FQHC Look-Alike in 2017 to address the shortage of primary care services and reduce emergency department overuse. The health system supported the Clinic’s development through a loan, lease agreement for medical office space, and master services agreement for administrative and medical services, but after four years of operation, the Clinic struggled with making payments. The health system offered to forgive the debt on the loan, enter into a new lease for medical office space and equipment, and increase the scope of services provided to the Clinic to help with its financial stability. New agreements would not restrict the Clinic from referring patients to other providers, be for a fixed sum, be medical or clinical in nature, and contribute to the Clinic’s ability to serve a medically underserved population. The Clinic would re-evaluate the agreements annually and provide notice to patients of their freedom to choose any provider or supplier.
OIG Findings
In OIG Advisory Opinion 22-17, the proposed restructuring between a health system and an FQHC Look-Alike involving debt forgiveness, office lease, and services agreement was assessed by the Office of Inspector General. The arrangement was found not to qualify for the AKS FQHC Safe Harbor, but the OIG concluded that it posed a low risk of fraud and abuse and would not result in an enforcement action under the Anti-Kickback Statute. This was due to factors such as the shared mission of the health system and the clinic to improve access to healthcare, limited referral restrictions, government oversight through HRSA, and the alignment of the parties’ shared mission and history. The OIG determined that the acquisition of grants, below-market value services, and other forms of support from healthcare providers or systems can play a crucial role in safeguarding the limited resources of a Health Center and enhancing access to healthcare services in the community.
Please contact Burrows Consulting for more information regarding this analysis.
