On Thursday, March 22, the U.S. Office of Personnel Management (OPM) and America’s Health Insurance Plans (AHIP) hosted the annual Federal Employees Health Benefits (FEHB) Program Carrier Conference. The conference featured OPM’s policy and contracting priorities for the FEHB Program for 2018. It followed and discussed OPM’s FEHB Program Call Letter (available here), which provides a high-level outline of its intentions for contract negotiations for plan year 2019.

This year’s Carrier Conference included three key highlights for FEHB carriers:

  1. OPM will re-open the Indemnity Benefit Plan to contract with either a nationwide carrier or a consortium of carriers to begin offering coverage in 2020.
  2. OPM is seeking legislative changes to apply the Anti-Kickback Statute to the FEHB Program.
  3. OPM is interested in Plans improving value by offering Accountable Care Organization or other innovative models


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The Office of the Inspector General of the Department of Health and Human Services (OIG) last week replaced a 20-year old policy statement, and issued guidance on the criteria the agency will use to evaluate whether to exclude certain individuals and entities from billing or “participation in” Federal health programs under its permissive exclusion authority. The new guidelines supersede and replace the OIG’s December 24, 1997 policy statement and set forth “non-binding” criteria that the OIG may consider in exercising this authority under circumstances involving fraud, kickbacks and other prohibited conduct. The newly-memorialized policy is yet another effort by the agency to encourage healthcare providers to implement robust compliance mechanisms that can timely identify and voluntarily self-disclose to the government any unlawful conduct.

Under Sections 1128(b)(1)-(b)(15) of the Social Security Act (the “Act”), the Secretary, by delegation to the OIG, has discretion to exclude individuals and entities based on a number of grounds. This so-called “permissive exclusion” authority grants significant discretion to the OIG.  The new policy provides guidelines for permissive exclusions that are based on Section 1128(b)(7) of the Act, which permits the OIG to exclude persons from participation in any Federal health care program if the OIG determines that the individual or the entity has engages in fraud, kickbacks and other prohibited activities.


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On February 8, 2016, the United States District Court in the Southern District of Georgia approved the settlement agreement ending a whistleblower lawsuit initiated on March 9, 2011 against Memorial Health University Medical Center (“Memorial Medical Center”) and three affiliated entities in a case that highlights the Department of Justice’s (“DOJ”) vigorous scrutiny of physician compensation arrangements. The non-profit hospital, based in Savannah, Georgia, agreed to pay $9.89 million with $2.29 million going to the relator, the hospital’s former president and CEO, who initiated the action under the qui tam provision of the False Claims Act (“FCA”).  The settlement is the largest civil healthcare fraud recovery recorded by the U.S. Attorney’s Office for the Southern District of Georgia.

The underlying lawsuit alleged that Memorial Medical Center acquired a physician practice for compensation in excess of fair market value (“FMV”), and that the acquisition resulted in a projected financial loss of approximately $670,000 per year over a five-year period.  According to the complaint, the defendant hospital engaged in a complex scheme to compensate its employed and contracted physicians at rates above FMV in return for the promise of patient referrals–thereby violating both the federal Anti-Kickback Statute (“AKS”) and the physician self-referral law (“Stark Law”), and tainting Medicare and Medicaid payments.


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