On August 4, 2011, HHS’s Office of the Inspector General issued an advisory opinion concluding that a proposed arrangement between a supplier of medical supplies and equipment and a skilled nursing facility could violate the federal Anti-Kickback Statute.

• The supplier would bill Medicare Part B for products eligible for Part B reimbursement and bill the SNF for products and services not eligible for Part B reimbursement.
• The supplier would bill the SNF for non-Part B products below the supplier’s cost.
• The Part B payments received by the supplier would both (i) cover the supplier’s cost in delivering any services needed in conjunction with the Part B Products, and (ii) make up for  the supplier’s losses incurred in providing non-Part B products below its cost.

• The arrangement puts the SNF in a position to direct the Part B products business to the Supplier.
• There is a bad connection between the below-cost pricing offered for non-Part B products and the SNF’s related referral of business for Part B products.
• The supplier and the SNF have a motive to trade the below-cost pricing for non-Part B products for referrals of  the Part B products business.
• It makes no difference if the Supplier provides non-Part B Products through its original company or forms a new one to do it. The same concerns apply.

For more information, contact your Taft health and life sciences attorney.