Hospitals Permitted to Pay for Transition Care Services

Article by: Elizabeth E. Hogue, Esq

Hospitals are increasingly aware of the need to prevent readmissions. Although there is limited data regarding what works and what does not, it appears that certain types of care transition services; such as follow-up regarding prescription medications, appointments with physicians following discharge, etc.; may be helpful. The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services addressed the issue of the provision of these services to hospitals in Advisory Opinion No. 13-10, issued on August 9, 2013. The Opinion addresses the issue of whether a wholly-owned subsidiary of a major pharmaceutical manufacturer can assist hospitals to better coordinate care, help patients adhere to their hospital discharge plans, and avoid preventable hospital readmissions.

Specifically, the vendor will sell hospitals a package of services designed to help them avoid payment reductions associated with excess hospital readmissions. The services will be marketed to hospitals directly and through group purchasing organizations authorized to act as purchasing agents for hospitals. Agreements to purchase the services will be in writing, signed by both the vendor and hospitals, and have a term of not less than one year. The Agreement will also spell out all of the services that the vendor will provide to hospitals. The vendor will charge hospitals standard fees at fair market value. In other words, agreements between the vendor and hospitals will meet the requirements of the personal services and management contracts safe harbor or exception under the federal anti-kickback statute.

Hospitals will be able to purchase services from the vendor on a patient-by-patient basis that they expect will help reduce preventable readmission rates. Discharge planners/case managers will identify patients who may benefit from services offered by the vendor. If patients elect to receive the services, discharge planners/case managers will enter their discharge plans into the vendor’s software system.

Participating patients will have access for a twelve-hour period each day to a patient liaison who will help them understand and follow their discharge plans. For the remaining twelve-hour period each day then patient liaisons are unavailable, participating patients will be automatically transferred to a twenty-four-hour nurse hotline. Patient liaisons, who are not necessarily clinicians, will contact participating patients within forty-eight hours of discharge to ensure that they understand and will follow discharge plans.

Thereafter, patient liaisons will contact participating patients daily or at intervals selected by contracting hospitals to administer questionnaires about participating patients’ health and compliance with discharge plans. Participating patients may also answer questionnaires on the internet or through telephone interactive voice response systems. Patient liaisons will ask participating patients about medication compliance, remind them about refills, and add newly-prescribed medication to their electronic health records. Patient liaisons may also assist participating patients with various tasks, such as scheduling follow-up appointments, reminding them about scheduled appointments or helping them obtain transportation at participating patients’ own cost, providing participating patients with unbranded educational materials intended for general audiences, and providing updates to participating patients’ caregivers and primary care providers. Reports will be provided to hospitals regarding patients’ medication adherence, post-discharge physician appointment completion, readmission rates, demographics, readmitting hospitals, and secondary diagnoses.

Fees charged by the vendor for these services will include an initial flat fee for implementation services. The vendor will also charge a per-patient annual fee. Hospitals may also request additional services for which the vendor would charge separate or additional fees, based on an hourly basis plus expenses and a reasonable profit margin.

The OIG reviewed the above and concluded that the proposed arrangement is unlikely to violate the federal anti-kickback statute or to trigger the imposition of civil money penalties for the following reasons:

The arrangement is unlikely to lead to increased costs or overutilization of federal reimbursable services.
The proposed arrangement is unlikely to interfere with clinical decision making.
The vendor will implement a number of safeguards to prevent the proposed arrangement from being used to increase drug sales by the parent pharmaceutical company.
The proposed arrangement is unlikely to result in inappropriate patient steering.
Participating patients will designate providers, practitioners, and suppliers that he/she wishes to receive information associated with the services provided by vendor.
The proposed arrangements will not involve providing any rewards or incentives to participating patients that would likely influence their selection of providers, practitioners, or suppliers.

Based upon this Advisory Opinion, it appears that hospitals may pay outside vendors for services related to care transitions so long as the criteria described above are met. As long as the same safeguards are in place, hospitals may pay post-acute providers for the same types of services.

Readmission rates must be reduced and controlled. Hospitals must engage in activities to accomplish this goal and clearly need capable partners.

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