Using OIG Advisory Opinions to Level Playing Field

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TWICE DURING THE PAST 12 MONTHS, the Office of the Inspector General (OIG) has issued a negative opinion on a marketplace arrangement between a laboratory company and a physician group. The most recent was OIG Advisory Opinion 05-08, released on June 13, 2005 and responding to a request to evaluate how a lab might reimburse a physician for phlebotomy services performed by his office. (See pages 5-6.)

The earlier opinion was OIG Advisory Opinion 04-17. It was released on December 17, 2004 and addressed a request to evaluate a model of “anatomic pathology laboratory condominium” services between a laboratory company and a physician group. (See TDR, January 3, 2005.)

Having carefully read both opinions, I believe they share something in common. I believe both opinions were requested by laboratory companies that actually wanted the OIG to issue a negative opinion in response to the business scenario described in their original request letters. In both cases, if the requesting lab company got a negative advisory opinion from the OIG, that opinion, now on public record, would inhibit laboratory competitors from engaging overtly and aggressively in that type of behavior.

I consider this to be an interesting strategy for labs that want to “level the field” against competitors. It gives them a way to respond, legally, when they observe a competing laboratory offering physicians inducements, benefits, or business arrangements that can be argued to be in violation of Medicare statutes. A negative OIG opinion on that particular marketing practice certainly gives the requesting laboratory a credible document to show physicians and educate them about the compliance risks they assume should they participate in an arrangement that the OIG has deemed to be in violation of Medicare laws.

Since we’ve seen two of these types of advisory opinions issued in the past 12 months by the OIG, it may be that an increasing number of lab- oratory executives and pathologists are willing to use this approach to counter what they consider egregious marketing practices by laboratory competitors. In this sense, labs requesting these opinions are taking a proactive approach to Medicare compliance. They are initiating regulatory rulings on abusive marketing practices in the lab industry.

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