OIG Reaffirms Approval of Free Pre-Authorization Services Arrangement by Radiology Group


By Adrienne Dresevic, Esq. and Carey F. Kalmowitz, Esq.

October 2012—On August 30, 2012, the Office of Inspector General (OIG) posted Advisory Opinion 12-10, approving a proposal by a radiology group to offer free insurance pre-authorization services to patients and referring physicians. Advisory Opinion 12-10 confirms the position established by earlier OIG opinions on the issue – namely, it notes that any relationship wherein a party provides free services that may benefit a potential referral source is suspect, but can be acceptable when developed in good faith and constructed with appropriate safeguards.

An explanation and analysis of the initial OIG opinion on the issue, Advisory Opinion 10-04 (responding to several imaging providers), was published in the June 2010 edition of Link (available here), and highlighted the importance of careful regulatory review of free pre-authorization service arrangements. Subsequent opinions by the OIG approved of similar arrangements, with the caveat that approval of such arrangements depends on the lack of intent to induce referrals and the presence of appropriate safeguards to minimize the risk of violating the Anti-Kickback Statute (AKS) (see Advisory Opinions 10-13 and 10-20).

Advisory Opinion 12-10 reviewed the Pre-Authorization Arrangement of a radiology group with a similar structure as those arrangements previously approved by the OIG. The radiology group proposed to obtain any pre-authorization required from insurers for the group’s services at no charge, as long as it was not prohibited by the insurer in its contract with the provider. Advisory Opinion 12-10 notes that the arrangement on its face would be suspect if it lacked specific mitigating characteristics. Four such factors, discussed in the previous OIG opinions on the issue, are cited in Advisory Opinion 12-10.

  1. The arrangement does not target any particular referring physicians, and is made available to all patients and physicians without regard to the volume or value of past or expected referrals. Indeed, Advisory Opinion 12-10 notes that in most cases the radiology group will not know whether a particular physician in one case might be required to pre-authorize, and so the group (through the arrangement) would only “unwittingly” relieve these physicians of their preauthorization responsibilities.
  2. The arrangement contains safeguards that lower the risk of fraud and abuse. Specifically, there are no ancillary agreements with physicians that would otherwise reward referrals, and no assurances are made that pre-authorization approval will be obtained. Additionally, ensuring that the arrangement complies with all state and federal privacy laws further reduces the likelihood of an AKS violation.
  3. The arrangement is transparent by ensuring that representatives of the radiology group identify themselves as such to insurers, and by making available to physicians the information submitted for pre-approval. In this scenario, the role played by the radiology group is not one readily capable of influencing referral decisions (as compared to discharge planners, home care coordinators, or home care liaisons).
  4. Perhaps most importantly, the radiology group has a legitimate business interest in offering the services in the proposed arrangement. Advisory Opinion 12-10 recognizes and emphasizes the importance of a legitimate business interest outside of influencing the volume or value of referrals. In the Free Pre-Authorization Services Arrangement proposed by the radiology group, the OIG explicitly identified the legitimate business interest – the fact that the radiology group would not be paid for procedures where pre-approval was required and not obtained – that was completely separate and apart from any scheme to influence referral sources.

Again in Advisory Opinion 12-10, the OIG noted that the opinion does not imply a requirement that free pre-authorization services be offered. Importantly, as in past OIG opinions, Advisory Opinion 12-10 reiterates its position that this type of arrangement is suspect because of its potential for AKS abuses. Thus, any imaging providers who offer or are contemplating offering pre-authorization services should ensure that such arrangements are reviewed for appropriate safeguards to reduce the risk of violating the AKS.


Adrienne Dresevic, Esq. graduated Magna Cum Laude from Wayne State University Law School. Practicing healthcare law, she concentrates in Stark and fraud/abuse, representing various diagnostic imaging providers, eg, IDTFs, mobile leasing entities, and radiology and multi-specialty group practices.

Carey F. Kalmowitz, Esq. graduated from NYU Law School. Practicing healthcare law, he concentrates on corporate and financial aspects, eg, structuring physician group practice transactions; diagnostic imaging and ancillary services, IDTFs, provider acquisitions, CON, compliance, and Stark and fraud/abuse.

The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.

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