OIG Issues Advisory Opinion Allowing Non-Profit to Bill Medicaid While Providing the Same Services for Free to Uninsured or Underinsured Children

On October 15, 2013, the Office of Inspector General for the U.S. Department of Human Services (“OIG”) issued an Advisory Opinion favorable to a non-profit health services organization’s (“Requestor’s”) proposal to provide free dental screenings and services to uninsured children while billing Medicaid for the same services provided to children who were Medicaid beneficiaries.

The Requestor, a wholly owned subsidiary of a nationwide health care system, has an existing program that uses mobile dental buses to provide free dental services to financially needy children. Historically, the children receiving the Requestor’s services were mostly Medicaid Beneficiaries as well as uninsured or underinsured children without dental coverage.

Previously, the Requestor had provided the services to children for free without seeking reimbursement for Medicaid or any other governmental programs. Under the Requestor’s proposal, the Requestor would continue to provide free services to the uninsured or underinsured children while beginning to bill Medicaid for the dental services provided to Medicaid beneficiaries. In particular, it sought guidance from the OIG on whether its provision of free services would mean its bills to Medicaid for the same dental services would be “substantially in excess” of its “usual charges,” leading to possible permissive exclusion under Section 1128(b)(6) of the Social Security Act.

The OIG stated that it was the agency’s longstanding “enforcement policy” that a provider or supplier calculating its “usual charges” did not need to consider the free or substantially reduced charges for services it provided to “uninsured or underinsured persons who were responsible for the charges.” Furthermore, the OIG indicated that it had never attempted to exclude a provider or supplier because of services furnished for free or at substantially reduced charges to uninsured or underinsured individuals. In the case of the Requestor, even though it would bill Medicaid for the services, because the free services were provided to uninsured or underinsured children whose families would otherwise be responsible for the services, the enforcement policy would apply and OIG would not seek exclusion.

The Requestor also sought guidance on whether the proposal would violate the Anti-Kickback Statute (AKS). However, the OIG indicated that because the Requestor would not provide the free services to Medicaid beneficiaries, there was no remuneration provided for services or items payable by the program and, therefore, the AKS was not implicated.

For more information regarding this and related issues, please contact Adrienne Dresevic, Esq., or Carey Kalmowitz, Esq. at (248) 996-8510, or visit the HLP website.