Home
/ Insights
/ Articles
/ New OIG Compliance Program Guidance for Nursing Facilities

New OIG Compliance Program Guidance for Nursing Facilities

Anti-Kickback Statute Compliance Considerations

This FTI Consulting article was written in partnership with Kathleen A. Fitzgerald, J.D., CHC, CHPC, Managing Director, FTI Consulting; Edward G. Case, Esq., Partner, Harter Secrest & Emery LLP; and Kristian D. Walker, Esq.; Associate, Harter Secrest & Emery LLP, and originally published with the American Health Law Association.

On November 20, 2024—just in time for the season of giving—the Office of Inspector General for the U.S. Department of Health and Human Services (“OIG”) issued new compliance program guidance specifically targeted at Nursing Facilities (“NFs”). This Nursing Facility Industry Segment-Specific Compliance Program Guidance¹ (“NF ICPG”) updates, but does not replace, the OIG’s prior guidance issued in 2000² and in 2008.³ In its NF ICPG, the OIG noted that these guidance documents would still be available on its website as archived resources that entities may want to consult as needed.⁴

While written primarily for NF leaders and compliance professionals, the NF ICPG is recommended reading for compliance officers and attorneys who work with any entity that does business with or has referral relationships with NFs, as well as other types of long-term care providers.⁵

This article will:

Provide a brief overview of the more notable features of the new guidance;
Describe certain transactions and relationships between NFs, patients and other health care providers, suppliers, and vendors that the guidance characterized as “potentially problematic” under the Federal Anti-Kickback Statute (“AKS”) and related principles; and,
Provide practical advice for NF leaders, compliance officers, and attorneys interested in mitigating compliance risk under the AKS and related principles.

NF ICPG Overview

The NF ICPG is meant to be read in tandem with the OIG’s General Compliance Program Guidance (“GCPG”) issued last year.⁶ While the GCPG generally addressed compliance programmatic goals for federal health care program (“FHCP”) participants and stakeholders, the NF ICPG specifically addresses compliance risk areas for NFs with potential risk mitigation measures that organizations should consider. The NF ICPG also includes a Nursing Facility ICPG Supplement: Reimbursement Overview⁷ which summarizes Medicare and Medicaid reimbursement principles for NFs and should be an invaluable quick reference guide for anyone who needs to understand how FHCPs pay NFs.

The stated goals of the NF ICPG are to: (1) reduce fraud, waste, and abuse; (2) promote cost-effective and quality care; (3) enhance the effectiveness of providers’ operations; and (4) propel improvements in compliance, quality of care, and resident safety within NFs.⁸ Among the major sections of the NF ICPG, Section II (“Compliance Risk Areas and Recommendations for Mitigation”) addresses four key compliance risk areas: (A) Quality of Care and Quality of Life; (B) Medicare and Medicaid Billing Requirements; (C) The AKS; and (D) Other Risk Areas (e.g., Related Party Transactions, Physician Self-Referral Law (Stark Law), Anti-Supplementation, HIPAA Privacy, Security and Breach Notification, and Civil Rights).⁹

Like the GCPG, the NF ICPG is well organized and presented in an interactive format, with active links to helpful resources. Gone are the days when compliance professionals and attorneys had to strain their eyes sifting through .pdf reprints of Federal Register notices to extract the OIG’s compliance wisdom.

Legal Significance, Relationship to CMS Requirements of Participation

The new guidance represents the OIG’s most current recommendations for structuring and operating an effective NF compliance program. However, the OIG emphasized that the NF ICPG is “voluntary” and “nonbinding” and not meant to be all-inclusive.¹⁰ It also clarified the relationship between the NF ICPG and the Centers for Medicare & Medicaid Services (“CMS”) Compliance and Ethics Program Requirements of Participation in the Medicare and Medicaid programs (“Compliance ROPs”) which require NFs to operate a compliance and ethics program that effectively prevents and detects criminal, civil and administrative violations, and promotes quality of care.¹¹ The NF ICPG is meant to “complement” the Compliance ROPs.¹² Thus, while it would be prudent for an NF to review the NF ICPG and consider its recommendations carefully, it need not adopt all the NF ICPG recommendations to meet the Compliance ROPs.

Collaboration and Integration Between Compliance and Quality Programs

The NF ICPG’s discussion of quality of care (Section II.A.) is longer and more detailed than it was in the 2000 Compliance Guidance for NFs or the 2008 Supplemental Compliance Guidance for NFs. In the NF ICPG, the OIG explained that it considers compliance and quality to be inextricably linked and envisions a strong and active role for NF compliance programs in monitoring the quality of NF care. The OIG recommends “collaboration and integration of efforts between compliance and quality programs to monitor nursing facilities’ compliance with laws and regulations that govern health and safety standards, resident care, and quality of life”, and provides specific descriptions of the roles compliance leadership and staff should play in promoting quality and mitigating the risk of substandard care.¹³

The NF ICPG also includes a detailed description of the role the compliance committee should play in quality oversight and provides examples of the types of quality and safety data it should regularly review, including State and Federal survey results, resident outcomes and care delivery, events reporting, and performance on CMS quality indicators.¹⁴

This approach is significantly different from the 2000 NF Compliance Guidance which stated that an NF’s quality committee was “best suited” to develop and monitor measurable quality criteria, and the 2008 NF Supplemental Compliance Guidance, which spoke generally about what the NF should do.¹⁵ The OIG acknowledged that the new recommendations “may extend beyond traditional compliance program oversight and require clinical or other specialized expertise and assessment.”¹⁶ For NFs that have not integrated their compliance and quality functions, or do not have compliance teams with clinical expertise, these recommendations are expected to generate robust discussion.

The AKS and Related Concerns

Section II.C. of the NF ICPG specifically focuses on the AKS¹⁷ which prohibits, in pertinent part, the knowing and willful offer, solicitation or exchange of anything of value in consideration for referrals for items or services paid for by FHCPs.¹⁸ Consistent with the statute, the OIG defined “referral” broadly to include “referring, arranging for, purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing or ordering.”¹⁹ It noted that NFs obtain referrals from physicians and other health care professionals, hospitals and hospital discharge planners, hospices, home health agencies, other NFs, FHCPs, and FHCP enrollees.²⁰ Likewise, NFs can refer residents to, or order items or services from, durable medical equipment (“DME”) suppliers, laboratories, diagnostic testing facilities, long term care pharmacies, hospitals, physicians, other NFs, and physical, occupational, and speech therapists.²¹

In a standalone header, the OIG warned that “[a]ll referral relationships call for vigilance under the [AKS]” and recommended that any such arrangements be structured to fit squarely within a statutory exception or regulatory safe harbor.²² “Statutory exceptions” refer to specific practices defined in the AKS to which the broad prohibition against providing remuneration to referral sources does not apply. They include, without limitation, properly disclosed and reported discounts obtained by FHCP providers from vendors, amounts paid by a provider to employees engaged in the provision of FHCP covered items and services, and fixed amounts or percentages paid by vendors to purchase agents who represent FHCP providers.²³ “Safe harbors” are regulations the OIG has promulgated pursuant to its rule making authority that specify certain practices that are not treated as criminal offenses under the AKS and therefore do not serve as a basis for exclusion.²⁴ The statutory exceptions and safe harbors are important because they essentially immunize certain payment and business arrangements that would otherwise be implicated by the AKS from criminal and civil prosecution under the statute. Violations of the AKS can carry criminal penalties and administrative sanctions including fines, imprisonment, and exclusion from participation in FHCPs.²⁵

Many of the kickback risk area examples the OIG provided will be familiar to those who still consult the 2000 and 2008 NF Compliance Guidance materials. They can be divided into six general categories:

Arrangements Where the NF or NF Decisionmakers Receive Goods or Services for Free or Below Fair Market Value (“FMV”) from Ancillary Service Providers and Suppliers Seeking Orders and Referrals. This would include:

Infection control, chart review, or other clinical or administrative services supplied by laboratories, or other suppliers or providers, for free or below FMV;
Equipment, computers, or software applications offered for free by long-term care pharmacies or laboratories;
Free or deeply discounted DME or supplies offered by DME suppliers for residents covered by the SNF Part A benefit;
Arrangements where a long-term care pharmacy agrees to provide free or below FMV consultant pharmacist services, medication management, equipment or supplies to the NF; or,
Financial relationships between the NF pharmacist or NF prescribers and long-term care pharmacies or drug manufacturers that could create conflicts of interest, skew clinical decision making and lead to overprescribing, inappropriate prescribing, prescription switching, or steering.²⁶

Arrangements Where Remuneration is Provided to the NF by Other Providers Seeking Referrals. This could include:

A hospice registered nurse providing nursing services to non-hospice patients of the NF;
A hospital providing free or below FMV goods, services, staff, or supplies to the NF; or,
A hospital making payments to an NF to hold or reserve beds where the payment is excessive, is for more beds than the hospital needs, is for beds already occupied by an NF patient, or does not comply with CMS bed reserve or bed hold requirements.^{27, 28}

Arrangements Where the NF Provides Goods, Services, Gifts, or Excessive Compensation to Actual or Potential Sources of Referrals for Free or Less than FMV. Examples the OIG listed include:

Gifts to hospital discharge planners (such as free meals or tickets to sporting events);
Free (or below FMV) items or services to a hospital;
An NF extending “charity care” to certain patients as a favor to a hospital; and
An NF contracting with referring physicians for duplicative, unnecessary, or overpriced medical director or quality assurance services.²⁹

Patient Inducements: Free or below-market benefits such as gift cards or copayment waivers provided to beneficiaries or their family members.³⁰

Swapping: Contracts or understandings where the NF receives deep discounts from laboratory, DME, or other suppliers for services and supplies that are included in the NF Part A per diem reimbursement, in exchange for the NF’s referring FHCP patients to the supplier for Part B covered items and services that the supplier can bill directly.³¹

Supplementation: Where an NF charges or accepts from Medicare or Medicaid enrollees or someone else (such as family members or discharging hospitals) any amount in excess of the Medicare or Medicaid cost sharing enrollees are required to pay, as a condition of accepting FHCP beneficiaries or expediting their admission.³²

Practical Considerations and Recommendations

The November release of the NF ICPG is a gift to compliance officers and teams developing their 2025 work plans. NF compliance programs should make a compliance New Year’s resolution to include time in their annual work plans for review of the NF ICPG and for discussion about implementing its recommendations. Organizations that have not already integrated their compliance and quality programs should consider doing so, consistent with the OIG’s recommendations in the NF ICPG.

To assess risk under the AKS, compliance teams should work with clinical and administrative leadership, ordering providers, and procurement departments to undertake a wholistic and comprehensive review of their relationships with actual and potential referral sources and recipients. A workable approach would include, without limitation, the following steps:

Inventory all existing arrangements.
Determine whether each existing arrangement was structured to be protected by an AKS exception or safe harbor such as those relating to discounts, space rental, equipment rental, personal and management services, and employment.³³
If the arrangement was protected, evaluate whether the conditions necessary for protection remain in place. For example, do the terms of signed agreements remain consistent with the way the arrangement is currently performed? Is the compensation still consistent with FMV? Are the items or services still necessary and are they actually provided? Is there appropriate documentation to support the compensation such as time logs, invoices, or packing slips?
If the arrangement was not structured to comply with an exception or safe harbor, ask relevant questions to evaluate whether it has the potential to violate the AKS: The OIG has provided a helpful list of relevant questions in the NF ICPG and the GCPG. There is also a nursing home-specific list of considerations in the OIG’s 2008 compliance guidance.³⁴
Evaluate whether the arrangement could be modified to bring it into compliance with an exception or safe harbor. This could include steps like adjusting the compensation to align with FMV or revising the terms to reflect the current need for services or the way the parties are currently performing the arrangement.
In situations where one party is providing free services to a source of FHCP referrals, consider whether changes can be made to the arrangement to comply with an available exception or safe harbor. For example, could computer equipment or chart review services provided free of charge in connection with a laboratory services agreement, be replaced with a price reduction on the purchased laboratory services that would comply with the discount safe harbor and achieve the same financial goals?
Alternatively, in-kind services provided by a hospital or hospice to the NF to facilitate safe and timely discharge could potentially be structured to meet the AKS safe harbor for care coordination arrangements to improve quality, health outcomes, and efficiency.³⁵ And, in-kind benefits provided directly to such patients may potentially be restructured to meet the safe harbor for arrangements for patient engagement and support to improve quality, health outcomes, and efficiency. ³⁶
Evaluate potential swapping concerns by scrutinizing arrangements with ancillary service providers and suppliers such as laboratories and DME suppliers to ensure the compensation paid for services procured for Part A patients is consistent with FMV and is not conditioned on or designed to induce or require referrals for services where the provider or supplier may bill FHCPs directly.
Develop or reinforce processes to screen new arrangements with potential referral sources or recipients for AKS risk. Structure new arrangements to meet all requirements set forth in an exception or safe harbor whenever possible.
Evaluate bed hold and reservation arrangements to ensure they comply with CMS requirements,³⁷ that payments are not excessive or for more beds than the hospital needs, and that they do not reserve beds already occupied by an NF patient.
Develop a robust conflict-of-interest disclosure and management structure that ensures clinical and administrative decisionmakers are required to disclose in advance any financial relationships with potential referral sources or recipients, such as long-term care pharmacies, and implement processes to manage conflicts of interest.

Conclusion

As the New Year dawns and the season of giving transitions into the season of renewal, the NF ICPG provides an invaluable tool for providers, compliance programs, and compliance professionals to renew their commitment to reducing AKS risk and promoting other key health care compliance principles.

About the Authors

Edward G. Case, Esq. – Ted is a partner in the Health Care, Higher Education and Human Services Practice Group of Harter Secrest and Emery LLP, and former Chief Compliance Officer for the University of Rochester Medical Center and Vanderbilt University Medical Center. He focuses his practice on health care regulatory issues involving Medicare, Medicaid, and health care fraud and abuse.

Kathleen A. Fitzgerald, Esq. – Kathy is a Managing Director in the Healthcare Risk Management & Advisory practice of FTI Consulting, Inc. She specializes in building and strengthening health care compliance programs and frequently serves as an Interim Chief Compliance Officer for organizations in transition.

Kristian D. Walker, Esq. – Kristian is an associate in Harter Secrest and Emery LLP’s Health Care, Higher Education and Human Services Practice Group. She advises both health care and non-health care clients on a wide range of health care compliance and regulatory issues, as well as corporate and transactional issues.

The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates or its other professionals.

FTI Consulting, Inc., including its subsidiaries and affiliates, is a consulting firm and is not a certified public accounting firm or a law firm.

FTI Consulting is an independent global business advisory firm dedicated to helping organizations manage change, mitigate risk and resolve disputes: financial, legal, operational, political and regulatory, reputational and transactional. FTI Consulting professionals, located in all major business centers throughout the world, work closely with clients to anticipate, illuminate and overcome complex business challenges and opportunities.

This article is intended for general information purposes only and should not be considered legal advice. The views expressed are the personal views of the authors and not necessarily the views of Harter Secrest & Emery LLP. The contents are neither an exhaustive discussion nor do they purport to cover all developments in the area. The reader should consult with legal counsel to determine how applicable laws and regulations apply to specific situations.

Footnotes:

1: OIG, Nursing Facility Industry Segment-Specific Compliance Program Guidance (November 20, 2024): Link.

2: Compliance Program Guidance for Nursing Facilities, 65 Fed. Reg. 14289 (March 16, 2000).

3: Supplemental Compliance Program Guidance for Nursing Facilities, 73 Fed. Reg. 56832 (September 30, 2008).

4: NF ICPG at p. 3.

5: The NF ICPG specifically applies to “a skilled nursing facility (SNF) that meets the requirements of section 1819 of the Social Security Act (the Act) (42 U.S.C. § 1395i–3), an NF that meets the requirements of section 1919 of the Act (42 U.S.C. § 1396r), and a dually certified facility; and single facilities, chains, managing and operating companies, and entities that own nursing facilities.” NF ICPG, supra note 1, User’s Guide section, at p. 1. However, the OIG encouraged long-term and post-acute care providers, such as assisted living facilities, to consider the guidance set forth in the NF ICPG when establishing and maintaining their compliance and quality programs. Id.

6: OIG, General Compliance Program Guidance (November 6, 2023), Link.

7: OIG, Nursing Facility ICPG Supplement: Reimbursement Overview (November 2024), Link.

8: NF ICPG at p. 6.

9: Id. at p.10.

10: NF ICPG, “User’s Guide”, at p. 1.

11: 42 C.F.R. Part 483, Subpart B.

12: NF ICPG at p. 7.

13: NF ICPG at pp. 6, 12.

14: Id. at p. 53.

15: See 65 Fed. Reg at 14292-14294; 73 Fed. Reg. at 56836-56839.

16: NF ICPG at p. 6.

17: 42 U.S.C. § 1320a-7b(b).

18: Id.

19: NF ICPG at p. 33.

20: Id.

21: Id.

22: Id. at p. 34 (emphasis in original).

23: See 42 USC § 1320a-7b(b)(3).

24: See 42 USC § 1320a-7b(b)(3)(E), 42 CFR § 1001.952 and GCPG at pp. 11-12. As listed in the NF ICPG, the safe harbors most applicable to NFs include: Investment interests (42 C.F.R. § 1001.952(a)); Space rental (42 C.F.R. § 1001.952(b)); Equipment rental (42 C.F.R. § 1001.952(c)); Personal services and management contracts and outcomes-based payment arrangements (42 C.F.R. § 1001.952(d)); Discounts (42 C.F.R. § 1001.952(h)); Employees (42 C.F.R. § 1001.952(i)); Managed care and risk-sharing arrangements (42 C.F.R. §§ 1001.952(m), (t), and (u)); Electronic health records items and services (42 C.F.R. § 1001.952(y)); Local transportation (42 C.F.R. § 1001.952(bb)); Care coordination and value-based arrangements (42 C.F.R. §§ 1001.952(ee), (ff), and (gg)); Arrangements for patient engagement and support to improve quality, health outcomes, and efficiency (42 C.F.R. § 1001.952(hh)); CMS-sponsored model arrangements and CMS-sponsored model patient incentives (42 C.F.R. § 1001.952(ii)); and Cybersecurity technology and related services (42 C.F.R. § 1001.952(jj)).

25: See 42 USC § 1320a-7b.

26: NF ICPG at pp. 22, 35, and 38-39.

27: Id. at p. 35.

28: CMS Bed Reserve and Bed Hold Requirements are set forth in the Provider Reimbursement Manual, Ch. 21 § 2105.3(D), Link.

29: NF ICPG at pp. 35, 37, and 39.

30: Id. at p. 35.

31: Id. at p. 36.

32: Id. at pp. 39-40, 47.

33: See note 24, supra. To the extent the arrangement is with a physician, the NF should also evaluate whether it requires and meets a Physician Self-Referral Law (Stark Law) exception. See NF ICPG at p. 46.

34: See NF ICPG at p. 38; GCPG at pp. 12-14; 73 Fed. Reg. at 56842.

35: 42 CFR § 1001.952(ee).

36: 42 CFR § 1001.952(hh).

37: See Provider Reimbursement Manual supra note 28.

Related Insights

Related Information

Published

January 27, 2025

Key Contacts

Wayne T. Gibson

Senior Managing Director, Leader of Healthcare Risk Management & Advisory