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Blog Post Written by: William T. Mathias and Aaron J. Rabinowitz with OberKaler
On March 8, 2012, the OIG issued an advisory opinion (OIG Advisory Opinion 12-01) analyzing a proposed purchasing structure under the federal anti-kickback law. The OIG approved the proposed arrangement even though it fell outside the narrow confines of the group purchasing organization (GPO) and discount safe harbors. The absence of safe harbor protection did not prove fatal because the OIG concluded that there was an “acceptably low level of risk” due to several safeguards in the proposed arrangement.
The OIG’s approval of the proposed purchasing arrangement seems consistent with the advice that many in the health care industry have been getting for years. By treating GPO administrative fees that are distributed to the purchasing GPO members as discounts and offsetting them against purchases, the benefit of the GPO fees are essentially passed along to Medicare. The netting of distributions and purchases, thus, appears to effectively eliminate the risk of fraud and abuse.