Posted On Tuesday, March 22, 2016
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On Friday, HHS-OIG issued an advisory opinion (No. 16-3) regarding the use of a “preferred hospital network” as part of Medicare Supplemental Health Insurance (“Medigap”) policies. At issue in the requested opinion was a proposed arrangement for two insurance companies (owned by the same parent) to indirectly contract with hospitals for discounts on Medicare inpatient deductibles for their policyholders. OIG determined that the proposed arrangement would not constitute grounds for sanctions under the civil monetary penalty provision of the Social Security Act, and that the arrangement would not provide a basis for sanctions under the Federal Anti-Kickback Statute.
The insurers making the request indicated that they planned to start offering Medigap policies in several states. As part of that plan, they proposed to participate in an arrangement with a preferred hospital organization (“PHO”) that has contracts with hospitals throughout the country (“network hospitals”). Under the proposal, the network hospitals would provide discounts of up to 100% on Medicare inpatient deductibles incurred by the insurers’ Medigap policyholders that otherwise would be covered by the insurers. Each time the insurers received this discount from a network hospital, the insurers would pay the PHO a fee for administrative services. If a policyholder were to be admitted to a hospital other than a network hospital, the insurers would pay the full Part A hospital deductible, as provided under the applicable Medigap plan. The insurers indicated that they would return a portion of the savings resulting from the proposed arrangement by issuing a $100 premium credit directly to any policyholder who has an inpatient stay at a network hospital.
OIG ultimately concluded that, although the proposed arrangement could potentially generate prohibited remuneration under the Anti-Kickback Statute if the requisite intent to induce referrals were present, the OIG would not impose administrative sanctions. Moreover, although the OIG did not find that the proposed arrangement qualified for “safe harbor” protection, it did find that the proposed arrangement presented a sufficiently low risk of fraud or abuse under the anti-kickback statute. Specifically, it noted that neither the discounts nor premium credits would increase or affect per-service Medicare payments. It also found, among other things, that the proposed arrangements would operate transparently, and would be unlikely to increase utilization, affect competition or impact professional medical judgment.
OIG also found a sufficiently low risk of fraud or abuse under its civil monetary penalty analysis. Based on that and the totality of facts and circumstances that it reviewed, it found that it would not impose administrative sanctions.
A complete copy of the advisory opinion can be found here.
Posted On Tuesday, March 15, 2016
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Once a client has pled or was found guilty, much of our focus as practitioners is naturally on the client’s potential exposure to a prison term or fine. Accordingly, we may not be as familiar with computing the potential period of supervised release applicable to a particular case. This issue came up in a recent case so I thought others might find the results of my research helpful, particularly in cases where the guideline range is not significant but imprisonment is nevertheless a significant possibility. It is also helpful as a means to double-check the calculations concerning supervised release made by the federal prosecutor in a plea letter or by the probation officer in a presentence report are correct.
In white collar matters, both the term and the management of supervised release often play a significant role in the lives of individuals attempting to rehabilitate and reconstruct their business or professional careers. The risk of action by the government to revoke supervised release for failure to meet conditions, which may include the payment of restitution and fines, is very real. Unfortunately, conditions of supervised release can often present substantial impediments to a return to a productive life following terms of imprisonment. Accordingly, it is critical for counsel to advocate for the most appropriate terms of supervisory status.
Similar to probation, supervised release is a period of monitoring by the federal probation office and includes various conditions and rules that a defendant must follow. Unlike probation, however, supervised release directly follows a term of imprisonment. After federal parole was abolished in 1984 as part of the enactment of the federal sentencing guidelines effective in 1987, supervised release replaced parole as the means for supervising defendants after their release from prison. Violating a condition of release, including committing another violation of federal or state law, can return the defendant to federal prison in addition to any punishment imposed for the new federal or state law violation.
The maximum term of supervised release depends on the classification of the offense of conviction under 18 U.S.C. §3559. Federal offenses are classified by their corresponding letter grades based on the maximum prison term, Class A felony to Class E felony and Class A misdemeanor to Class C misdemeanor. For example, a false statement offense under 18 U.S.C. §1001 typically has a five-year maximum and thus is a Class D felony. Likewise, the misdemeanor offense of interference with a law enforcement agent under 18 U.S.C. §118, which has a maximum prison term of 12 month, is a Class A misdemeanor.
Based on the letter grade of the federal offense, 18 U.S.C. §3583 provides the authorized terms of supervised release: For Class A or Class B felonies, not more than five years; for a Class C or Class D felonies, not more than three years; for Class E felonies or for misdemeanors (other than a petty offenses), not more than one year. When determining whether to impose supervised release and the length of the term, trial courts are directed to consider the 18 U.S.C. §3553(a) factors in determining the length of the term of supervise release and the conditions to be imposed. Most courts have standard conditions of release but routinely create and tailor additional conditions based on the needs of the defendant and his or her offense.
