On Oct. 27, the Department of Health and Human Services Office of the Inspector General (OIG) issued Advisory Opinion 16-11, which stated that the OIG would not impose sanctions against a licensed offeror of Medicare Supplemental Health Insurance, or Medigap policies (requestor) who proposed to participate in an arrangement (proposed arrangement) with a preferred hospital organization (PHO), which enters into contracts with hospitals throughout the country (network hospitals).
Under the proposed arrangement, network hospitals would provide discounts of up to 100 percent on Medicare inpatient deductibles incurred by a requestor’s Medigap plan policyholders (policyholders) that otherwise would be covered by a requestor. The discounts would apply only to the Medicare Part A inpatient hospital deductibles covered by the Medigap plans, and not to any other cost-sharing amounts. The network hospitals would provide no other benefit to the requestor or the policyholders as part of the proposed arrangement. Each time the requestor receives this discount from a network hospital, the requestor would pay the PHO a fee for administrative services. Additionally, a premium credit of $100 would be provided to policyholders who use a network hospital for an inpatient stay.
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