OIG approves rural hospital's proposed 'warranty' program for joint replacements


HHS' Office of Inspector General on Sept. 15 issued a favorable advisory opinion for a hospital's proposed joint replacement program that would cover complications, JDSupra reported Sept. 21.

The unnamed nonprofit critical access hospital, which serves a rural, eight-county region across two states, proposed a warranty program for joint replacement patients done by its two employed orthopedic surgeons. The program would be applicable if a patient develops a common complication after receiving primary total knee, total hip or partial knee arthroplasty procedure.

The hospital would cover up to $50,000 for qualifying treatments within 90 days after surgery. Clinical decisions would be deferred to the surgeons.
The OIG said the warranty program would implicate the federal Anti-Kickback Statute and Beneficiary Inducements CMP. However, at the rural hospital, the program would have minimal risk since it incentivizes the hospital to improve health outcomes and has a low risk of inappropriate steering due to limited healthcare provider options in the area.

The OIG said the advisory opinion may have limited utility for most healthcare providers who want to implement similar warranty programs. The rural hospital has no competitors within 40 miles .

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