OIG Issues Favorable Advisory Opinion for Medigap “Preferred Hospital” Network Arrangement

On Monday, October 21, 2014, the Office of the Inspector General of the U.S. Department of Health and Human Services (“OIG”) issued a favorable advisory opinion regarding the use of a “preferred hospital” network as part of the Medicare Supplemental Health Insurance (“Medigap”) policies. Under the arrangement, an insurer issuing Medigap policies would contract with hospitals for discounts on the otherwise-applicable Medicare inpatient deductibles for its policyholders and provide a premium credit of $100 off the next renewal premium to policyholders who used a network hospital for an inpatient stay (the “Proposed Arrangement”). The Proposed Arrangement would not affect the policyholder’s obligation to pay for covered services, whether provided by a within the preferred network or any other hospital. (Read more)