OIG: Provider Can Keep Inventory at Doctors' Offices - U.S. Health and Human Services Department's Office of Inspector General, portable oxygen systems

Distributing portable oxygen systems on-site at hospitals and physicians' offices to departing patients would not violate anti-kickback laws, according to a recent advisory opinion from the U.S. Health and Human Services Department's Office of Inspector General.

OIG issued the opinion at the request of a durable medical equipment provider - referred to in the letter as "Company A" - and insisted that the opinion applied only to Company A.

"This opinion may not be relied on by any persons other than Company A, the requestor," OIG said.

Like other oxygen providers nationwide, Company A supplies and delivers home oxygen systems, and other DME, to patients within a specific service area. But recently Company A has arranged to place an inventory of its oxygen equipment on-site at referral sources' offices, clinics and hospitals, to allow patients who choose Company A's equipment to take the equipment home right away.

Apparently wary of OIG's reaction to this arrangement, Company A asked the Inspector General whether such an arrangement would violate anti-kickback laws.

Based on the specific arrangement that Company A described - which included signed contracts between company A and referral sources, the promise that Company A would not reward referral sources for acting as a distributor and the certification that patients would retain a choice of oxygen providers - OIG determined that such an arrangement would not violate anti-kickback laws.

"We conclude that the proposed arrangement would not generate prohibited remuneration under the anti-kickback statute," OIG said.

To ensure patients' freedom of choice, Company A also promised to provide each referral source with a list of local DME suppliers, and to encourage the referral sources to disseminate the list to oxygen patients