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A provider network administrator somewhere in the country is trying to set up a nursing home network aimed issuers of private long-term care insurance (LTCI) and their policyholders.

The statewide nursing home network would offer people covered by “participating payors” rate discounts.

Only private LTCI providers could by participating payors.

Officials at the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) approved a proposal for the private LTCI nursing home network in an advisory opinion.

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A copy of the ruling is available here.

HHS OIG officials do not name the administrator or say what state it’s in, and they note the network organizer might have to go through other, separate regulatory review processes.

The network organizers told HHS OIG they would open the network to any willing nursing home care provider in a state that earned a quality rating of 3 stars or higher on the Centers for Medicare and Medicaid Services Nursing Home Compare website, if the facility agreed to give a participating payor’s insureds a minimum discount on use of a semiprivate room.

The network would also be open to lower-rated affiliates of in-network nursing homes, if the lower-rated homes were in ZIP codes with no nursing homes with ratings of 3 stars or higher.

HHS OIG officials write in their ruling that the proposal raises questions about federal anti-kickback statutes, because some users of private LTCI coverage end up using Medicare skilled nursing facility benefits or Medicaid nursing home benefits, and the discount could lead some patients to use higher cost or lower quality care.

Officials say they decided the risk of fraud and abuse in the proposed arrangement is low, partly “because physicians, discharge planners, and others participating in site-of-care decisions about policyholders’ long-term care needs would receive no remuneration under the proposed arrangement.”

In a footnote, officials report that the network organizer would get an administrative fee from a participating payor when an insured received an in-network discount from an in-network nursing facility.

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