Senior Living Provider OK’d for Paid Resident Referrals: OIG

A nonprofit senior living provider concerned about violating the Federal anti-kickback statute was green-lighted to compensate a placement agency in exchange for new resident referrals, said the Department of Health and Human Services Office of Inspector General in a recent advisory opinion.

The unnamed provider requesting the advisory is a nonprofit corporation that owns and operates 11 senior living communities, two skilled nursing facilities, and a management company that negotiates contracts for the properties and provides other management services. 

About two percent of the collective communities’ residents are participants of the state Medicaid Elderly Waiver Program, which helps cover their services, and the skilled nursing facilities provide federally reimbursed healthcare services to residents, including therapy. 


A placement agency is paid for each new resident it places in one of the provider’s communities, with compensation based on a certain percentage of the community’s initial gross collections from the new resident. The provider inquired as to whether the arrangement could be grounds for sanctions or civil monetary penalties related to the Federal anti-kickback statute.

“The anti-kickback statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services
reimbursable by a Federal health care program,” explains the advisory. “Where remuneration is paid purposefully to induce or reward referrals of items or services payable by a Federal health care program, the anti-kickback statute is violated.”

However, because the placement fee takes into account only the initial rent and services the participating community is providing, paid for by the new resident, the OIG recognizes the compensation isn’t calculated on the basis of charges to a Federal healthcare program.


Additionally, the provider’s contract with the placement agency prohibits both the placement and acceptance of potential residents who are known to rely in whole or in part on state or Federal funding sources such as Medicare or Medicaid to pay for community’s services.

Although it’s possible that continued business with the placement agency could eventually generate prohibited remuneration under the anti-kickback statute in certain circumstances, the OIG said it will not impose sanctions on the provider in connection with the current arrangement.

The OIG emphasizes in the advisory opinion that it only applies to the senior living provider in question based on information it provided and cannot be applied to other providers.

View the Advisory Opinion here.

Written by Alyssa Gerace