In Advisory Opinion No. 26-15 posted on June 30, 2026; the Office of Inspector General (OIG) says that providers cannot pay vendors of referral management software. Providers that use this type of software must now terminate their contracts or restructure them with the assistance of legal counsel. This Advisory Opinion was requested by an owner of Medicare-certified home health and private duty/home care agencies that receive many referrals from hospitals for post-acute care.
Conditions of Participation (CoPs) of the Medicare Program for hospitals for discharge planning require hospitals to provide patients discharged to their homes and referred for home health services with a list of home health agencies “that are available to the patient, that are participating in the Medicare program, and that serve the geographic area (as defined by the HHS) in which the patient resides...HHAs must request to be listed by the hospital as available.” Referrals from hospitals to post-acute companies are often provided on a first-come, first served basis. Consequently, the speed with which providers respond to hospitals’ requests for services for particular patients post-discharge often determines which companies receive referrals.
Providers routinely pay subscription fees to health care technology and software companies that provide online referral management software. The software connects hospitals with post-acute providers in order to refer patients to companies as part of the discharge planning process. Companies pay fees to vendors for subscriptions to software that enables companies to accept electronic referrals from hospitals seeking availability of patients who will be discharged. Vendors charge providers for software subscriptions based on a number of factors, such as geographic location and the number of locations owned by providers. Payments by companies to vendors are not based solely on vendors’ costs to provide software.
Software vendors provide each hospital with a list of all agencies in the region without regard to whether agencies subscribe to the software, but only companies that pay to subscribe to the software receive electronic communications from hospitals. When hospitals have subscribed to referral software, but post-acute companies have not, hospitals send referrals to non-subscribed companies via fax, email, phone, or hand-delivery. When companies want to accept referrals, they must contact appropriate staff at hospitals directly by phone. Companies that subscribe to the software, however, can accept referrals immediately through the software. Companies that do not subscribe are, therefore, effectively excluded from receipt of referrals.
The OIG first said that the federal anti-kickback statute (AKS) is applicable to these types of arrangements. Both Congress and the U.S. Department of Health and Human Services (HHS) published safe harbors or exceptions to the prohibitions of the AKS. Safe harbors or exceptions are applicable only when all of the conditions of safe harbors are met. The safe harbor for referral services is potentially applicable. Requirements include that fees must be assessed uniformly among all participants, must be based only on the cost of operating referral services, and do not vary depending on the volume or value of referrals of federal health care program business.
The OIG concluded that the arrangement described above does not meet the requirements of the safe harbor and that it poses risks of fraud and abuse. Its reasoning is that:
These types of arrangements have existed for many years. Providers that have not subscribed have periodically yearned for a “level playing field” without subscribing. Here it is!
©2026 Elizabeth E. Hogue, Esq. All rights reserved.No portion of this material may be reproduced in any form without the advance written permission of the author.