June 17th, 2025
The Office of Inspector General (OIG) for the Department of Health and Human Services issued an unfavorable advisory opinion on June 20, 2025, concerning a medical device company’s proposal to pay for its own vendor screening costs on behalf of its customers. This opinion, AO-25-04, has direct implications for the common business model used by third-party vendor credentialing companies such as GHX and symplr.
The opinion addresses a proposal from a medical device company (“Requestor”) to pay the annual fees charged by a “third-party company” to screen the Requestor for exclusion from Federal health care programs. This screening was a requirement imposed by the Requestor’s customers—hospitals, health systems, and ambulatory surgery centers—as a condition of doing business. Under the plan, the medical device company would pay the subscription fee, estimated at $450,000 annually, directly to the screening company on a per-customer basis.
OIG’s Legal Analysis and Conclusion
The OIG concluded that this arrangement presents a significant risk under the Federal anti-kickback statute. The statute makes it a criminal offense to offer or pay anything of value to induce the purchase of items or services reimbursable by a federal health care program.
The key issues identified by the OIG include:
- Prohibited Remuneration: The OIG views the vendor’s payment of the screening fee as a thing of value given to the customer. This payment relieves the hospital of a financial burden it would otherwise have to bear, which could be an illegal inducement.
- Inappropriate Steering: The practice could inappropriately steer customers to select the Requestor over competitors that are unable or unwilling to pay the fees.
- Anti-Competitive Risk: The OIG has “longstanding and continuing concerns” about vendors providing free services to referral sources, and it found this arrangement posed anti-competitive risks.
What This Means for the Industry
While the advisory opinion does not name specific companies, the arrangement it scrutinizes is a core part of the business model for many major vendor credentialing organizations. These firms are hired by hospitals to manage vendor access and compliance, and they often charge the vendors fees for these services.
The unfavorable opinion serves as a strong warning to medical device companies, suppliers, and other vendors. It clarifies that paying a fee to a credentialing company on behalf of a hospital customer is a high-risk practice. If that payment is intended to induce the hospital to purchase the vendor’s products, it could lead to sanctions, including significant fines and exclusion from federal programs. This opinion puts both vendors and the credentialing companies on notice regarding the legal hazards of such payment structures.
https://oig.hhs.gov/documents/advisory-opinions/10355/AO-25-04.pdf