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The OIG Releases Two Advisory Opinions

The Office of Inspector General (OIG) of the Department of Health & Human Services (HHS) issued two advisory opinions.

The first advisory opinion released by the OIG involves a continuing care retirement community’s proposed rewards program for referrals by current residents and employees. The OIG determined that the proposed arrangement would not be a violation of the Anti-Kickback Statute, and thus would not subject the requestor to administrative sanctions.

The requestor for the OIG’s opinion on the proposed arrangement operates continuing care retirement communities (CCRCs). The CCRCs provide three levels of care: independent living, assisted living, and skilled nursing. Although continuing care residents have a contractual right to move to a higher level of care, a 2005 actuarial study conducted by the requestor found that two-thirds of those who enter the CCRCs at the independent living level are not expected to become residents of the community’s skilled nursing units. The CCRCs do not provide health care, nor do they participate in Federal health care programs.

The proposed arrangement involves two parts: (1) Gift cards for CCRC Tours: current residents and employees of the CCRCs who recommend the community to a prospective resident receive a gift card. (2) Credits/Rewards for Independent Living Referrals: if the prospective resident moves into independent living at the CCRC within 12 months after the tour, the current resident who made the referral will receive a one-time credit toward his/her monthly CCRC fee and an employee will receive a check as part of his or her employment compensation. The CCRC employees who make the referrals would be typically friends or acquaintances of the prospective residents and are not physicians or other health care professionals in the position to make direct recommendations about health services.

The advisory opinion determined that the proposed arrangement, limited to the facts provided by the requestor, would not be a violation of the Anti-Kickback Statute. First of all, the referral program is limited to the independent living section of the communities which does not involve health care services or participation in Federal health care programs. The OIG found that whether an individual resident referred to the CCRC independent living unit will eventually require assisted iving or skilled nursing services that do involve Federal health care programs is far too speculative and outside the control of the referring employee or current resident. In addition, the OIG focused on the fact that the CCRC employees would likely be friends or acquaintances of the referrals, not health care professionals. Thus, the proposed arrangement would not impact a health care professional’s decision to order a health care item or service or to refer a patient to a particular practitioner, provider or supplier.

The OIG’s second advisory opinion determined that it would not impose administrative sanctions on a nonprofit, tax-exempt, independent charitable organization if it provided financial assistance for drug copayment obligations to underinsured patients, including Medicare and Medicaid beneficiaries. The Charity is controlled by an independent board of directors that makes all policy determinations, including the specifications of the proposed patient assistance program (PAP). Funding for the PAP comes in the form of cash or cash equivalents from individual, corporate, and foundation donors. Although the donations may be either unrestricted or earmarked for a specific disease category, the donors would not be given information that could correlate the PAP recipients with the donors’ products, nor would the patient know the identity of the Charity donors.

The Charity would utilize an objective, first-come, first-served basis for accepting underinsured patients into the PAP. Eligible patients would receve a MasterCard debit card issued by an independent third party. The debit card does not carry direct funds, but rather the funds are applied when an approrpiate pharmacy transaction occurs.

In making its determination, the OIG focused on two components of the PAP: (1) the Charity’s acceptance of donations is structure to insulate beneficiary decision-making from donations and (2) the Charity’s financial assistance to underinsured patients is not likely to improperly influence a patient’s choice of a particular provider, practitioner, supplier, service, or product. In its analysis of the first component, donor contributions, the OIG noted several factors that rendered beneficiary decision-making sufficiently insulated from donations. These factors included: no donor exerts control over the Charity or the use of funds; financial assistance is based upon reaosnable, verifiable, uniform and objective criteria; and non individual information is provided to donors, and donors are unable to correlate the amount or frequency of their donations with the amount or frequency of the use of their products or services. The OIG’s focus on the second component that the financial assistance is unlikely to improperly influence a patient’s choice of health care involved a review of factors including: patients can switch providers, suppliers, and products at any time without affecting eligibility for assistance. Eligibility is based purely on financial need; and as a charitable, tax-exempt entity, the Charity has an incentive to fulfill its mission by maximizing charitable use and minimizing expenditures. Due to these safeguards, the OIG determined that it would not impose administrative sanctions with respect to the Charity’s PAP.

If you would like any of your financial arrangements analyzed for risk of Stark or Anti-Kickback Statute violations, please contact a Wachler & Associates attorney at 248-544-0888.