• OIG Will Not Impose Sanctions on Charity Operating a Patient Assistance Program
  • June 29, 2010 | Author: Kerrie S. Howze
  • Law Firm: King & Spalding LLP - Atlanta Office
  • On May 27, 2010, the HHS OIG released Advisory Opinion 10-06 in which it explained 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 under-insured patients, including Medicare and Medicaid beneficiaries.  The OIG considered whether the arrangement would run afoul of Social Security Act Sections 1128A(a)(5) prohibiting inducements to beneficiaries (the “Beneficiary Inducement Statute”), or 1128B(b) (the “Anti-Kickback Statute”).  Although the OIG found that the arrangement could potentially violate the Anti-Kickback Statute, the OIG declined to impose sanctions.  Additionally, the OIG concluded that the PAP grants were unlikely to influence improperly a beneficiary’s selection of a provider, supplier or plan due to several key elements of the PAP that ensured sufficient insulation between donors and grant recipients.

    The OIG focused its analysis on the factors surrounding (1) donor contributions and (2) grants to federal health care program beneficiaries.  In analyzing the factors surrounding donor contributions, the OIG explained that the following factors supported its decision not to impose sanctions:

    • donors do not have any control over the use of their donations; rather, the charity has absolute and independent control;
    • the charity awards assistance in an independent manner based on reasonable, verifiable, uniform and objective criteria;
    • the charity ensures anonymity of donors and grant recipients because it does not provide: (1) individual patient information or data to any donor; (2) donor information to patients; or (3) donor information to other donors; and
    • donors are not capable of correlating the amount or frequency of their donations with the amount or frequency of the use of their products or services.

    In analyzing the factors surrounding grants to federal health care program beneficiaries, the OIG explained that the following factors supported its conclusion not to impose sanctions:

    • the charity bases patient eligibility purely on financial need eligibility criteria that it alone establishes;
    • the charity does not consider the identity of any applicant’s provider, the referring party or any donor who may have contributed for the support of the applicant’s condition;
    • the charity assists patients who meet the financial need eligibility criteria on a first-come, first-served basis;
    • the patients to whom the charity provides assistance through the PAP are already under the care of a physician at the time of application and already have a treatment regimen in place;
    • the charity ensures that patients are aware of their freedom to choose providers, suppliers and products by notifying them that they may switch providers, suppliers or products without affecting eligibility for assistance; and
    • the charity, as a tax-exempt entity, has an interest in fulfilling its charitable mission by maximizing charitable use and minimizing expenditures.