- Summary of the HHS OIG Advisory Opinion No. 08-17
- November 6, 2008 | Authors: Claudia A. Hrvatin; Daniel Francis Donovan
- Law Firm: King & Spalding LLP - Washington Office
On October 21, 2008, the Department of Health and Human Services Office of Inspector General (the “OIG”) issued an advisory opinion to the foundation (the “Foundation”) of a nonprofit, tax-exempt, charitable organization (the “Organization”)  indicating that the OIG would not impose sanctions against the Foundation if it were to engage in a plan to provide financial assistance to cover cost-sharing obligations associated with outpatient drug treatment owed by certain  Medicare or Medicaid beneficiaries (the “Arrangement”).
At issue was whether the Arrangement would constitute grounds for sanction under the civil monetary penalty provision of the Social Security Act prohibiting inducements to beneficiaries (section 1128A(a)(5)), under the exclusion authority at section 1128(b)(7) or the civil monetary penalty provision at section 1128A(a)(7), in so far as these sections relate to the commission of acts described in section 1128B(b), the anti-kickback statute.
The anti-kickback statute of the Social Security Act, section 1128B(b), makes it a crime 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, such as Medicare.
Case law has interpreted the statute to apply to any arrangement where a purpose of the remuneration is to obtain money for the referral of services or to induce further referrals. Violation of the statute constitutes a felony punishable by a maximum fine of $25,000, imprisonment up to five year or both. Conviction also leads to automatic exclusion from federal health care programs. The OIG may initiate administrative proceedings against a party that is found to have violated section 1128B(b) to impose civil monetary penalties thereon under section 1128A(a)(7). The OIG may also initiate administrative proceedings under section 1128(b)(7) to exclude such a party from the federal health care programs.
Finally, section 1128A(a)(5) provides for the imposition of civil monetary penalties against any person who gives something of value to a beneficiary of Medicare or a state health care program, such as Medicaid, that the donor knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or the state health care program, including Medicaid. The OIG is empowered to initiate administrative proceeding to exclude such a party from the federal health care programs as well.
Under the Arrangement, the Foundation would attempt to increase access to expensive medically-necessary drug treatment options that are often disregarded by patients who cannot afford to pay.
The OIG focused its analysis on two particular aspects of the Arrangement: Donor influence and the Foundation’s grants to beneficiaries.
Donor Influence. Long-standing OIG guidance has set forth that industry stakeholders can contribute effectively to the health care safety net for financially needy Medicare and Medicaid patients by contributing to independent, bona fide charitable assistance programs. Under a properly structured program, such donations should not raise substantial concerns about the improper inducement of beneficiaries. In this advisory opinion, the OIG, taking into account several factors, concluded that the proposed design and administration of the Arrangement would insulate beneficiaries effectively from basing their decisions on information that would attribute the funding of their benefit to any particular donor. The OIG determined that it would be unlikely that any donor contributions would influence a beneficiary’s selection of a particular provider, practitioner, supplier or product, or the selection of any particular insurance plan. Similarly, the OIG found that there would be minimal risk that donor contributions would improperly influence referrals by the Foundation.
Foundation Grants. Similarly, upon consideration of several factors, the OIG found that the assistance provided by the Foundation for cost-sharing obligations for certain eligible, financially needy Medicare and Medicaid beneficiaries would not likely improperly influence any beneficiary selection of a particular provider, practitioner, supplier or product. Along the same lines, there would be minimal risk that donor contributions would influence referrals by the Foundation improperly.
Accordingly, the OIG found that:
- The assistance would not constitute grounds for the imposition of civil monetary penalties under section 1128A(a)(5); and
- While the assistance could potentially generate prohibited remuneration under the anti-kickback statute, if the requisite intent to induce or reward referrals of federal health care program business were present, the OIG would not impose administrative sanctions under sections 1128(b)(7) or 1128A(a)(7) (as such sections relate to the commission of acts described in section 1128B(b)) in connection with the assistance.
 Note that the identity of the organizations involved was redacted in the advisory opinion issued by the OIG.
 Note that the disease state of the beneficiaries involved was redacted in the advisory opinion issued by the OIG.