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Beneficiary Anti-Inducement Statute

“Implicating the Anti-Kickback Law”

by Sean Weiss, Partner & VP of Compliance

Ahh… the age-old argument of “It’s my practice and I can do what I want” until reality sets in and it becomes “Why can’t I do what I want in my practice?” For the most part, you can do what you want in your practice unless it violates statute or applicable law. One such area in which I often get questions from clients is related to marketing or wanting to give something to the patient as either a thank you or a way to solve a problem (wink, wink; nod, nod!) The Office of Inspector General (OIG) is quite clear with its guidance on what is and is not appropriate with regard to providing free or discounted items or services to a Medicare or Medicaid-reimbursable service. Throughout this Blog Post, I will address multiple sections of Federal Regulations (Fed Reg) and United States Code (USC) highlighting various aspects of the Beneficiary Inducement and Anti-Kickback Statutes.

Let’s begin this journey by first understanding that Under section 1128A(a)(5) of the Social Security Act (the Act), enacted as part of Health Insurance Portability and Accountability Act of 1996 (HIPAA), a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of Medicare or Medicaid payable items or services may be liable for civil money penalties (CMPs), which can be significant for each wrongful act. To ensure you, the reader, understand what a remuneration truly is we must define the term specific to the OIG. “Section 1128A(a)(5) of the Act, the statute defines “remuneration” to include, without limitation, waivers of copayments and deductible amounts (or any part thereof) and transfers of items or services for free or for other than fair market value. (See section 1128A(i)(6) of the Act.).” As with most things related to our government, there are a limited number of exceptions within section 1128A(i)(6) of the Act (42 CFR 1003.101). Additionally, the anti-kickback statute makes it a criminal offense 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 (section 1128B(b)) of the Act. Where remuneration is paid purposefully to induce or reward referrals of items or services payable by a Federal health care program, the anti-kickback statute is violated.

“The statute has been interpreted to cover any arrangement where one purpose of the remuneration was to obtain money for the referral of services or to induce further referrals.  See, e.g., United States v. Nagelvoort, 856 F.3d 1117 (7th Cir. 2017); United States v. McClatchey, 217 F.3d 823 (10th Cir. 2000); United States v. Davis, 132 F.3d 1092 (5th Cir. 1998); United States v. Kats, 871 F.2d 105 (9th Cir. 1989); United States v. Greber, 760 F.2d 68 (3d Cir. 1985), cert. denied, 474 U.S. 988 (1985).  Violation of the statute constitutes a felony punishable by a maximum fine of $100,000, imprisonment up to ten years, or both.  Conviction will also lead to automatic exclusion from Federal health care programs, including Medicare and Medicaid.  Where a party commits an act described in section 1128B(b) of the Act, the OIG may initiate administrative proceedings to impose civil monetary penalties on such party under section 1128A(a)(7) of the Act.  The OIG may also initiate administrative proceedings to exclude such party from the Federal health care programs under section 1128(b)(7) of the Act.”

The definition of “remuneration” in section 1128A(i)(6) contains five specific exceptions:

  • Non-routine, unadvertised waivers of copayments or deductible amounts based on individualized determinations of financial need or exhaustion of reasonable collection efforts. Paying the premiums for a beneficiary’s Medicare Part B or supplemental insurance is not protected by this exception.
  • Properly disclosed differentials in a health insurance plan’s copayments or deductibles. This exception covers incentives that are part of a health plan design, such as lower plan copayments for using preferred providers, mail order pharmacies, or generic drugs. Waivers of Medicare or Medicaid copayments are not protected by this exception.
  • Incentives to promote the delivery of preventive care. Preventive care is defined in 42 CFR 1003.101 to mean items and services that (i) are covered by Medicare or Medicaid and (ii) are either pre-natal or post-natal well-baby services or are services described in the Guide to Clinical Preventive Services published by the U.S. Preventive Services Task Force. Such incentives may not be in the form of cash or cash equivalents and may not be disproportionate to the value of the preventive care provided. (See 42 CFR 1003.101; 65 FR 24400 and 24409.)
  • Any practice permitted under an anti-kickback statute safe harbor at 42 CFR 1001.952.4
  • Waivers of copayment amounts in excess of the minimum copayment amounts under the Medicare hospital outpatient fee schedule.

This also means we must define “Inducement” – Section 1128A(a)(5) of the Act bars the offering of remuneration to Medicare or Medicaid beneficiaries where the person offering the remuneration knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services from a particular provider. The “should know” standard is met if a provider acts with deliberate ignorance or reckless disregard. No proof of specific intent is required. (See 42 CFR 1003.101.) The above is absolutely my favorite part of this entire section. Why you ask? Simple, because it clearly states that “No proof of specific intent” is required to show that you violated the Code of Federal Regulations (CFR). Yes, I know defense attorneys will argue that somehow what you did fits into a “Safe Harbor” (Exception) but, with the statute being so broad, it makes for an uphill battle and one on which you likely will not prevail resulting in a plea of some sort is my opinion. The OIG goes on to state that, “The “inducement” element of the offense is met by any offer of valuable (i.e., not inexpensive) goods and services as part of a marketing or promotional activity, regardless of whether the marketing or promotional activity is active or passive. For example, even if a provider does not directly advertise or promote the availability of a benefit to beneficiaries, there may be indirect marketing or promotional efforts or informal channels of information dissemination, such as “word of mouth” promotion by practitioners or patient support groups. In addition, the OIG considers the provision of free goods or services to existing customers who have an ongoing relationship with a provider likely to influence those customers’ future purchases.”

Let’s take the discussion a bit further. According to the OIG, offering gifts of value to beneficiaries of Medicare or Medicaid could influence their choice of a Medicare or Medicaid provider and that could lead to questions about quality and costs associated with patient care. In plain terms, when you offer “Gifts” or other services of value to your Medicare or Medicaid beneficiaries, it could create an economic incentive to offset the additional costs attributable to the giveaway by rendering services that are “Medically Unnecessary” or cause good or services of a lesser quality to be provided to the patient. Here is the other thing – if there were no regulations surrounding this type of behavior, then larger organizations would have the ability to marginalize their competition even more given their financial resources; thus, making it easy to crush smaller practices that they see as competition.

In the Special Advisory Opinion (8/02) cited above, “bright-line guidance” was issued in an attempt to protect the Medicare and Medicaid program, promote compliance, and ensure a level playing field for all providers. In the Special Advisory Opinion, the OIG applied the following prohibitions:

  • “First, the OIG has interpreted the prohibition to permit Medicare or Medicaid providers to offer beneficiaries inexpensive gifts (other than cash or cash equivalents) or services without violating the statute. For enforcement purposes, inexpensive gifts or services are those that have a retail value of no more than $10 (This was changed to $15 in 2016) individually, and no more than $50 (This was changed to $75 in 2016) in the aggregate annually per patient.
  • Second, providers may offer beneficiaries more expensive items or services that fit within one of the five statutory exceptions: waivers of cost-sharing amounts based on financial need; properly disclosed copayment differentials in health plans; incentives to promote the delivery of certain preventive care services; any practice permitted under the federal antikickback statute pursuant to 42 CFR 1001.952; or waivers of hospital outpatient copayments in excess of the minimum copayment amounts.
  • Third, the OIG is considering several additional regulatory exceptions. The OIG may solicit public comments on additional exceptions for complimentary local transportation and for free goods in connection with participation in certain clinical studies.
  • Fourth, the OIG will continue to entertain requests for advisory opinions related to the prohibition on inducements to beneficiaries. However, as discussed below, given the difficulty in drawing principled distinctions between categories of beneficiaries or types of inducements, favorable opinions have been, and are expected to be, limited to situations involving conduct that is very close to an existing statutory or regulatory exception.”

 

I will finish this post by addressing the changes (Exceptions) issued December, 2016 by the Office of Inspector General related to the Beneficiary Inducement Statute. The first of these has to do with “Monetary Limits for Gifts of Nominal Value” which are deemed not to violate the beneficiary inducement statute. The OIG states, that due to inflation, they increased the limit for individual items from $10 to $15, and the annual aggregate limit per patient from $50 to $75 both address above.

The second of the exceptions is “Financial-Need-Based”. This exception protects the “Offer or Transfer” of items of services for free or less than fair market value under certain conditions if you are able to demonstrate the patient qualifies. The OIG identifies four statutory requirements: (1) the item or service not be advertised or solicited; (2) the item or service not be tied to the provision of other services reimbursed by Medicare or Medicaid; (3) there be a reasonable connection between the item or service and the individual’s medical care; and (4) there be an individualized determination of financial need.

The third and final “Exception” I will address is the “Access to Care”, which protects the provision of remuneration that promotes access to care and poses a low risk of harm to patients and federal health care programs. The OIG states in the final regulation that items potentially covered by this exception include free or discounted medications, supplies, or devices; technology for reporting health data; scales; programmable tools to help with medication dosage or refill reminders; and telemedicine capability. However, the OIG does go on to caution that “It may be difficult to meet the “Low risk of harm” requirement if there is a more applicable exception or if one of the safe harbors to the Anti-Kickback Statute was available but not utilized.” Additionally, OIG clarified that this particular exception only protects remunerations that promote access to items and/or services that are payable by Medicare or Medicaid for the beneficiary that received them. The last part of this exception and one that I found to be quite interesting is providing incentives to patients for complying with treatment plans would not qualify for the exception since this type of incentive would be considered a “reward” for accessing care instead of “promoting” access to care.

 

 

*Sources:

  1. Federal Register / Vol. 83, No. 166 / Monday, August 27, 2018 / Proposed Rule
  2. Federal Register / Vol. 81. No. 235 / Wednesday. December 7, 2016 / Rules and Regulations
  3. Special Advisory Bulletin – Gifts and Inducements 08/02 
  4. OIG Advisory Opinion – No. 18-05 / Issued June 18, 2018 / Posted June 25, 2018
  5. 81 Fed. Reg. 88368. 79
  6. Reg. 59717.
  7. 42 U.S.C. § 1320a-7a(a)(5).
  8. 42 C.F.R. § 1003.110.
  9. 81 Fed. Reg. at 88397. Id. at 88390-91.  Id. at 88391. Id. at 88394-95.
  10. 42 C.F.R. § 1003.110.  81
  11. Reg. at 88403.  Id. at 88404.  Id. at 88405. Id. Id. 81
  12. Reg. at 88394.
  13. 81 Fed. Reg. 88396 (December 7, 2016).
  14. 81 Fed. Reg. at 88397.
  15. 42 U.S.C. § 1320a-7b.

For assistance with establishing your compliance program or bringing your current plan up-to-date contact me at [email protected] or at 800-635-4040