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OIG Issues Favorable Advisory Opinion Regarding a Hospital Waiving or Reducing Cost-Sharing Expenses to Medicare Beneficiaries Who Enroll in a Clinical Study

On June 27, 2017, the U.S. Department of Health and Human Services Office of Inspector General (“OIG”) issued Advisory Opinion 17-02 (“AO 17-12”) concerning an unnamed hospital’s proposal to waive or reduce certain cost-sharing fees owed by Medicare beneficiaries who enroll as subjects in a clinical research study at the hospital’s outpatient center (the “Proposed Arrangment”). Under the facts provided by the hospital, the OIG concluded that the Proposed Arrangement would not violate the federal anti-kickback statute (“AKS”) or the Civil Monetary Penalties Law (“CMPL”) that prohibit beneficiary inducements.

A biomedical company that manufactures an FDA-approved wound care system (“WCS”) joined the hospital in requesting the OIG’s review of this Proposed Arrangement. The hospital’s outpatient center provides comprehensive wound care services, and the biomedical company’s WCS uses autologous platelet-rich plasma (“PRP”) treatment for chronic, non-healing diabetic, pressure or venous wounds. A Center for Medicare & Medicaid Services (“CMS”) National Coverage Determination from 2012 limited Medicare reimbursement for PRP treatment, including related items and professional services, to circumstances where the PRP treatment is delivered in association with a CMS-approved clinical study that evaluates the treatment of Medicare patients using the product.

The hospital’s outpatient center is a CMS-approved participating site for PRP treatment, meaning the hospital can receive reimbursement for providing PRP treatment to Medicare patients. However, Medicare beneficiaries were still responsible for out-of-pocket expenses connected with their PRP treatments. This was a concern of the Requestors, especially for patients dually eligible under Medicare and Medicaid who may be more financially disadvantaged and therefore more likely to be discouraged from participating in a study that would result in more out-of-pocket expenses for the patients.

Under the Proposed Arrangement, the hospital, in accordance with its already existing financial need policy, would either reduce or waive out-of-pocket expenses for Medicare patients who were also participating in the study. The financial need policy required potentially eligible patients to complete a financial need application, provide evidence of financial need (e.g., paycheck stubs, tax returns, unemployment records), and certify that the information and supporting documents in the application were true. Based on the application, the hospital would then use a sliding-scale method to determine possible reductions or waivers based on the patient’s monthly family income relative to the Federal Poverty Level.

Regarding the possibility of the Proposed Arrangement violating the beneficiary inducement CMPL, the OIG found that the Proposed Arranged met all of the criteria to satisfy an exception to the CMPL. The OIG explained that waiving or reducing some out-of-pocket expenses for certain financially needy Medicare patients would not constitute illegal remuneration because eligibility for the program used objective criteria to make good faith conclusions regarding patients’ financial needs. The OIG also noted that the Proposed Arrangement’s benefits would not be openly solicited to the public, but instead patients would learn about it during the informed consent process for treatment if they expressed concern about their ability to pay. Also, the OIG found that the hospital’s objective approach of using case-by-case determinations of financial hardship would safeguard the program from potential abuse.

Based on the conclusion that the Proposed Arrangement did not violate the beneficiary inducement CMPL, and similar to its approach in Advisory Opinion 17-01, the OIG found that by satisfying an exception to the CMPL the Proposed Arrangement would also not violate the AKS.

The attorneys at CCLB represent healthcare providers of all types and sizes in connection with government investigations and audits and a wide variety of other regulatory and compliance matters, including those involving the Stark Law, Anti-Kickback Statute, and False Claims Act. For any questions, or if we can assist you in connection with a healthcare regulatory or compliance issue or audit/investigation, please contact us at (404) 262-6505 or sgrubman@cclblaw.com.