7 Indest-2008-4By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

A nonprofit organization (Requestor) requested an advisory opinion from the Office of the Inspector General (OIG).  The organization is dedicated to helping financially needy patients, including those covered by Medicare and Medicaid, with a single disease state (Disease State) obtain magnetic resonance imaging (MRI) (altogether, “Arrangement”).  Specifically, the Requestor sought the OIG’s opinion as to the legality of its funding for the Arrangement.

The Arrangement is funded by persons and corporations, primarily pharmaceutical manufacturers, as well as foundations and other entities.  The Requestor asked the OIG whether the Arrangement constituted violations of any of the following:

(a)    the civil monetary penalty provision of the Social Security Act (Act) prohibiting inducements to beneficiaries at section 1128(a)(5);

(b)    the exclusion authority of the Act at section 1128(b)(7); or

(c)    the civil monetary penalty provision at section 1128A(a)(7) of the Act

as each of those sections relate to section 1128B(b) of the Act, otherwise known as the federal Anti-Kickback Statute (AKS).

The OIG issued a favorable opinion on November 13, 2015, Advisory Opinion 15-14, concluding that the Arrangement does not constitute grounds for the imposition of civil monetary penalties and that it would not impose sanctions in connection with the AKS with respect to the Arrangement.

OIG’s Analysis of the Arrangement.

In its analysis of the Arrangement, the OIG noted its longstanding guidance permitting stakeholders to contribute to the health care safety net for financially needy patients.  This guidance is inclusive of federal health care program beneficiaries.  OIG’s Supplemental Special Advisory Bulletin on Independent Charity Patient Assistance Programs states “that pharmaceutical manufacturers can effectively contribute to the safety net by making cash donations to independent, bona fide charitable assistance programs.”  It states further, “…we recognize that bona fide independent charities may reasonably focus their efforts on patients with particular diseases (such as cancer or diabetes) and that, in general, the fact that a pharmaceutical manufacturer’s donations to an independent charity are earmarked for one or more broad disease funds should not significantly raise the risk of abuse.”

To read the full OIG’s Supplemental Special Advisory Bulletin on Independent Charity Patient Assistance Programs, click here.

The OIG further relied on its Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees in its overall assessment of the risks imposed by the Arrangement.  The referenced bulletin states in pertinent part, “…cost-sharing subsidies provided by bona fide, independent charities unaffiliated with pharmaceutical manufacturers should not raise anti-kickback concerns, even if the charities receive manufacturer contributions…This, we believe lawful avenues exist for pharmaceutical manufacturers and others to help ensure all Part D beneficiaries can afford medically necessary drugs.”

To read the OIG’s Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees in its entirety, click here.

OIG’s Conclusive Assessment for Fraud and Abuse Risk.

OIG concluded that the Arrangement presented minimal risk of donors’ (including pharmaceutical manufacturers) contributions influencing direct or indirect referrals by the Requestor due to the following determinations:

(1)    No donor or donor affiliate exerts direct or indirect control over the Requestor or the program because the Requestor is an independent, nonprofit, tax-exempt charitable organization that operates independently and autonomously from donors and donors’ contributions;

(2)    Although the Requestor matches “full-pay” patients* with contracted MRI providers for MRI’s covered under the Arrangement, all patients are free to choose their health care providers, practitioners, suppliers and insurance plans, and the Requestor does not refer to or recommend donors or donor affiliates;

(3)    The Requestor does not provide the donors with any data that would enable a donor to correlate its donations with the amount or frequency of the use of its drugs or devices; and

(4)    No donor or donor affiliate directly or indirectly influences the identification or delineation of the Disease State fund.

Accordingly, the OIG concluded that the Arrangement presented a low risk of fraud and abuse and was not likely to improperly influence beneficiaries’ choice of providers, suppliers, items or services due to the following determinations:

(a)    Although the Requestor matches “full-pay” patients with contracted MRI providers, the Requestor reimburses contracted providers in full and those MRI costs are not reimbursed by Medicare or Medicaid.  Additionally, the requestor does not refer to, recommend or arrange for particular providers, suppliers, drugs or insurance plans to “co-pay” patients*;

(b)    The Requestor’s determination of a patient’s qualification for assistance is based solely on financial need determined in a verifiable and consistent manner.  This determination is made without regard to the patient’s providers, suppliers, drugs or insurance plans, or any referring party or donor and the amount of the corresponding donation; and

(c)    The Requestor assists all eligible financially needy patients on a first-come first-served basis to the extent of available funds without regard for a patient’s provider, supplier or insurance plan.  Additionally, patients have already selected a provider or supplier for treatment, and the Requestor does not refer patients to, or recommend or arrange for products or services of, a donor.

*A patient is categorized as “full-pay” or “co-pay” based on their insurance status and deductible or cost-sharing obligations.  “Full-pay” patients can be either uninsured or insured with a deductible or cost-sharing obligation that exceeds the average charge for an MRI negotiated with contracted MRI providers in the program.

To read the full OIG Advisory Opinion 15-14, click here.


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Demske, Gregory E.  “OIG Advisory Opinion No. 15-14.”  Office of Inspector General.  Department of Health and Human Services: Issued 13 Nov. 2015, Posted 20 Nov. 2015.  Web.  1 Dec. 2015.

Fraud and Abuse Practice Group Leadership.  “Summary of OIG Advisory Opinion 15-14.”  American Health Lawyers Association: 30 Nov. 2015.  E-mail.  1 Dec. 2015.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida area.  www.TheHealthLawFirm.com. The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

Keywords: OIG, Office of the Inspector General, audit attorney, Medicare fraud defense attorney, pharmaceutical manufacturer attorney, Florida health attorney, health law attorney, Florida health lawyer, The Health Law Firm, health law defense lawyer, non-profit health care attorney, financially needy patients, patient assistance programs (PAP), civil monetary penalties lawyer, Anti-Kickback Statute (AKS), AKS attorney, illegal kickbacks attorney, illegal referrals in health care, health professional legal representation, counsel for charitable organizations in health care, health care legal opinions, OIG advisory opinion, legal opinion on health care business transactions, anti-kickback opinion, Medicare legal counsel, complex business transactions, advice of legal counsel, declaratory statement from Board of Medicine, Board of Pharmacy administrative opinions

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