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OIG Rescinds Advisory Opinion Providing Financially Needy Medicare Beneficiaries with Assistance for Premiums and Cost-Sharing

Publications - Client Alert | November 29, 2017


The Office of Inspector General (“OIG”) has rescinded Advisory Opinion 06-04, which relates to a nonprofit, tax-exempt, charitable corporation’s proposal to provide financially needy Medicare beneficiaries with assistance with premiums and cost-sharing obligations. Both the Advisory Opinion 06-04 and the Rescinded Advisory Opinion Letter can be found here.

In Advisory Opinion 06-04, a nonprofit, tax-exempt, charitable corporation (“Requestor”) proposed to provide financially needy Medicare beneficiaries with assistance with premiums and cost-sharing obligations under Medicare Part B, Medicare Part D, Medigap and Medicare Advantage (the “Proposed Arrangement”). Based on the facts certified by the Requestor, the OIG concluded that the Proposed Arrangement would not constitute grounds for imposing civil monetary penalties for violating the beneficiary inducements prohibition (1128A(a)(5) of the Social Security Act) and, while the Proposed Arrangement could generate prohibited remuneration under the federal anti-kickback statute (1128B(b) of the Social Security Act), the OIG would not impose administrative sanctions under 1128(b)(7) or 1128A(a)(7) of the Social Security Act.

In its original analysis, the OIG was concerned that industry stakeholders would use the program to garner kickbacks or induce referrals of Medicare payable items or services by (i) influencing the decision of a Medicare beneficiary’s selection of a particular provider, practitioner, supplier or product or (ii) improperly influencing referrals by the Requestor to the particular donor. In its original analysis, the OIG concluded, in part based on certifications from the Requestor, that sufficient safeguards were in place to protect against the risk of fraud or abuse because the arrangement interposed an independent, bona fide charitable organization between donors and patients.

Critical to the OIG’s determination were certifications made by the Requestor that the OIG has since learned are inaccurate or false. The OIG specifically relied on the following certifications: (a) the Requestor makes awards of assistance in an independent manner that severs the link between donors and beneficiaries, (b) the Requestor would not provide donors with any data that would facilitate the donor in correlating the amount or frequency of its donations with the amount or frequency of the use of its products or services and no individual patient information will be conveyed to any donor and (c) no donor or affiliate of a donor will directly or indirectly influence the Requestor’s identification of disease categories for which assistance may be provided.

In the letter rescinding Advisory Opinion 06-04, the OIG states that the “Requestor’s failure to fully, completely, and accurately disclose all relevant and material facts to OIG” and Requestor’s failure to comply with factual certifications made by the Requestor in the advisory opinion process, which were material to the OIG’s conclusions, give reason for the OIG to rescind Advisory Opinion 06-04. According to the Rescinded Advisory Opinion Letter, the Requestor (i) provided patient-specific data to one or more donors that would enable the donor(s) to correlate the amount and frequency of their donations with the number of subsidized prescriptions or orders for their products, and (ii) allowed donors to directly or indirectly influence the identification or delineation of Requestor’s disease categories.

This rescission of Advisory Opinion 06-04 by the OIG is evidence of the OIG’s continued review of Advisory Opinions that it has issued, and its continued enforcement of the federal anti-kickback statute and the beneficiary inducements prohibition.

Additional Information

If you would like assistance evaluating these and other arrangements that may pose a risk under the federal fraud abuse laws, please contact a member of our National Healthcare Practice Group.

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