On March 16, 2022, the Office of Inspector General (OIG) published Advisory Opinion 22-05 (Advisory Opinion) in which it declined to impose sanctions against a medical device manufacturer (Requestor) that proposes to pay certain cost-sharing obligations of clinical trial participants, including Medicare beneficiaries. The OIG concluded that although the proposed arrangement (described below) would constitute prohibited remuneration under the Federal anti-kickback statute (AKS) and the beneficiary inducement prohibitions of the Civil Monetary Penalties Law (CMP), the low-risk nature of the proposed arrangement did not warrant the imposition of sanctions.

Proposed Arrangement

The Requestor manufactures a device that uses a patient’s cells for treatment of ischemic systolic heart failure (Therapy). The Therapy is a one-time treatment, though patients may receive follow-up items and services that are reimbursable by Medicare. The Requestor states that such follow-up items and services would not involve products manufactured by the Requestor. The Therapy is available in the US for use only in a clinical trial, through an FDA-approved Category B Investigational Device Exemption (IDE). The Requestor intends to conduct such a clinical trial (Study) at approximately 40 different sites. The Study will be subject to institutional review board (IRB) oversight, and each Study site and investigator must meet certain objective criteria to be eligible to conduct the Study. The Centers for Medicare and Medicaid Services (CMS) approved the Study as a Category B IDE study, which means that Medicare will provide reimbursement for the Therapy and for routine care items and services provided during the Study.

Under the proposed arrangement, the Requestor would pay to the Study site or investigator the Medicare cost-sharing amounts that Study subjects would otherwise owe for Medicare-reimbursable items and services provided during the Study. The Requestor would provide the same subsidy to commercially insured Study participants and those covered by Medicaid or other Federal health care programs. The Requestor estimates that the Medicare cost-sharing amounts could be more than $1,300 per beneficiary over the two-year course of the Study. According to the Requestor, the subsidy would serve three purposes: (1) reduce financial barriers to subjects participating and remaining in the Study; (2) attract a population of socioeconomically diverse Study subjects; and (3) maintain blinding of the Study subjects. With respect to the latter purpose, Study subjects in the “control” group will not be billed any cost-sharing amounts because they will not receive therapeutic benefit, as they are not receiving the Therapy. Thus, the lack of billing would signal to Study subjects that they are part of the control group, potentially affecting the Study outcome. With the subsidy, no Study subjects will be billed any cost-sharing amounts, preserving blinding of the subjects.

OIG Analysis

According to the OIG, the offering and paying of the subsidy would implicate the AKS because the subsidy could influence Medicare beneficiaries to participate in the Study and receive items and services reimbursable by Medicare. Further, the Requestor would provide remuneration directly to Study sites and/or investigators in the form of an opportunity to bill Medicare for Study-related items and services, as well as a guaranteed payment of beneficiaries’ cost-sharing obligations. The proposed arrangement also implicates the CMP, according to the OIG, because the subsidy would likely influence a beneficiary’s decision to receive Medicare-reimbursable items and services from a particular provider. However, the OIG concluded that even though it generated prohibited remuneration, the proposed arrangement posed a low risk of fraud and abuse.

The OIG highlighted several key features of the proposed arrangement in reaching its conclusion:

• The payment of the subsidy is a reasonable way for the Requestor to enroll Study subjects, attract a diverse pool of subjects and incentivize the subjects to complete the Study. This is particularly true where, per the Requestor, 40% of the subjects would be in the control group and receive no therapeutic benefit.

• There is a low risk of over-utilization or inappropriate utilization of items or services reimbursable by a Federal health care program. The OIG acknowledged that utilization may increase due to the Study, but there was no indication that the increase would be inappropriate. The OIG pointed to several safeguards:

  • The Requestor would not advertise the subsidy;

  • All Study subjects must meet the enrollment criteria to participate in the Study and receive the subsidy;

  • The sites and investigators are bound by the Study protocol and subject to oversight of an institutional review board; and

  • There will be a maximum of 260 Study subjects.

• CMS has approved the Study as a Category B IDE study and determined that it includes appropriate patient protections.

• Even though Study subjects may receive follow-up items and services that are reimbursable by Medicare, Requestor would not financially benefit from those items and services.

Conclusion

This favorable Advisory Opinion from the OIG provides additional guidance to device manufacturers and other stakeholders on safeguards that can be incorporated into unique clinical trial designs that may lower the risk of scrutiny under fraud and abuse laws.

As the OIG has emphasized, its Advisory Opinions are issued only to the requestors of the opinion, and have no application to, and cannot be relied upon by, any individual or entity, nor may they be introduced into evidence by anyone other than the requestors to prove the individual or entity did not violate the anti-kickback statute or any other law.