On March 24, 2023, the Office of Inspector General (“OIG”) issued Advisory Opinion 23-03 (the “Opinion”), in which it decided not to impose sanctions on an Arrangement to provide prepaid gift cards to patients for certain preventative screening tests (the “Arrangement”).

As part of the Arrangement, a laboratory and its parent company (the “Companies”) would provide a prepaid card, such as a Visa or Mastercard gift card, of up to $75 to certain individuals to encourage those individuals to return the sample collection kit associated with an FDA-approved colorectal cancer screening test (the “Test”). In the Opinion, the OIG determined that it would not impose administrative sanctions under the Anti-Kickback Statute (“AKS”)^[1] or the Beneficiary Inducements prohibition in the Civil Monetary Penalties Law (“CMP”)^[2] for the Arrangement.

FOCUS ON THE FACTS: Review of Specific Safeguards Under the Arrangement

In its analysis, as always, the OIG relied heavily on the specific facts of the Arrangement. Specifically, the OIG noted that the Test must be prescribed by a health care provider acting within the scope of their prescribing authority (the “Prescriber”). The Test kit is then mailed to the patient’s home. The patient must collect their own stool sample and ship the Test kit back to the laboratory. As such, the Prescriber does not control whether the Test kit sample is sent to the laboratory – that step is within the patient’s control.

Next, the Companies certified they would implement certain safeguards related to the Arrangement, including the following:

• The Gift Card would be mailed only to those patients who return the Test kit by a specified deadline.

• They would advise patients that the Gift Card may not be used for items or services provided by the Companies.

• Each patient would be limited to receiving one Gift Card per 36-month period, a time period that aligns with Medicare’s coverage for the Test, which is once every 36 months.

• The Companies would implement processes to ensure that the recipient of the Gift Card had not already received a Gift Card in the prior 36-month period.

• The Companies would not engage in any other patient-focused promotion of the Arrangement, such as direct-to-consumer advertisements on third-party websites or advertisements in newspapers, on television or radio, or in magazines in connection with the Arrangement.

• The Companies would not advertise or market the Arrangement to Prescribers or offer or pay any remuneration to Prescribers in connection with the Arrangement.

THE OIG’S ANALYSIS:

The OIG advised that the Arrangement would implicate the Beneficiary Inducements CMP and AKS because of the offer and transfer of remuneration to Medicare patients, potentially resulting in the purchase of laboratory services in connection with the Test. However, the OIG concluded that it would not impose administrative sanctions on the Companies in connection with the Arrangement under either law based on the fact-specific analysis outlined below.

Review of the Proposed Arrangement Under Federal AKS

At a high level, the OIG concluded that the Arrangement presents a minimal risk of fraud and abuse under the AKS. Notably, the OIG cited to its prior opinion on preventative care services, noting that:

“From an anti-kickback perspective, the chief concern is whether an arrangement to induce patients to obtain preventive care services is intended to induce other business payable by a Federal health care program. Relevant factors in making this evaluation would include, but not be limited to: the nature and scope of the preventive care services; whether the preventive care services are tied directly or indirectly to the provision of other items or services and, if so, the nature and scope of the other services; the basis on which patients are selected to receive the free or discounted services; and whether the patient is able to afford the services.”

Accordingly, the OIG determined that the Arrangement is unlikely to lead to improperly increased costs or overutilization because the Test prescription is limited in several ways. For example, the Test is limited to patients aged 45-75-years-old and each patient may only obtain one prescription every 36-months. Additionally, because Gift Cards are only provided to patients who return the Test, rather than to all patients who receive a Test, Prescribers will not be able to anticipate whether the Companies would offer or provide the Gift Card to patients for which the test was ordered.

Second, the Arrangement would benefit patients and the Medicare program by promoting compliance with a recommended screening test. Notably, over thirty percent of patients who received a Test were not returning their sample. Finally, the OIG noted that the listed safeguards set forth by the Companies reduce the risk of fraud and abuse.

Beneficiary Inducements CMP and the Preventative Care Exception

When analyzing the Beneficiary Inducements CMP, the OIG focused on the exception to the definition of “remuneration” under section 1128A(i)(6)(D) of the Social Security Act, excluding incentives given to individuals to promote the delivery of preventive care where the delivery of such services are not tied (directly or indirectly) to the provision of other services reimbursed in whole or in part by Medicare or an applicable State health care program. (the “Preventive Care Exception”).

The OIG opined that the Gift Card under the Arrangement would satisfy this exception because the Gift Card promoted the delivery of a preventative screening test and the Gift Card would neither be an instrument convertible to cash, nor, in this particular case, disproportionately large in relationship to the value of the preventive care service. While the OIG made a note that $75 may be too large in other contexts, it considered the benefits to beneficiaries and the future health care costs expected to be avoided as a result of the Tests when evaluating the proportionality in this instance.

FINAL THOUGHTS:

Gift cards and other alternative forms of remuneration remain on the OIG’s radar and subject to scrutiny. Notably, the OIG recently published an FAQ discussing how it differentiates between “cash,” “cash equivalents,” and “in-kind” gift cards.

While the Opinion provides some flexibility, it is important to note that the OIG highlighted that its opinion is, as always, specific to the facts presented in the Companies’ Arrangement here. Notably, the OIG stated:

“We appreciate that the Gift Card may present the opportunity for patients to receive valuable remuneration that could induce them to purchase federally reimbursable services and caution that if any of the foregoing facts were different, we likely would reach a different conclusion with respect to the risk presented by this type of arrangement under the Federal anti-kickback statute, regardless of whether the arrangement satisfies an exception to the Beneficiary Inducement CMP.”

FOOTNOTES

^[1] 42 U.S.C. § 1320a–7b(b).

^[2] 42 U.S.C. § 1320a–7a(a)(5).