In Advisory Opinion 12-21, the OIG concluded that a Federally qualified health center’s offer of grocery store gift cards to capitated managed care patients would not constitute grounds for the imposition of sanctions under the civil monetary penalty law’s beneficiary inducement prohibition or the Anti-Kickback Statute.

The health center is a 501(c)(3) nonprofit community health center that participates in the Medicare and Medicaid programs and receives Federal grants to deliver health care services to medically underserved populations.  The health center serves as a contracted provider for certain Medicaid managed care plans and receives reimbursement for its services on a capitated basis.  Each Medicaid managed care plan assigns its enrollees to specific contracted providers, such as the health center, based on various factors such as geographic location and the contracted provider’s available capacity.

Under the proposed arrangement, the health center would send letters to plan enrollees who are either (1) newly assigned to the health center as their contracted provider, or (2) were assigned to the health center at least one year before the visit but have not been treated at the Health Center in the past twelve months.  The letters would offer enrollees the opportunity to claim a $20 gift card for groceries from a major supermarket chain in exchange for a visit to the health center for a screening or any other clinical health service.  Enrollees would be eligible to receive only one gift card during any 12-month period and the gift card would not be redeemable for cash or for items or services from the health center.  The health center certified that the proposed arrangement is intended to:

• encourage patients to be seen for care and to be engaged in preventative care;
• encourage patients to learn more about the health center; and
• help the Health Center achieve better health outcomes.

In analyzing whether the gift card offer would violate the CMP Law or the AKS, the OIG noted that there are valid reasons for Congress to restrict the availability of “giveaways” in connection with Medicare and Medicaid Providers.

• Such programs can corrupt the beneficiary decision-making process and result in over-utilization, increased costs, or inappropriate medical choices.
• There is potential harm to competing providers who do not, or cannot afford to, offer similar incentives to generate business.
• Such practices can negatively affect the quality of care provided to beneficiaries.  The OIG is concerned that providers may offset the costs of these inducements by cheating on the quality of Medicare and Medicaid items and services.

Although the gift card would constitute remuneration to Federal health care program beneficiaries and would be of more than nominal value, the OIG concluded that the proposed arrangement was unlikely to influence beneficiaries to select the health center as their contracted provider and, therefore, would not violate the CMP Law.  The OIG noted that beneficiaries are assigned to the health center by the Medicaid managed care plan and would have to affirmatively elect a reassignment to receive services from another provider.  The gift card would be of “relatively modest value” and would not be redeemable for cash, or for items or service provided by the health center.  The OIG pointed out that, in a different context, remuneration of such value could have a substantial potential to steer patients.  Finally, the gift card would only be advertised and marketed to certain groups of enrollees already assigned to the health center.

Citing similar reasons, the OIG also concluded that the proposed arrangement would pose minimal risk of fraud and abuse under the AKS.  The OIG noted that the health center would only offer the gift card to eligible enrollees of Medicaid managed care plans reimbursed on a capitated basis.  Due to the capitated reimbursement structure, the proposed arrangement would not result in increased costs to Federal health care programs and the health center would not have an incentive to provide unnecessary care.  The OIG concluded its analysis by highlighting that the proposed arrangement would benefit enrollees in primarily poor and underserved communities and may prove “to both improve health outcomes and make best use of resources in connection with capitated managed care plans.”

During 2012, the OIG issued other favorable advisory opinions (12-05 and 12-14) regarding application of the CMP Law and the AKS to rewards and “giveaways” offered by providers to Medicare and Medicaid beneficiaries.  Taken together, these advisory opinions provide useful guidance for the development and structuring of beneficiary incentive and rewards programs by a variety of provider types.