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Florida Business, Whistleblower, & Securities Lawyers / Blog / Qui Tam/Whistleblower / HEALTHCARE WITH A SIDE OF HAIRCARE: IMPROPER INCENTIVES TO MEDICARE PATIENTS



Offering free gifts with purchase is not a new marketing concept. Many businesses use it as an effective tool for customer retention and soliciting new customers. When the customers are paying with government funds, however, free gifts can be a big no-no. Especially when the free gifts offered to Medicare beneficiaries have no relation to the provision of healthcare services, such as free hair and nail appointments or holiday parties. The federal government wants federal healthcare beneficiaries (e.g., Medicare and Medicaid patients) to choose their healthcare professionals based on their medical acumen, not because they offer the best “free gift.”

The two main rules governing inducements to federal healthcare beneficiaries are the Anti-Kickback Statute (“AKS”) and the Civil Monetary Penalties Law (“CMPL”).  In addition, many states have similar laws.

The federal AKS prohibits offering or receiving any form of remuneration to induce referrals for any items or services to be paid by any federal healthcare program, with some specific exceptions. (42 U.S.C. § 1320a-7b(b)).  In other words, medical providers cannot pay for the referral of Medicare patients to their practice.

The federal CMPL prohibits:

[O]ffers to or transfers remuneration to any individual eligible for benefits under title XVIII of this Act, or under a State health care program (as defined in section 1128(h)) that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part, under title XVIII, or a State health care program (as so defined).

(42 U.S.C. § 1320a-7a(a)(5); 42 C.F.R. § 1003.100(a)). In simple terms, the CMPL prohibits incentives that are likely to influence a beneficiary’s choice of a provider for particular services.

Over the years, the Office of Inspector General (“OIG”) has issued advisory bulletins and other guidance to further illustrate what types of remuneration may or may not be permissible under the AKS and CMPL.

What May Be Permitted:

  • Some Gift Cards: specific use gift cards that can be redeemed only for certain categories of items (such as fuel-only gas station gift cards to help patients travel to medical appointments), or a gift card for a service that delivers the ingredients necessary for a healthy meal could be protected, if the other conditions of the safe harbor provision are satisfied.
  • Items of Nominal Value: gifts of de minimis value with a retail value of $15 or less per item or $75 in the aggregate per beneficiary on an annual basis. See OIG, Policy Statement Regarding Gifts of Nominal Value to Medicare and Medicaid Beneficiaries (12/7/16). 
  • Tools or Supports to Patients: Assistive tools or supports may be offered to a Medicare patient IF it:

(i) is an in-kind item, good, or service; (ii) that has a direct connection to the coordination and management of care of the target patient population; (iii) does not include any cash or cash equivalent; (iv) does not result in medically unnecessary or inappropriate items or services reimbursed in whole or in part by a Federal health care program; (v) is recommended by the patient’s licensed health care professional.

(42 CFR 1001.952(hh)(3)(ii)) AND it is in furtherance of one of the following goals:

(A) Adherence to a treatment regimen determined by the patient’s licensed health care professional. (B) Adherence to a drug regimen determined by the patient’s licensed health care professional. (C) Adherence to a follow up care plan established by the patient’s licensed health care professional. (D) Prevention or management of a disease or condition as directed by the patient’s licensed health care professional. (E) Ensure patient safety.

(42 CFR 1001.952(hh)(3)(vi)).

Examples of  tools or supports that may be permissible include:  home modifications such as shower grab bar and other physical or structural modifications that allow patients to live safely at home; grocery or meal delivery services; and exercise or fitness programs,   provided all safe harbor conditions are met, including that the tool or support advances one of the goals enumerated in paragraph 42 CFR 1001.952(hh)(3)(vi).  In addition, if a medical provider is going to make available patient engagement tools and supports, 42 CFR 1001.952(hh)(8) mandates that the provider cannot consider the type of insurance held by the patient when deciding whether to offer the tool/support.  In the case of a medical practice with primarily senior patients, it is possible that all or virtually all patients utilizing the tool/support would be Medicare beneficiaries. So long as patients receiving the tool/ support are not selected based on their Medicare insurance status, the requirement would not be violated.

  • Transportation to Medical Appointments: OIG has approved the provision of local transportation to patients who reside up to 25 miles from the provider (or 75 miles if the patient lives in a rural area) to attend medical appointments.

Examples of potentially prohibited conduct include:  

  • Cash and cash equivalents regardless of value: OIG’s longstanding guidance makes clear that remuneration in the form of cash and cash equivalents poses a higher risk of interfering with clinical decision-making, incentivizing over-utilization, or inappropriate utilization, and is not permissible, regardless of amount. 
  • Gift Cards to big-box retailers: Gift cards offered by retailers that sell a wide variety of items (e.g., Amazon, Wal-Mart, Costco) would not qualify for protection under the safe harbor provision, regardless of value, as they could easily be diverted from their intended purpose or converted to cash. See OIG Advisory Opinion 20-08 (December 23, 2020).
  • Some forms of direct patient marketing: OIG has previously explained that door-to-door marketing, telephone solicitations, direct mailings, and in-person sales pitches or “informational” sessions can be extremely coercive, particularly when such activities target senior citizens. Therefore, direct patient solicitations may be impermissible.
  • Routine waiver of Medicare Part B co-payments See 42 C.F.R. § 1003.110. 
  • Free nail and hair salon services 
  • Cards, dominoes, holiday parties, and other purely social events 
  • Gifts valued over $15 per item or over $75 per patient per year 
  • Transportation that is for non-medical purposes

Violations of the AKS and/or CMPL are subject to stiff penalties and may be subject to a False Claims Act case.  If you have first-hand knowledge that a medical provider may be providing improper incentives to Medicare beneficiaries, contact the qui tam lawyers at Rabin Kammerer Johnson, who are experienced at bringing these type of whistleblower cases, for a free consultation.

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