News & Insights


January 24, 2022

Health Headlines– January 24, 2022

OIG Issues Favorable Advisory Opinion on Retailer’s Proposed Expansion of Discount Programs for Low-Income Individuals – On January 19, 2022, OIG posted a favorable Advisory Opinion on a pharmacy-owning retailer’s proposal to expand its existing discount programs for low-income individuals by including enrollment in Medicaid as an additional category of eligibility. In its decision, OIG recognized the discount programs are likely to have a neutral effect on federal health care programs while offering meaningful benefits to newly eligible members.
The retailer operates a web-based marketplace that sells consumer goods to the public. Customers of the retailer may enroll in a membership program that confers various benefits (e.g., shipping, streaming services, digital storage). The retailer also owns a pharmacy that is enrolled with Medicaid programs in multiple states and that offers delivery of orders. The membership program provides shipping benefits for pharmacy orders and discounts to customers who pay out of pocket for certain drugs.

The retailer offers two types of discount programs for qualifying low-income individuals: (1) a discount on the monthly fee for the membership program; and (2) discounts on certain grocery items, but not anything sold by the pharmacy. Individuals may qualify for these programs if they can show proof they receive benefits under certain public assistance programs. The retailer proposed to offer the programs to Medicaid enrollees.

OIG first observed the retailer’s expansion of the programs to Medicaid beneficiaries who are not otherwise eligible for the discount programs under current eligibility categories could induce those beneficiaries to select the pharmacy for purchasing future drugs, including drugs reimbursable by Medicaid. Despite finding the proposal would not meet a safe harbor to the federal Anti-Kickback Statute or an exception to the prohibition on beneficiary inducements under the civil monetary penalties law, OIG declined to impose administrative sanctions for the following reasons:

  • First, the nexus between the discount programs and a Medicaid beneficiary’s potential ordering of drugs from the pharmacy is attenuated. In particular, OIG noted the grocery discount is wholly unrelated to pharmacy purchases, and that the membership discount includes access to free expedited shipping on all drugs ordered from the pharmacy—not just Medicaid-reimbursable drugs.

  • Second, Medicaid enrollment would be used as one of multiple proxies for financial need, rather than part of a targeted effort to provide remuneration only to Medicaid beneficiaries.

  • Third, the proposal is unlikely to result in inappropriate utilization or overutilization of items or services reimbursable by federal health care programs or an increase in costs to such programs. OIG did not see any indication that the discount programs would induce beneficiaries to order prescription drugs they would not otherwise purchase.

  • Fourth, the proposal does not raise patient safety or quality of care concerns and instead has the potential to provide meaningful assistance to low-income individuals.

  • Lastly, the proposal does not pose a heightened risk of steering beneficiaries to a particular pharmacy. OIG recognized that while the proposed arrangement may factor into a Medicaid beneficiary’s decision to purchase drugs from the retailer’s pharmacy, other important considerations could also inform that decision.

OIG Advisory Opinion 22-01 is available here.
Reporter, Kelley T. Tran, Los Angeles, +1 213 443 4328,

Georgia Sues HHS Over Medicaid Work Requirement Repeal – On January 21, 2022, Georgia sued HHS over its withdrawal of the approval of the work requirement policy as a requirement for Medicaid eligibility in the Georgia Pathways to Coverage demonstration. As previously reported, in December 2021, CMS formally rescinded its approval of the qualifying hours requirement. One month later, Georgia has now sued HHS and CMS in the Southern District of Georgia to enforce the terms under which Georgia’s Pathways was originally approved.

In October 2020, HHS approved Georgia’s Pathways, a Section 1115 Demonstration Project, that would create an enrollment opportunity for more than 50,000 Georgia families to gain Medicaid eligibility so long as they met and continued to satisfy a minimum number of qualifying hours through work, job training, education, volunteering, or other similar activities. Medicaid work requirements were approved in Georgia and 11 other states by HHS during the Trump administration, which made such requirements a policy priority.

Under the Biden administration, HHS now rejects the work requirements as a violation of the Medicaid statute that compromised the effectiveness of the coverage expansion in light of the ongoing disruptions caused by the COVID-19 pandemic. Thus, in February 2021, CMS sent Georgia a letter indicating that it was reconsidering its previous approval of Georgia’s Pathways and had preliminarily determined the qualifying hours requirement did not further the objectives of Medicaid.

The complaint filed by Georgia against HHS is available here.
Reporter, Christopher C. Jew, Los Angeles, + 1 213 443 4336, 


Public Health Emergency Extended – HHS renewed its determination that a public health emergency exists nationwide as a result of the continued consequences of the COVID-19 pandemic, effective January 16, 2022. This is the eighth renewal of the original January 31, 2020 determination that a public health emergency exists and has existed since January 27, 2020. The full text of the order can be found here.

CMS Issues Additional State-Specific No Surprises Act Guidance – Last month, CMS issued letters to forty-five (45) states and United States territories detailing federal and state enforcement of certain provisions of the No Surprises Act. The No Surprises Act defers to state law in certain circumstances including the payor-provider independent dispute resolution process, the payment rules, the patient-provider dispute resolution process, and enforcement of balance billing protections. The CMS letters detail who will be responsible for enforcing certain provisions of the No Surprises Act – either CMS, the state, or both through a collaborative enforcement agreement. The CMS letters also clarify whether the state or federal dispute resolution process will apply to payor-provider disputes and patient-provider disputes. The CMS state-specific letters can be found here and more information about the No Surprises Act requirements can be found here.

King & Spalding Webinar – Annual Healthcare Fraud Enforcement Update: What Does 2022 Hold? – On February 1, 2022, at 1:00 PM ET, King & Spalding will be hosting a roundtable webinar exploring the evolving healthcare fraud enforcement pattens from 2021 and focusing on what to expect from the government and whistleblowers in 2022.
Topics for discussion will include:

  • Department of Justice and Office of Inspector General False Claims Act (FCA) enforcement initiatives impacting providers, including the Deputy Attorney General’s speech on individual accountability and focus on pandemic issues;

  • Specific FCA enforcement trends, including post-acute care, Medicare Part C, pursuit of private equity investors, the Provider Relief Fund, and the focus on the Anti-Kickback Statute;

  • FCA procedural updates, such as the False Claims Amendments Act of 2021; and

  • Thoughts on strategies for risk assessment and proactive compliance steps to mitigate risk.

The presenters include Amy Boring, Ethan Davis, Stephanie Johnson and Michael Paulhus. To register for the event, click here.