Health Headlines– June 6, 2022

OIG Modifies 2020 Advisory Opinion Regarding Financial Assistance for Travel, Lodging, and Other Expenses for Certain Patients by a Drug Manufacturer
On May 26, 2022, OIG issued a modification of Advisory Opinion 20-02 (2020 Opinion), which was originally issued on January 15, 2020.  In the 2020 Opinion, OIG issued a favorable advisory opinion regarding a pharmaceutical manufacturer’s (the Requestor) provision of financial assistance for travel, lodging, and other expenses provided to eligible patients prescribed the Requestor’s drug in connection with a round trip to an approved treatment center for administration of the drug. OIG concluded in its 2020 Opinion that it would not impose administrative sanctions on the Requestor for this financial arrangement for violations of the federal anti-kickback statute (AKS) or the civil monetary penalty law prohibiting inducements to beneficiaries (Beneficiary Inducement CMP). 

The modified Advisory Opinion 20-02 recently published in 2022 focused on whether its conclusions in the 2020 Opinion should be modified if the Requestor also provides financial assistance to eligible patients for travel, lodging, and other associated expenses in connection with a round trip to an approved treatment center for a cell-removal process that must be completed before the patient receives the Requestor’s drug. OIG concluded that although the modified arrangement could generate prohibited remuneration under the AKS if the requisite intent were present, it would not impose administrative sanctions on the Requestor in connection with this modified arrangement.

The Requestor manufactures an FDA-approved drug using personalized medicine made from the patient’s own cells. The process to formulate the personalized drug involves separating a patient’s white blood cells through a process called leukapheresis, which must be performed on each patient at designated inpatient and outpatient facilities.

In the 2020 Opinion, OIG issued a favorable advisory opinion regarding the Requestor providing financial assistance to patients and up to two caregivers for travel, lodging, and other out-of-pocket expenses in connection with the drug administration and post-administration monitoring at the designated facilities. However, the arrangement described in the 2020 Opinion did not include assistance with the expenses associated with the leukapheresis process. Patients who were eligible for this assistance had to meet the following requirements: (1) live more than 2 hours driving distance or 100 miles from the nearest designated facility; (2) have been prescribed the drug for an FDA-approved indication; (3) have a household income that does not exceed 600 percent of the Federal Poverty Level; and (4) have no insurance for non-emergency medical travel.

Under the modified arrangement, eligible patients may receive financial assistance for one round trip from the patient’s and each caregiver’s place of residence to a designated facility for leukapheresis in addition to the round trip to the designated facility for the drug administration and post-administration monitoring. The assistance covers costs for a modest, single shared hotel room located near the facility for two nights and reimbursement for certain meal and other travel expenses up to $50 per day per person.

OIG concluded that the modified arrangement implicates the AKS because: (1) the free travel, lodging, and meal assistance provided in connection with leukapheresis constitute remuneration to eligible patients who are federal health care program beneficiaries that may induce them to purchase the Requestor’s drug; and (2) the travel, lodging, and meal assistance the Requestor offers to beneficiaries allow them to travel to and stay near a designated facility that they might not otherwise have selected for the drug treatment or leukapheresis.  However, OIG concluded that this arrangement was low-risk due to the following safeguards:

1. The financial assistance for the leukapheresis is narrowly tailored to remove barriers to undergo the process and is only offered to those patients who meet certain criteria;

2. Reimbursement for traveling to the leukapheresis location is limited to expenses incurred during a 2-night stay and does not authorize lodging when the Requestor has knowledge that the patient is eligible to receive free lodging without charge from the designated facility;

3. Requestor does not advertise the financial assistance available under the arrangement;

4. Patients do not learn about or become eligible for assistance until they are prescribed the drug;

5. Patients and caregivers must agree not to request reimbursement from any federal health care program for costs covered under the arrangement; and

6. The Requestor does not bill or otherwise shift the costs of the arrangement to any federal health care program.

Regarding the Beneficiary Inducement CMP, OIG concluded that the arrangement implicates the Beneficiary Inducement CMP because it is likely to influence a patient to select a particular physician or facility that the patient may not otherwise have selected.  However, OIG concluded that the arrangement satisfies the promotes access to care exception, so it will not pursue administrative sanctions for the arrangement.

In summary, in its modified opinion, OIG extended its conclusion that it would not impose sanctions under the AKS or Beneficiary Inducement CMP to the Requestor’s payment of travel and related expenses by a drug manufacturer to eligible patients to also include travel expenses for a separate but associated service with the drug treatment when certain safeguards are present.

Modified OIG Advisory Opinion 20-02 is available here, and the original OIG Advisory Opinion 20-02 is available here. 
Reporter, Brittany Bratcher, Austin, +1 512 457 2071, bbratcher@kslaw.com.

ALSO IN THE NEWS

OIG Issues Seventh Favorable Advisory Opinion Regarding Medigap Plan and Preferred Hospital Organization Arrangements
On June 1, 2022, OIG posted a favorable advisory opinion, Advisory Opinion No. 22-12, relating to an arrangement between a Medigap plan and a preferred hospital organization. The proposed arrangement and OIG’s analysis is similar to a number of other advisory opinions issued last year, including Advisory Opinion Nos. 21-03, 21-04, 21-05, 21-07, 21-09, and 21-11.  Previous reporting on those advisory opinions is available here (Advisory Opinion Nos. 21-03, 21-04, 21-05), here (Advisory Opinion No. 21-07), here (Advisory Opinion No. 21-07), and here (Advisory Opinion No. 21-07).  The most recent Advisory Opinion No. 22-12 is available here.

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