News & Insights

Newsletter

October 11, 2021

Health Headlines – October 11, 2021


OIG Issues Advisory Opinion for Alzheimer’s Study to Subsidize PET Imaging Coinsurance Costs  On September 29, 2021, OIG issued Advisory Opinion No. 21-13 analyzing a proposal for a clinical study that would involve subsidizing Medicare beneficiaries’ cost-sharing obligations in connection with a clinical study relating to Alzheimer’s disease. The study aims to investigate the use of a positron emission tomography (PET) scan that detects beta amyloid (Aβ) plaques to examine whether PET Aβ imaging affects health outcomes in a diverse sample of patients who are Medicare beneficiaries. As discussed in further detail below, OIG finds that the proposed subsidy arrangement could generate prohibited remuneration under the Federal Anti-Kickback Statute (AKS) and the beneficiary inducement provision of the civil monetary penalties law, but ultimately determines that it would not impose administrative sanctions because the arrangement presents a low risk of fraud and abuse.

Factual Background

The Advisory Opinion was requested by a professional medical society representing radiologists (the Association) and a nonprofit organization that supports Alzheimer’s research (the Charity). The Association would serve as the sponsor of the study and the Charity would be the director of the study. The Association would enroll approximately 350 sites where the PET Aβ scans will be performed. The sites would include hospital outpatient departments and independent diagnostic facilities. All patients participating in the study would be Medicare beneficiaries. The requestors received approval from CMS in April 2020 for the PET Aβ scans conducted in connection with the study to be reimbursed by Medicare pursuant to a National Coverage Determination issued in 2013.

Under the proposed subsidy arrangement, the Association would reimburse sites directly for the coinsurance that a Medicare beneficiary participating in the study would otherwise owe for the PET Aβ scan. The requestors indicated that enrollment from minority communities could be jeopardized due to lack of resources. The requestors also stated that they proposed to subsidize coinsurance for virtually all subjects, regardless of financial need, in order to remove a potential obstacle to general enrollment.

The requestors would finance the subsidies using funds donated to the Charity by individuals and foundations with the purpose of supporting the Charity’s research programs. The requestors certified that funds used to support the study would be kept segregated and that none of the donations would be from entities with a financial interest in the study.  The requestors also certified that the subsidies would not be offered as part of any advertisement or solicitation and that the information regarding the subsidies would be included in the informed consent documents provided to subjects.

Analysis

OIG finds that the subsidies could induce Medicare beneficiaries to participate in the study, which involves the provision of federally reimbursable health care items and services. OIG also notes that the arrangement would provide remuneration to investigators and participating sites through the opportunity to bill Medicare for the services related to the study and the guaranteed coinsurance payment. Based on these factors, OIG concludes that the arrangement would generate prohibited remuneration under the AKS, if the requisite intent to induce referrals were present, and would also generate prohibited remuneration under the beneficiary inducement provision of the civil monetary penalties law. OIG nevertheless concludes that the arrangement would present a minimal risk of fraud and abuse and that, in an exercise of discretion, OIG would not impose sanctions on the requestors in connection with the arrangement. OIG cites the following factors in support of this determination:

  • The study was developed in consultation with CMS, and the coinsurance subsidy appears to be designed to meet the policy objective of advancing Alzheimer’s treatment, particularly for minorities. The study could potentially address a real or perceived evidence gap on racial and ethnic factors in Alzheimer’s research.

  • There is a low risk of overutilization or inappropriate utilization, and there are guardrails to further mitigate this risk, including the fact that investigators will not advertise the availability of subsidies and that beneficiaries must meet certain eligibility criteria.

  • The arrangement is distinguishable from problematic “seeding” arrangements—such as those where manufacturers offer subsidies to lock in future utilization—because participants receive only one PET Aβ scan and three office visits, with no expectation of triggering subsequent utilization of services.

The Advisory Opinion is limited in scope to the proposed arrangement and can only be relied upon by the requestor. However, the opinion provides a helpful indication of how OIG might respond to similar requests.

The Advisory Opinion is available here.

Reporter, J. Gardner Armsby, Atlanta, +1 404 572 2760, garmsby@kslaw.com.

OIG Issues Favorable Advisory Opinion Regarding Chiropractor Arrangement to Offer Discounts – On September 30, 2021, OIG posted Advisory Opinion No. 21-14 regarding a chiropractor’s proposal to extend an existing discount program covering a package of services to include federal health care program beneficiaries. OIG concluded that it would not impose administrative sanctions under either the Federal Anti-Kickback Statute (AKS) or the beneficiary inducement provision of the civil monetary penalties law, as the proposed arrangement, while not meeting the definition of a “discount” for purposes of the safe harbor, did not implicate the concerns OIG expressed when excluding bundled discounts from the safe harbor protections. 

The requestor of this advisory opinion operates chiropractic clinics (the Clinics). The chiropractors who provide services at those Clinics do not participate as in-network providers with any third-party payors, including the Medicare program. Accordingly, patients, including federal Health care program beneficiaries, pay the Clinics directly for services received, and the Clinics provide them with an itemized receipt to submit to their insurance plan for any reimbursement that may be owed under their plans’ out-of-network coverage. In accord with the proposed arrangement and the Medicare program requirements, patients who have Medicare as their primary insurance pay the Clinics directly at the time of service and the Clinics submit the claims to Medicare on the patients’ behalf. Medicare’s reimbursement decision is sent directly to the patient. Thus, if the services furnished are covered by Medicare, that patient may be reimbursed by Medicare, in whole or in part, for the amount the patient initially paid the Clinics.

The Clinics currently offer various discounts to the general public but prohibit federal health care program beneficiaries from receiving these discounts. Under the proposed arrangement, the Clinics would permit federal health care program beneficiaries to utilize any offered discounts on the same terms as other member of the general public, which would be offered and advertised to the general public and not targeted to federal health care program beneficiaries. The discounts would be offered throughout the year and limited in supply, expire on a specific date, or both. To receive a discount, patients would have to affirmatively ask for the discount when presenting for an appointment; the Clinics do not and would not notify patients of any outstanding discount offers while patients are at the Clinics.

The discounts offered by Clinics are typically on a package of services. Those packages may consist of services reimbursable by federal health care programs and non-reimbursable services. Under the proposed arrangement, the Clinics would allocate the discount proportionally across each of the services in the package, with the same percentage discount applied to each service. Thus, the discounted charges would be reflected on the billing statement or receipt, and claims submitted to Medicare would reflect the discounted amounts for the covered service(s).

OIG concluded that the proposed arrangement implicates the AKS because the discount program may induce referrals for services reimbursable by a federal health care program. It considered whether any statutory exceptions to the AKS applied, including the safe harbor for discounts. OIG noted that it had previously expressed concerns about discounts on bundled items and services. Particularly where the bundled goods and services were reimbursed under different payment methodologies, discounts on those bundled goods and services might shift costs among reimbursement systems and distort the true cost of items and services. Due to the bundling in the proposed arrangement, OIG concluded that the discounted price would not meet the definition of a “discount” for purposes of the safe harbor. Accordingly, the proposed arrangement implicated the AKS and would not be protected under the discount safe harbor. However, because the bundled services reimbursable under the Medicare program would all be reimbursed under the same payment methodology, Medicare Part B, OIG also found that its concerns expressed when excluding bundled discounts from safe harbor protection were not implicated here. Concluding that the proposed arrangement presents a low risk under the AKS, OIG determined not to impose administrative sanctions on the Clinics.

OIG also noted that the proposed arrangement would implicate the beneficiary inducement provision of the civil monetary penalties law and would not meet the exception to that statute for any permissible practice specified in an exception to the AKS or a safe harbor regulation. For the same reasons set out in its assessment of the proposed arrangement under the AKS, OIG determined, in the exercise of its discretion, not to impose administrative sanctions under the beneficiary inducement provision of the civil monetary penalties law.

The OIG Advisory Opinion is available here.

Reporter, Christopher C. Jew, Los Angeles, + 1 213 443 4336, cjew@kslaw.com.

ALSO IN THE NEWS

Call for Amicus Participation in Supreme Court DSH Case: Becerra v. Empire Health Foundation – King & Spalding is representing Empire Health Foundation before the Supreme Court, challenging HHS’s 2005 disproportionate share hospital (DSH) policy treating patients who had exhausted their Part A benefits (or otherwise were ineligible for Part A payment) as nonetheless being “entitled to benefits under Part A.”   CMS’s policy tends to reduce both a hospital’s Medicare fraction and its Medicaid fraction, thereby reducing DSH payments for the vast majority of DSH hospitals.  Furthermore, not only will the Supreme Court’s decision in Empire decide nationally whether CMS’s exhausted day rule is valid, it will likely also have substantial implications for the ongoing litigation surrounding the Allina Part C issue since both issues turn on whether the phrase “entitled to benefits under Part A” should be interpreted narrowly (as hospitals contend) or broadly (as CMS contends). 

Empire Health Foundation won its case before the District Court and the Ninth Circuit, and the Ninth Circuit reinstated HHS’s pre-2005 regulation under which only “covered” days are included in the Medicare fraction (more information is available in the May 5, 2020 Health Headlines).  The Supreme Court granted HHS’s request for review in July and amicus briefs supporting Empire are due by October 25, 2021.   DSH hospitals that are adversely affected by CMS’s exhausted days policy or CMS’s Part C policy should consider joining an amicus brief informing the Court that CMS’s policy detrimentally affects their DSH payments since we believe that will be an important consideration for the Court.  Such hospitals should also consider urging their state or national hospital associations to also support Empire as amicus.  If you are interested in learning more about joining as amicus, please contact Dan Hettich (dhettich@kslaw.com) and Ahsin Azim (aazim@kslaw.com), and they will put you in touch with the counsel for amici.