OIG Issues Advisory Opinion Regarding Bundled Discounts Offered to Cash-Paying Medicare Patients

On October 5, 2021, the U.S. Department of Health and Human Services, Office of the Inspector General (“OIG”), published an Advisory Opinion (AO# 21-14) regarding a proposal to extend an existing discount program for chiropractic patients to include Federal health care program beneficiaries.

The requestor of the Advisory Opinion operates a chiropractic clinic in which practitioners render services solely on an out-of-network basis, as the providers do not participate in any payor programs, including Medicare. However, the clinic assists patients by submitting out-of-network claims for payment, on the patient’s behalf, for reimbursement directly to the patient.

The requestor set forth that the clinic offers a bundled discount program to its patients, and that it desires to extend such discounts to Federal health care program beneficiaries. Of note, the discounts were described as being widely advertised, offered in limited supply during certain times of year, and applicable only upon the patient’s completion of the entire bundled course of treatment. Importantly, some of the discounted bundles would include both reimbursable and non-reimbursable services under Medicare.

The OIG advised that offering the discounts to Federal health care beneficiaries would implicate both the Federal Anti-Kickback Statute and the Civil Monetary Penalty Law’s prohibition on beneficiary inducements, as the discounts to patients constitute renumeration and the arrangement did not fit within the Discount Safe Harbor to the Federal Anti-Kickback Statute. In particular, given that a bundle would include both reimbursable and non-reimbursable services, the arrangement could not be structured to strictly comport with the requirements of the Safe Harbor.

Nevertheless, the OIG determined that the concerns presented by the proposed arrangement were alleviated largely because (i) the reimbursable services would be reimbursed under the same payment methodology (Part B) rather than applied across different payment programs; and (ii) the discounts would be allocated proportionally across all services rendered, including the reimbursable and non-reimbursable services, and disclosed in each applicable billing statement. As such, in the OIG’s view, the arrangement posed a sufficiently low risk of abuse under the Anti-Kickback Statute because the requestor “would not, for example, be offering a deep discount on a non-reimbursable service to induce a patient to get additional reimbursable services.” Similarly, for these reasons, the OIG opined that it would decline to enforce against the clinic under the Civil Monetary Penalties Law for offering inducements to federal healthcare beneficiaries.

How Frier Levitt Can Help

The offering of discounts, gifts, or rebates to Medicare and other federal healthcare program beneficiaries is fraught with legal risk. Frier Levitt has extensive experience providing compliance advice to health care providers, including as it relates to discounts, gifts, and rebates. Contact Frier Levitt to obtain a regulatory review of an existing or planned business arrangement, and for assistance implementing internal compliance protocols.

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