OIG Advisory Opinion Allows Clinical Trial Sponsor to Subsidize Copayments

Paying subsidies to clinical research subjects has long been viewed as a clear violation of the Federal Anti-Kickback Statute (AKS). However, in a recent Advisory Opinion, the U.S. Department of Health & Human Services, Office of Inspector General (OIG) stated that it would not impose administrative sanctions on a device manufacturer that subsidizes copayments for Medicare beneficiaries participating in a clinical trial sponsored by the manufacturer.

Centers for Medicare & Medicaid Services (CMS) policies allow Medicare payment to cover the routine costs of qualifying clinical trials as well as reasonable and necessary items and services used to diagnose and treat complications arising from participation in those trials.  However, it raises fraud and abuse concerns under the AKS when a research sponsor offers to pay cost-sharing amounts owed by the Medicare beneficiary. The AKS prohibits knowingly and willfully offering, paying, soliciting, or receiving any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program.  Thus, the AKS is implicated when a clinical trial sponsor pays applicable copayments for the purpose of inducing patients to enroll in a study.

Advisory Opinion No. 15-07 opined on the waiver of copayments in the context of a prospective, controlled, double-blind, randomized trial designed to test whether the use of a percutaneous lumbar decompression procedure with a study device would improve health outcomes in patients with lumbar spinal stenosis. Under the proposed study design, subjects randomized to the treatment group would receive the procedure while study subjects randomized to the control group would receive a sham surgery with no treatment in order to control for the placebo effect. CMS would provide coverage for Medicare beneficiaries enrolled in the study, but those beneficiaries would typically be charged copayments for the facilities’ services and the physicians’ professional services. In this case, collecting copayments from patients receiving the sham surgery would be inappropriate because there would be no services rendered with therapeutic intent. However, failing to charge copayments to the patients in the control group, who received sham surgery, while charging copayments to the patients in the treatment group would compromise the study design because those patients not charged would realize they were in the control group. In addition, the study sponsor proposed paying all costs associated with the procedure for those patients in the control group who elected to have surgery after exiting the study.

Although the study sponsor stated the purpose of subsidizing the procedure for study subjects is to encourage enrollment in the study, the OIG concluded that the arrangement presents a minimal risk of fraud and abuse under the AKS because the subsidies are necessary to achieve the study’s goals and the data generated by the study will eventually assist CMS in determining whether the procedure is necessary for broader Medicare coverage. The OIG also noted that the arrangement was not designed to induce the use of the study device except for the purposes of conducting the study and that the subsidies would only be paid to a predetermined number of patients enrolled in the study pursuant to a protocol subject to monitoring by an Internal Review Board.

While this opinion is instructive on the OIG’s treatment of certain compensation arrangements, this decision is limited to the very specific facts set forth in this proposed arrangement. Complying with federal regulations related to clinical trial services requires tremendous effort and operational precision. Frier Levitt counsels clinical trial sponsors and investigators on the complex legal issues that must be navigated in the clinical research setting. Contact us today to speak to an attorney.

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