Advisory Opinion Highlights Inconsistency Between OIG and DOJ Regarding Gift Cards
January 26, 2024 I Christopher C. Sabis and Rachel V. Rose
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On January 3, 2024, the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) published OIG Advisory Opinion No. 23-15 (Opinion). As a reminder, HHS-OIG advisory opinions are limited to potential violations of the federal Anti-Kickback Statute (AKS) and only apply to the person or entity requesting the opinion. “Pursuant to section 205 of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Public Law 104–101, codified at section 1128D of the Social Security Act (Act), the Secretary must publish advisory opinions regarding the application of the [AKS] and the safe harbor provisions, as well as certain other administrative sanction authorities, to parties’ proposed or existing arrangements.”
The Opinion
The favorable Opinion addresses a request from a physician consulting company (Requestor) that “provides consulting services . . . includ[ing] practice optimization services such as helping practices uncover workflow issues, data analytics services, electronic health record consulting services, compliance monitoring services, bi-annual Medicare Merit-Based Incentive Payment System (‘MIPS’) eligibility checks, annual MIPS-related training, auditing MIPS-related performance measures, and assistance with submitting MIPS data.” The Requestor asked HHS-OIG for an advisory opinion regarding a “proposal to offer physician practices that are current customers of Requestor certain gift cards for referring potential new physician practice customers (the ‘Proposed Arrangement’).” Specifically, Requestor would provide physician clients a $25 gift card for referring another physician practice. If the referral resulted in a new customer for Requester, Requestor “would give the customer making the recommendation another $50 gift card.”
The requesting consultant acknowledged that some of its services “could result in customers receiving higher MIPS reimbursements from Medicare,” but also certified that “it does not advise its customers to take any action, or otherwise promote any activity, that would violate applicable billing or other rules or regulations” and that “it receives a fee for its services that is unrelated to whether a customer receives a greater or lesser reimbursement as a result of Requestor’s services.” Requestor further certified that “it does not recommend to any customer the purchasing, leasing, or ordering of any item or service for which payment may be made in whole or in part under a Federal health care program” and “none of the services that Requestor furnishes are or would be paid for, in whole or in part, directly or indirectly, by a Federal health care program.”
Analysis
This Opinion raises several questions. First, it appears to be in tension with enforcement actions the Department of Justice (DOJ) has taken in recent years. Second, it appears significantly less restrictive than limitations in place for pharmaceutical companies. Third, physician practices reviewing the Opinion may wonder whether the Proposed Arrangement implicates the Physician Open Payments Program (f/k/a the Sunshine Act).
Prior DOJ Enforcement Actions
The Requestor is a consulting company that assists physician practices with various revenue cycle management issues, which include but are not limited to “data analytics services, electronic health record consulting services, compliance monitoring services, [and MIPS services].” And the Proposed Arrangement has Requestor providing gift cards to physicians to incentivize referrals of other physician practices for use of its consulting services—gift cards that vary in value depending on the success of the referral in creating business for Requestor. In considering this arrangement, HHS-OIG determined that “the Proposed Arrangement does not implicate the Federal anti-kickback statute” because the payment streams “would not be in return for referrals for, the purchase of, or arranging for or recommending the purchase of, any item or service for which payment may be made in whole or in part under a Federal health care program.”
But the Proposed Arrangement seems similar to physician-to-physician referral arrangements that DOJ has considered kickback violations in the electronic health records (EHR) context, where the EHR system obtained by the referred physician resulted in increased meaningful use (MU) payments from the federal government. For example, DOJ entered a False Claims Act (FCA) settlement with athenahealth (Athena) in January 2021, which resolved a number of EHR-related allegations. The covered conduct in that case included a DOJ allegation that, Athena paid kickbacks to its existing customers under a ‘Lead Generation’ program designed to identify and refer new prospective clients to Athena. Under this program, Athena paid up to $3,000 to existing customers for each new client that signed up for Athena services, regardless of how much time, if any, the existing customer spent speaking to or meeting with the new client.
While the payments were larger in the Athena settlement, the referral arrangement was similar. In that case, physicians were being compensated for referring other physicians to a particular EHR developer, whose software and services would result in higher MU payments from a federal health care program. In the Opinion, “Requestor certified that it does not recommend to any customer the purchasing, leasing, or ordering of any item or service for which payment may be made in whole or in part under a Federal health care program.” Yet, Requestor provided EHR consulting services and EHR utilization is directly tied to the Interoperability Program.
Accordingly, Requestor is in a unique position to steer physician practices towards certain vendors and services. Additionally, MIPS relates directly to value-based reimbursement by federal programs, including Medicare. This begs the question—why is one referral incentive a kickback violation and the other not? There may be differences in the details at issue in each scenario or HHS-OIG may be signaling a shift in the government’s approach to these types of physician referral arrangements.
Although distinguishable in terms of the circumstances involving gift cards, DOJ and HHS-OIG have also jointly pursued an FCA case involving MCS Advantage, Inc., a Medicare Advantage plan, and its gift card incentive program, which resulted in a $4.2 million recovery for alleged violations of the AKS.
According to the settlement agreement, the United States asserted that MCS Advantage submitted or caused to be submitted claims for payment to the Medicare Program relating to a gift card incentive program implemented by MCS during the period of November 2019 and December 2020, which the Government alleges resulted in violations of the False Claims Act and the Anti-Kickback Statute. As a result of the incentive program, MCS distributed 1,703 gift cards to administrative assistants of providers at an aggregate cost of $42,575 to induce the assistants to refer, recommend, or arrange for enrollment of 1,646 new Medicare beneficiaries to an MCS Advantage plan. Those new beneficiaries resulted in associated premium payments received by MCS Advantage for the new members.
Notably, the defendant received cooperation credit from the government in part because the company voluntarily terminated its gift card program in December 2020. As the Athena and MCS Advantage cases illustrate, similar conduct has been the subject of FCA cases. “Violations of the [False Claims Act] . . . may only be waived by the Department of Justice, and the unauthorized statements of United States agents may not serve to waive the Government's claims.” While other government agencies’ perspectives carry weight, an important consideration is that an advisory opinion only applies to the person requesting it. Additionally, only DOJ has the authority in a FCA case, including those involving the use of gift cards to induce beneficiaries of government programs to utilize certain programs, goods, or services, to waive the government’s claims.
Marketing Restrictions in Pharmaceuticals and Medical Devices
The second question arises from pharmaceutical and medical device company marketing guidelines, which have been in effect since 2008, that prohibit these entities “from giving out pens, as well as other ‘non-educational’ items such as mugs to healthcare providers and their staffs.” How can Requestor, a company that is in a position to influence referrals [and government reimbursement under MIPS] and provides services related to programs that require compliance and/or provide payment to physician practices, give out gift cards to gain new business from other physician practices?
A recent FCA case, which settled for $13.75 million, underscores the tension between DOJ and HHS-OIG. In this matter, Exact Sciences Corp. (ESC) and its subsidiary, Exact Sciences Laboratories LLC (ESL), which administers the Food and Drug Administration approved colon screening test Cologuard, agreed to settle allegations that patient gift cards were kickbacks. The gift cards and Super Certificates were worth between $10 and $75 to return the stool sample and complete the test. ESC then billed Medicare and TRICARE for the tests. OIG Advisory Opinion No. 23-03 (Mar. 24, 2023) also relates to an a “proposal to provide a prepaid card, such as a Visa or Mastercard gift card, of up to $75 to certain individuals, including Federal health care program beneficiaries, to encourage those individuals to return the sample collection kit associated with Requestors’ colorectal cancer screening test.” HHS-OIG acknowledged that the proposal “if undertaken, would generate prohibited remuneration under the Federal anti-kickback statute if the requisite intent were present” and chose to give the Requestor, which looks suspiciously like ESC and ESL, a pass on enforcement.
The Cologuard case further underscores that DOJ and not a government agency has theultimate authority to waive false claims.
Physician Open Payments Program
The third question relates to the physician practice and the consulting firm’s reporting obligations under the Physician Open Payments Program. Does the Requestor have an obligation? The answer is no because a consulting company that is not tied back to a manufacturer of pharmaceuticals, medical devices, or biologics does not have an obligation to report the gift cards under the Open Payments Program.
Conclusion
Just because HHS-OIG deems an arrangement to be either “low risk” or gives a pass to a particular requestor, does not mean that DOJ must adhere to the same position. Both DOJ and HHS-OIG as discussed above have pursued actions involving gift cards. Potential liability appears to come down to: (1) individual facts and circumstances; and (2) DOJ’s ultimate authority in dismissing FCA cases, against the perspective of a government agency. Overall, gift cards should be utilized with caution.
About the Authors
Rachel V. Rose, JD, MBA (Houston, Texas), advises clients on compliance, transactions, government administrative actions, and litigation involving health care, cybersecurity, corporate and securities law, as well as False Claims Act and Dodd-Frank whistleblower cases. She also teaches bioethics at Baylor College of Medicine in Houston. Rachel can be reached through her website, www.rvrose.com.
Christopher C. Sabis (Nashville, Tennessee) is a former Assistant United States Attorney and a Member of SRVH where he leads the firm’s Government Compliance & Investigations group. He also serves on the AHLA Dispute Resolution Service Council and is on the American Arbitration Association’s Roster of Arbitrators’ Commercial and Healthcare Arbitration Panels.
