Beneficiary Inducement Laws and How to Care for your Patients

Want to learn how to provide care for Medicare and Medicaid patients without running afoul of the government's CMP? Read this article on how not break the beneficiary inducement laws - of course check with your legal council since this is not considered legal advice but personal advice based on years of doing this work and using these rules to take care of these patients.

OFFERING GIFTS AND OTHER INDUCEMENTS TO BENEFICIARIES

• Under section 1128A(a)(5) of the Social Security Act (the Act), enacted as part of Health Insurance Portability and Accountability Act of 1996 (HIPAA), a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of Medicare or Medicaid payable items or services may be liable for civil money penalties (CMPs) of up to $10,000 for each wrongful act. For purposes of section 1128A(a)(5) of the Act, the statute defines “remuneration” to include, without limitation, waivers of copayments and deductible amounts (or any part thereof) and transfers of items or services for free or for other than fair market value. (See section 1128A(i)(6) of the Act.) The statute and implementing regulations contain a limited number of exceptions. (See section 1128A(i)(6) of the Act; 42 CFR 1003.101.)

OFFERING GIFTS AND OTHER INDUCEMENTS TO BENEFICIARIES

• First, the OIG has interpreted the prohibition to permit Medicare or Medicaid providers to offer beneficiaries inexpensive gifts (other than cash or cash equivalents) or services without violating the statute. For enforcement purposes, inexpensive gifts or services are those that have a retail value of no more than $10 individually, and no more than $50 in the aggregate annually per patient.

• Second, providers may offer beneficiaries more expensive items or services that fit within one of the five statutory exceptions: waivers of cost-sharing amounts based on financial need; properly disclosed copayment differentials in health plans; incentives to promote the delivery of certain preventive care services; any practice permitted under the federal anti-kickback statute pursuant to 42 CFR 1001.952; or waivers of hospital outpatient excess of the minimum copayment amounts.

• In sum, unless a provider’s practices fit within an exception (as implemented by regulations) or are the subject of a favorable advisory opinion covering a provider’s own activity, any gifts or free services to beneficiaries should not need the $10 per item and $50 annual limits.

• In addition, valuable services or other remuneration can be furnished to financially needy beneficiaries by an independent entity, such as a patient advocacy group, even if the benefits are funded by providers, so long as the independent entity makes an independent determination of need and the beneficiary’s receipt of the remuneration does not depend, directly or indirectly, on the beneficiary’s use of any particular provider. An example of such an arrangement is the American Kidney Fund’s program to assist needy patients with end stage renal disease with funds donated by dialysis providers, including paying for their supplemental medical insurance premiums.

Remuneration

• Section 1128A(a)(5) of the Act prohibits the offering or transfer of “remuneration”. The term “remuneration” has a well-established meaning in the context of various health care fraud and abuse statutes. Generally, it has been interpreted broadly to include “anything of value.” The definition of “remuneration” for purposes of section 1128A(a)(5) – which includes waivers of coinsurance and deductible amounts, and transfers of items or services for free or for other than fair market value – affirms this broad reading. (See section 1128A(i)(6).) The use of the term “remuneration” implicitly recognizes that virtually any good or service has monetary value.

The definition of “remuneration” in section 1128A(i)(6) contains five specific exceptions:

• Non-routine, unadvertised waivers of copayments or deductible amounts based on individualized determinations of financial need or exhaustion of reasonable collection efforts. Paying the premiums for a beneficiary’s Medicare Part B or supplemental insurance is not protected by this exception.

• Properly disclosed differentials in a health insurance plan’s copayments or deductibles. This exception covers incentives that are part of a health plan design, such as lower plan copayments for using preferred providers, mail order pharmacies, or generic drugs. Waivers of Medicaid copayments are not protected by this exception.

• Incentives to promote the delivery of preventive care. Preventive care is de d in 42 CFR 1003.101 to mean items and services that (i) are covered by Medicare or Medicaid and (ii) are either pre-natal or post-natal well- baby services or are services described in the Guide to Clinical Preventive Services published by the U.S. Preventive Services Task Force (available online at http://odphp.osphs.dhhs.gov/pubs/guidecps) . Such incentives may not be in the form of cash or cash equivalents and may not be is proportionate to the value of the preventive care provided. (See 42 C 1003.101; 65 FR 24400 and 24409.)

• Any practice permitted under an anti-kickback statute safe harbor at 42 CFR 1001.952.

• Waivers of copayment amounts in excess of the minimum copayment amounts under the Medicare hospital outpatient fee schedule.

Inducement

• Inducement. Section 1128A(a)(5) of the Act bars the offering of remuneration to Medicare or Medicaid beneficiaries where the person offering the remuneration knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services from a particular provider. The “should know” standard is met if a provider acts with deliberate ignorance or reckless disregard. No proof of specific intent is required. (See 42 FR 1003.101.)

• The “inducement” element of the offense is met by any offer of valuable (i.e., not inexpensive) goods and services as part of a marketing or promotional activity, regardless of whether the marketing or promotional activity is active or passive. For example, even if a provider does not directly advertise or promote the availability of a benefit to beneficiaries, there may be indirect marketing or promotional efforts or informal channels of information dissemination, such as “word of mouth” promotion by practitioners or patient support groups. In addition, the OIG considers the provision of free goods or services to existing customers who have an ongoing relationship with a provider likely to influence those customers’ future purchases.

Providing Assistance Assistance to Needy: The offer or transfer of items or services for free or less than fair market value does not constitute “remuneration” under the CMP Law if:

• The items or services are not offered as part of any advertisement or solicitation;

• The items or services are not tied to the provision of other services reimbursed in whole or in part by Medicare or Medicaid;

• There is a reasonable connection between the items or services and the medical care of the individual; and

• The person provides the items or services after determining in good faith that the individual is in financial need.

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