The OIG has issued a policy statement clarifying the conditions under which hospitals may discount or waive Medicare beneficiary copayment amounts for self-administered drugs (SADs) received in outpatient settings without running afoul of OIG fraud authorities. In particular, the OIG addressed questions that have arisen from a 2003 CMS statement that a hospital’s decision not to bill a beneficiary for SADs that are not covered by the Medicare Part B program (Noncovered SADs) potentially implicates the prohibition on inducements to beneficiaries (section 1128A(a)(5) of the Social Security Act) or the anti-kickback statute (section 1128B(b) of the Act).

According to the OIG, while some or all SADs a Medicare beneficiary receives in an outpatient setting may be covered by Medicare Part D plans, most hospital pharmacies do not participate in Medicare Part D. When a hospital does not contract with Medicare Part D plans, CMS previously has advised that the hospital should bill the Medicare beneficiaries for any noncovered SADs that it dispenses. As a result, the OIG observes that “Medicare beneficiaries may be billed for Noncovered SADs they received as outpatients—often at amounts much higher than they would have paid at retail pharmacies—even if those drugs are covered under their Medicare Part D plans.”

The OIG policy statement sets forth the conditions under which a hospital will not be subject to OIG administrative sanctions if it discounts or waives amounts that Medicare beneficiaries owe for Noncovered SADs (including Noncovered SADs that may be covered under Medicare Part D) that are received for ingestion or administration in outpatient settings. Specifically:

  • Hospitals must uniformly apply their policies regarding discounts or waivers on Noncovered SADs (e.g., without regard to a beneficiary’s diagnosis or type of treatment);
  • Hospitals must not market or advertise the discounts or waivers; and
  • Hospitals must not claim the discounted or waived amounts as bad debt or otherwise shift the burden of these costs to Medicare, Medicaid, other payers, or individuals.

The OIG notes that nothing in its policy statement requires hospitals to discount or waive amounts owed by Medicare beneficiaries for Noncovered SADs received in outpatient settings, nor does it affect the ability of a hospital to discount or waive any amounts owed by Medicare beneficiaries on the basis of a good-faith, individualized determination of a beneficiary’s financial need. Furthermore, this policy statement does not affect CMS rules and regulations.

For details, see the “OIG Policy Statement Regarding Hospitals That Discount or Waive Amounts Owed by Medicare Beneficiaries for Self-Administered Drugs Dispensed in Outpatient Settings,” issued October 30, 2015.