On June 18, 2018, the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) issued a favorable advisory opinion applicable to a nonprofit medical center operating a privately funded care center offering free or reduced-cost support services to individuals caring for the chronically ill. In OIG Advisory Opinion 18-05, the OIG determined that even though the arrangement implicated the civil monetary penalties law (CMP) and the federal anti-kickback statute (AKS), it would not subject the medical center to sanctions due to certain safeguards that reduced the risk of fraud and abuse.

The Arrangement

Under the arrangement, the nonprofit medical center established a department to provide certain support services to caregivers of adults with chronic medical conditions (“Caregiver Center”). The Caregiver Center's primary role is “to advocate and provide care coordination” for caregivers, who are often family members or friends of the care recipients. Private donations fund the Caregiver Center's entire operating budget, and most staff members are unpaid volunteers.

The Caregiver Center provides a number of free or reduced cost services to caregivers. The services are designed to help individuals learn more about caregiving, reduce stress, and promote a healthy lifestyle because these individuals often experience high levels of physical and/or financial strain as a result of the caregiving. Free services include access to a resource library, various care coaching sessions, support groups, and on-site respite care during Caregiver Center-sponsored events attended by caregivers. The Caregiver Center also implemented an equipment lending program to provide listening devices (ipods/MP3s) and adaptive equipment (spoons, pill-minders) for caregivers to test and evaluate prior to purchasing elsewhere. The Caregiver Center also partnered with community businesses to provide fee-based services such as stress reduction workshops and low-cost ride share programs, and, subject to qualification, financial assistance toward the fee-based services. All requests for financial assistance are evaluated through an objective and standardized review process.

Notably, all caregivers who participate in any program at the Caregiver Center must sign a consent form acknowledging that the Caregiver Center “does not provide medical care, make recommendations related to health care items or services, or recommend any particular health care or other service provider.” The medical center acknowledged that some caregivers, and the chronically ill they care for, are likely federal health care program beneficiaries.

The Analysis

The OIG concluded the arrangement could implicate both the CMP and AKS because the Caregiver Center’s provision of free or reduced cost services could serve as an inducement to the caregiver to obtain federally reimbursable services from the medical center for themselves or the chronically ill in their care. The OIG's primary analysis focused on the beneficiary inducement CMP, which prohibits providing remuneration to federal health care program beneficiaries to influence the beneficiaries' selection of a particular provider, practitioner, or supplier of reimbursable services. The OIG first examined whether the arrangement fit within one of the CMP exceptions, concluding that neither the “Promotes Access to Care Exception” nor the “Financial Need-Based Exception” was applicable to the arrangement.

Absent a statutory exclusion, the OIG examined the fraud and abuse risks raised by the arrangement. The OIG stated that it would exercise its discretion not to impose sanctions on the medical center because the following safeguards made the risk of fraud and abuse low:

  1. The services provided by the Caregiver Center primarily benefit the caregiver, who is not necessarily in need of particular health care services, as compared to directly benefiting the care recipient;
  1. The Caregiver Center's services were available to all caregivers; information was not requested about the caregivers' or care recipients' health care providers or insurers; and all financial assistance met an objective criteria;
  1. The services were not actively advertised, although information about the Caregiver Center was available online and in brochures; and
  1. The arrangement was unlikely to increase federal health care program costs, as evidenced by the fact that the staff were mostly volunteers and the operating costs of the Caregiver Center were funded by private donors.

Ultimately, the OIG found that the combination of these safeguards reduced the risk that the free or reduced-cost services would influence the caregivers or care recipients to seek health care services from the medical center, and for these same reasons found that the hospital would not be subject to sanctions under the AKS.

The Takeaway

In concluding that free and reduced-cost services provided by the Caregiver Center presented a low risk of fraud and abuse, the OIG focused its analysis on the fact that the services provided under the arrangement have “little, if any tie to federally reimbursable services.” The OIG also highlighted the fact that the Caregiving Center was staffed primarily with volunteers and operating costs were based on donations, limiting the likelihood that the arrangement would increase federal health care program costs. Lastly, the Caregiver Center does not make referrals for health care; its services are available to all community caregivers, and any financial need determination was made on objective and standardized criteria.

It is important to remember that this analysis, like all OIG advisory opinions, is fact-specific and cannot be relied upon to eliminate liability in similar arrangements. Each arrangement must be closely scrutinized from a fraud and abuse perspective. But, this opinion does support the general notion that the more attenuated an arrangement is from the federal health care programs, the lower the risk of fraud and abuse and, in turn, the lower the risk of enforcement under the CMP and AKS.

Finally, it is worth noting that this advisory opinion differs from some of the more recent opinions in that the requestor had already implemented the program prior to seeking guidance from the OIG, rather than seeking an advisory opinion regarding a “proposed arrangement.” This opinion serves as a good reminder that the mechanism for seeking an advisory opinion is available for existing or ongoing conduct, although the request might not alleviate the risk of enforcement for past conduct.