On June 4, 2015, OIG published an advisory opinion (No. 15-07) stating that it will not impose administrative sanctions on a medical device manufacturer that planned to pay for copayments and certain other costs for Medicare beneficiaries enrolled in a CMS-approved clinical study.  The study sought to test whether percutaneous image-guided lumbar decompression (PILD) using instruments made by the manufacturer improves health outcomes of patients with lumbar spinal stenosis.  Under the proposed arrangement, the manufacturer would pay for: (1) applicable copayments for Medicare beneficiaries enrolled in the clinical study; and (2) the cost of a subsequent PILD procedure for patients in the control group. 

The manufacturer explained that the proposed arrangement is necessary to the clinical study’s controlled, double-blind design.  It would be inappropriate to collect copayments from all Medicare beneficiaries who participate in the study because participants in the control group would receive surgeries in which no therapeutic treatment is performed.  The manufacturer could not, however, collect copayments only from Medicare beneficiaries who receive active treatment without compromising the study’s design because patients who are not charged copayments would then realize that they are in the control group.  According to the manufacturer, the purpose of subsidizing PILD procedures for patients in the control group is to encourage patient enrollment. 

Although OIG acknowledged that the proposed arrangement implicates both the federal Anti-Kickback Statute and Section 1128A(a)(5) of the Social Security Act (the beneficiary inducement prohibition), OIG reasoned that the arrangement posed a minimal risk of fraud and abuse as a result of several factors, including:

  1. The clinical study was designed in consultation with CMS, and its findings will assist CMS in determining whether PILD is reasonable and necessary for broader Medicare coverage;
  2. The proposed arrangement is a reasonable method of achieving the study’s goals by encouraging patient enrollment and allowing for the true impact of PILD on patient health outcomes to be isolated and assessed;
  3. The manufacturer certified that the proposed arrangement is not dependent upon and does not operate in conjunction with any other arrangement between the manufacturer and any party in a position to refer items or services reimbursable by federal healthcare programs;
  4. The manufacturer certified that the compensation it pays in connection with the proposed arrangement is fair market value for necessary study-related services; and
  5. Patients must satisfy certain criteria to enroll in the study, and the providers conducting the trial must comply with the study protocol and are subject to oversight and monitoring by an Institutional Review Board.

To read the advisory opinion, click here.