On March 2, 2022, the Office of Inspector General (“OIG”) for the Department of Health and Human Services (“HHS”) posted an advisory opinion concluding that a digital program for the treatment of substance use disorders would raise minimal fraud and abuse risk. OIG advisory opinions address the application of certain fraud and abuse enforcement authorities to the requesting party’s existing or proposed business arrangements.

Advisory Opinion No. 22-04 is notable given OIG’s consideration of the unique aspects of the requestor’s digital treatment program, which provides digital tools and contingency management incentives (“CM Incentives”), including cash equivalents, in order to motivate behavioral health changes in individuals who suffer from substance use disorders. As digital health companies consider unique offerings to improve health outcomes and reduce costs, this advisory opinion provides some guidance on potential guardrails for designing digital health offerings. The advisory opinion also follows the recent release of a Healthcare Common Procedure Coding System (“HCPCS”) code for qualifying digital therapeutics by the Centers for Medicare and Medicaid Services (“CMS”). These developments will continue to support digital health companies, as well as drug or device manufacturers considering digital health offerings that complement their products (e.g., drug adherence apps and companion apps to smart devices), in navigating the complex and evolving digital health market.

Background on the Program

OIG issued the opinion in response to a request submitted on behalf of a digital health company (“Requester”). Requester contracts with a variety of entities, including health plans, addiction treatment providers, employee assistance programs, and other institutions (“Customers”), to provide substance abuse treatment services and CM Incentives to individuals through smartphone and smart debit card technology. Requester certified that the program is evidence-based, protocol-driven, and consistent with published principles issued by the National Institute on Drug Abuse.

Program Enrollment and Operation

Individuals may be referred to the program by a Customer or may self-refer. An enrollment specialist, under the supervision of a licensed clinical supervisor, determines what type of services are appropriate for individuals enrolled in the program (each a “Member”). For example, Members might receive the following services from the Requestor via smartphone:

  • Automated appointment reminders and attendance verification;
  • Medication reminders and self-administration verification;
  • Saliva drug testing, breathalyzer alcohol testing, Smokerlyzer CO testing for tobacco, and saliva cotinine testing for e-cigarettes, all verified via self-video;
  • Self-guided cognitive behavioral therapy (“CBT”) modules;
  • Various surveys and assessments;
  • Certified recovery coaching;
  • Community reinforcement and family training; and
  • Daily support groups.

Requestor is not a provider or supplier under any Federal health care program. However, Members may or may not receive federally reimbursable services (e.g., a federally-reimbursable counseling session) from another supplier or provider, including from a Customer.

Services are provided and CM Incentives are distributed according to an evidence-based, automated algorithm over a 12-month period, which is divided into three phases of approximately four months each. During the initial “anchor” phase, the Member undergoes frequent substance testing and receives active CM Incentives for achieving specified behavioral health goals. During the second “build phase,” substance testing frequency and CM Incentives decrease. Finally, the “maintenance phase” reinforces behavioral health goals through non-incentive reinforcements.

Requestor provides CM Incentives through a smart debit card. Members are eligible to receive CM Incentives based on (1) verified substance tests consistent with medical expectations (70% of potential CM Incentives); (2) treatment attendance (20%); and (3) completion of self-guided CBT modules and other features, including follow-up self-assessments (10%). CM Incentives are capped at $200 per month, with an annual maximum of $599.00 per Member per year.

Customer Payment for the Program

Requestor contracts with various Customers, and individual Members and their families can also pay for the Program directly. Requester offers two payment models: a flat monthly fee per eligible, active Member and a pay-for-performance model, under which Requestor is paid upon a Member achieving certain agreed-upon abstinence targets.

CM Incentives are held in reserve until the Member has successfully met specified targets. When a Member does not engage with the application during a given month, the system designates that Member as “inactive.” Customers are not billed any fees for inactive Members, and unspent CM Incentive fees are held in reserve until the Member becomes active again.

Legal Analysis

OIG found that two aspects of the program could potentially implicate the Federal anti-kickback statute (“AKS”) and the Beneficiary Inducements CMP. First, even though Requestor does not bill Federal health care programs, it does collect fees from Customers and provide services that could incentivize a Member to receive a federally billable service (e.g., a federally-reimbursable counseling session). Additionally, there is at least a theoretical risk that a Customer could pay Requestor’s fees to generate business or reward referrals of federally reimbursable services. Some of the fees a Customer pays are passed on to Members as CM Incentives, based in part upon utilization of services that could be billable to Federal health care programs by another provider or supplier, including the same Customer.

Nonetheless, OIG determined that the program presents a minimal risk of fraud and abuse for four reasons.

  1. The program is protocol-driven and evidence-based. Requestor cited reputable sources stating that CM is “highly effective” and “cost-efficient” for the treatment of substance abuse disorders.
  2. The risk of overutilization of federally reimbursable services is low. According to OIG, the CM Incentives have a “relatively low [monetary] value.” Additionally, a substantial portion of CM Incentives are not tied to federally payable services, and the Requester itself never bills Federal health care programs for services furnished.
  3. The risk is low that a Customer would pay Requestor’s fees to generate business or reward referrals of federally reimbursable services. The fees paid by Customers do not vary based on the volume or value of federally reimbursable services rendered by that Customer. Instead, the program is protocol-driven and set by the Requestor.
  4. Safeguards mitigate the risk of fraud and abuse associated with cash and cash-equivalent remuneration. Requestor has full control over what services a Member needs and what CM Incentives are attached to such services. Additionally, the smart debit card cannot be used at bars, liquor stores, casinos, or certain other locations and cannot be used to convert credit to cash. The Requestor can also monitor use of the smart debit card, allowing recovery coaches and providers to be alerted in the event of a blocked purchase.