Supporting Patients while Steering Clear of Fraud
By Elizabeth “Issie” Karan

Hemophilia Treatment Centers (HTCs) often want to give their patients things they need to be, and stay, healthy. However, anytime a health care provider gives Medicaid and Medicare beneficiaries something of value, they implicate the Beneficiary Inducement Prohibition of the Civil Monetary Penalties Act (CMP Law). Luckily, the CMP Law contains exceptions. The Hemophilia Alliance tries to make HTCs aware of exceptions which may enable them to assist their patients, as envisioned by the comprehensive care model, without compromising compliance. In this article, we are providing background on the financial need exception to the CMP Law.

Section 1128A(a)(5) of the Social Security Act prohibits providers offering inducements to Medicare and Medicaid beneficiaries which may encourage them to utilize that provider’s services over others. This law provides for imposition of a civil monetary penalty against any person who provides remuneration to a Medicare or Medicaid program beneficiary that the person “knows or should know” is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or Medicaid. The penalties under this law are steep. The civil monetary penalty for each violation of § 1128A(a)(5) is $10,000, plus treble damages.

Remuneration is defined broadly to include “the waiver of coinsurance and deductible amounts (or any part thereof), and transfers of items or services for free or for other than fair market value.” Thus, because remuneration includes both services and goods, almost anything may be viewed as remuneration. The OIG recognizes that free equipment would be particularly beneficial to those with acute health conditions, but states that chronically ill beneficiaries also generate the most business, thus making it more attractive for providers to offer inducements to those patients.

Inducement includes “any offer of valuable goods and services as part of a marketing or promotional activity.” Marketing or promotional activity includes passive marketing, meaning that even something that is not advertised but becomes known via word of mouth is considered an inducement. The “should know” requirement for inducement does not require specific intent and is met when a provider acts with deliberate ignorance or reckless disregard.

The CMP law contains an exception for the provision of goods or services to financially needy patients under certain circumstances. Section 1128B(A)(i)(6)(H) of the SSA, and related regulations at 42 C.F.R. 1003.110, allows for the provision of items or services for free or less than fair market value if:

1. The items or services are not advertised or tied to the provision of other items or services reimbursed by the Medicare and Medicaid program;
2. There is a reasonable connection between the items or services and the medical care of the individual; and
3. The recipient has been determined to be in financial need.

In the preamble to the rule finalizing this exception, the OIG provided additional guidance on each provision. In particular, the OIG explained that an item must have a reasonable connection to medical care but cannot be contingent on the provision of a particular item or service. For example, although another exception may apply, the provision of diabetes testing strips to a financially needy patient may be appropriate under this exception but not if provided only in conjunction with refills of diabetes medication. Similarly, assistance getting to appointments would not qualify under this exception. In these examples, the discounted supplies and services are only provided if the patient is obtaining other services from the provider.

With regard to being reasonably connected to medical care, the OIG noted that the provision can be interpreted broadly, including the prevention of illness or injury and for safety. The OIG stated that medical professionals are generally in the best position to determine if a reasonable connection exists but cautioned against outlandish interpretations, such as providing tickets to entertainment to a depressed person or sporting equipment to an overweight individual.

HTCs wishing to use this exception should put in place policies and procedures for determining financial need and meeting the other criteria of the exception. Although this exception could be quite useful and flexible, each patients’ specific situation should be evaluated to ensure the exception is being appropriately applied.

As always, if you have questions, please contact HA’s legal team.

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