AMARILLO, TX – Section 1128A(a)(5) of the Social Security Act (the “Beneficiary Inducement Statute”) prohibits a person from offering or transferring to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of Medicare or Medicaid payable items or services. Violation of the statute may result in civil money penalties (“CMPs”) of up to $10,000 for each wrongful act. For purposes of the statute, “remuneration” includes the transfers of items or services for free or for other than fair market value.
The OIG has interpreted the Beneficiary Inducement Statute to not apply to a provider/supplier providing gifts of nominal value to a beneficiary. “Nominal value” means a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis. This exception does not apply to cash or cash equivalents.
Additionally, the Beneficiary Inducement Statute and implementing regulations set forth several exceptions to the definition of “remuneration” including: (i) items or services that promote access to care, (ii) items or services provided to patients in financial need, and (iii) preventative care items or services. A brief overview of each of these exceptions is provided below:
- Promote Access to Care: This exception protects items or services that would promote a beneficiary’s access to care and treatment and pose a low risk of harm to patients and federal health care programs. The items and services provided must (1) be unlikely to interfere with, or skew, clinical decision making; (2) be unlikely to increase costs to federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (3) not raise patient safety or quality-of-care concerns.
- Financial Need: This exception protects the offer or transfer of items or services for free or for less than fair market value if a person meets the following requirements: “(1) the items or services are not offered as part of any advertisement or solicitation; (2) the offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by the program under [Medicare or Medicaid]; (3) there is a reasonable connection between the items or services and the medical care of the individual; and (4) the person provides the items or services after determining in good faith that the individual is in financial need.”
- Preventative Care Items or Services: This exception protects incentives given to individuals to promote the delivery of preventive care services where the delivery of such services is not tied (directly or indirectly) to the provision of other services reimbursed in whole or in part by Medicare or Medicaid programs. “Preventative care” is defined as a service that is a prenatal service or post-natal well-baby visit or is a specific clinical service described in the current U.S. Preventative Services Task Force’s Guide to Clinical Preventative Services and is reimbursable by Medicare or Medicaid.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or firstname.lastname@example.org.
Lisa K. Smith, JD, is an attorney with the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. She represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Ms. Smith is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6370 or email@example.com.
 42 U.S.C. § 1320a-7a (a)(5).
 OIG, Policy Statement Regarding Gifts of Nominal Value to Medicare and Medicaid Beneficiaries (Dec. 7, 2016), available at https://oig.hhs.gov/fraud/docs/alertsandbulletins/OIG-Policy-Statement-Gifts-of-Nominal-Value.pdf.
 Id. § 1320a-7a (i)(6); 42 C.F.R. § 1003.110.
 42 C.F.R. § 1003.110.
AAHOMECARE’S EDUCATIONAL WEBINAR
Gifts to, and Collaborative Arrangements With, Physicians
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato
Tuesday, May 3, 2022
1:30-2:30 p.m. CENTRAL TIME
Any person or entity can be a referral source to a DME supplier. However, the most important referral source is a physician. He/she writes the order that triggers the whole process. A DME supplier can enter into arrangements with physicians, but in so doing, the DME supplier needs to adhere to federal and state laws that govern such arrangements. Examples of arrangements with physicians include (i) Medical Director Agreement; (ii) Consulting Agreement; (iii) service by physician on an advisory board; (iv) Preferred Provider Agreement; (v) loan closet; (vi) Space Rental Agreement; and (vii) sponsoring a physician to present education programs. In structuring an arrangement with a physician, DME suppliers need to be careful to avoid the federal anti-kickback statute, the federal physician self-referral statute (“Stark”), and other federal and state anti-fraud laws. This webinar will (i) discuss the applicable legal guidance governing arrangements with physicians, (ii) give examples of legally acceptable arrangements with physicians, and (iii) give examples of arrangements that need to be avoided.