AMARILLO, TX – Almost 50% of Medicare beneficiaries are enrolled in Medicare Advantage Plans (“MAPs”). This percentage will continue to increase. A DME supplier has the same obligation to collect copayments from MAP patients as they do from traditional Medicare patients. That is, the supplier must make a reasonable effort to collect copayments.
The supplier can reduce or waive a copayment only on a patient-by-patient basis … and only if the patient shows an inability to pay. The supplier cannot advertise that it may reduce or waive a copayment if a patient establishes financial need. Rather, the supplier can offer the possibility of a reduction/waiver only after (i) the supplier asks for the copayment and (ii) the patient responds that he/she does not have the ability to pay the copayment.
It is not uncommon for a DME supplier to be an out-of-network supplier to a patient. That is, the patient may want to purchase an item from the supplier, but the patient is covered by a MAP … and the supplier is not contracted with the MAP. In this scenario, the amount of the copayment is usually larger than if the supplier was in-network (i.e., the supplier is contracted with the MAP).
A DME supplier may want to establish a patient financial assistance program (“Program”) to assist patients – particularly out-of-network patients – who cannot afford large copayments. We see this in the pharmacy space. When an expensive drug is a “brand” drug (that is, it is still protected by a patent and no generics are allowed), then it makes financial sense for the manufacturer to establish a Program. But when the drug “goes off patent” and cheaper generics flood the market, the manufacturer will likely discontinue the Program.
Following are three options that a DME supplier can consider as it desires to set up a Program.
Option I: Fit the Program into the OIG 2016 Safe Harbor
One option for is for the supplier to follow the guidance set out in the 2016 Medicare Part D cost-sharing safe harbor. (See 42 CFR § 1001.952(k)(3).) While the safe harbor applies to pharmacies in the Part D space, the guidance is also relevant to DME suppliers. The safe harbor provides that a pharmacy may reduce or waive cost-sharing so long as:
- the waiver is not advertised or mentioned in advance; and
- the pharmacy does not routinely waive cost-sharing amounts; and
- the waiver is made after a good faith determination of financial need or effort to collect the copay.
The principal challenge is the determination of financial need. The OIG does not set any threshold for determining need but does lay out some signposts. In essence, a provider must set in place a uniform standard for determining and verifying financial eligibility. OIG guidance sets out examples of eligibility criteria. These can include something as simple as a multiple of the federal poverty guidelines (e.g., 200% to 400% of the federal poverty guidelines) and other factors such as the patient’s geographic cost of living or some threshold of the patient’s medical expenses. This normally requires separate documentation (e.g., collecting tax forms, pay stubs, medical receipts). See 81 FR 88368, 88374.
There are a couple of challenges in attempting to utilize this safe harbor. First, if products (particularly for out-of-network patients) result in large copayments, the DME supplier might need to set the federal poverty multiple fairly high, resulting in a high-income threshold, to reach the target patient population. There are a number of problems to deal with in this approach. First, it raises scrutiny over whether the Program would, in effect, function as a form of patient inducement. Second, the larger the pool of eligible patients, the more the Program would come to resemble a “routine” waiver. Lastly, the Program would likely need to be offered to any patient who expressed difficulty covering the cost sharing. This sets up a sort of see-saw problem.
The higher the supplier sets the maximum income limit for assistance, the better for the supplier’s high out-of-pocket population, but the more the DME supplier renders its entire cadre of patients eligible for cost savings. The reason this issue arises is that the OIG guidance has consistently warned against assistance programs that are, in effect, disguised inducements for or direct subsidies to patients to steer them to take advantage of federal programs payments for certain high-cost treatments or products. In effect, the more targeted the supplier’s eligibility guidelines look, in relation to the product lines for which the supplier desires to preserve access, the higher the risk of inviting regulatory scrutiny.
It is worth consulting two recent OIG Advisory Opinions addressing assistance programs. A 2020 Advisory Opinion involved a drug with an annual list price of $225,000 and cost sharing of around $13,000 for Part D beneficiaries. The high-cost sharing amounts, even after reaching catastrophic coverage, would likely render the product out of reach for many patients. The proposed program (set out in the Advisory Opinion) set assistance eligibility at between 500% and 800% of the federal poverty guidelines.
At the upper limit, all but 9% of the Medicare Part D population would be eligible for aid. The Advisory Opinion expressed concern that the arrangement would constitute a material inducement while also providing artificial market support for a high list price that might otherwise decrease. A 2022 Advisory Opinion raises similar concerns. Although each advisory opinion relates to patient assistance programs funded by manufacturers, because both opinions touch directly on the issue of determining financial need in reference to extremely high-cost products, both merit close attention.
Option II. Establishing A Charity
A DME supplier has the option of establishing an independent 501(c)(3) charity. However, limiting the charity to the supplier’s patients and to specific product lines are prohibited. The charity would have to remain fully independent of the DME supplier. In 2014, the OIG looked at a charitable arrangement for any evidence that its eligibility criteria tended to steer patients toward a particular drug or manufacturer. The OIG expressed concerned about charitable funds that limit assistance to specific products. The OIG advises setting up eligibility by way of clearly established clinical standards (for the disease) and an array of eligible products (for treatment).
Similarly, the OIG guidance expresses concern over sham independence. The message here is that a DME supplier can fund a charity, but not impose any restrictions on the eligible products, or the source of the products, or the location or commercial aspects of the patients. Established this way, the fund, once established and made public, would likely be quickly exhausted by patients not related to the DME supplier setting up the charity.
Option III. Patient Guidance
A safe path is to provide guidance to patients seeking assistance about established, independent charities that might help to cover their high copayment costs.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, 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. 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.
AAHOMECARE’S EDUCATIONAL WEBINAR
Six-Year Lookback Audits: How to Prepare and Respond
Presented by: Denise M. Leard, Esq., Brown & Fortunato & Jeffrey S. Baird, Esq., Brown & Fortunato
Tuesday, December 13, 2022
1:30-2:30 p.m. CENTRAL TIME
The Affordable Care Act includes the 60-day overpayment rule that requires DME suppliers to refund overpayments within 60 days of identification. What many suppliers are not aware of is that if an overpayment is identified, either internally or externally, suppliers are mandated by law to perform a six-year lookback audit. If suppliers do not comply with this rule, they are at risk for false claim penalties. This webinar will (i) discuss the 60-day overpayment rule and the six-year lookback obligation; (ii) discuss steps that suppliers can take to reduce the risk of being subjected to the 60-day overpayment rule; and (iii) set out the steps the supplier should take to successfully fulfill its obligations under the rule.
Registration will soon be available for Six-Year Lookback Audits: How to Prepare and Respond on Tuesday, December 13, 2022, 1:30-2:30 p.m. CT, with Denise M. Leard, Esq., and Jeffrey S. Baird, Esq., of Brown & Fortunato.