AMARILLO, TX – Let us examine several scenarios:

• Scenario 1 – A Medicare beneficiary (“beneficiary”) has an office visit with a physician. The physician determines that the beneficiary needs oxygen now and without immediate oxygen, the beneficiary will likely end up in a hospital within the next 48 hours. However, it will take several days before the beneficiary can undergo the qualification test. The physician asks a DME supplier to immediately supply an oxygen concentrator to the beneficiary.
• Scenario 2 – A physician believes that a beneficiary may have COPD. So, the physician asks a DME supplier to perform a pre-screen test on the beneficiary. If the pre-screen indicates possible COPD, then the physician will order a qualification test.
• Scenario 3 – A beneficiary is about to be discharged from the hospital. The physician determines that the beneficiary needs oxygen in the home and that without such oxygen, the risk is high that the beneficiary will be readmitted within the next week or two. However, it will be about a week before the beneficiary can undergo the qualification test. The physician asks a DME supplier to furnish an oxygen concentrator to the beneficiary now with the understanding that the beneficiary will likely qualify for oxygen within the next week.
• Scenario 4 – A beneficiary is about to be discharged from the hospital. The beneficiary has already qualified for oxygen and DME Supplier A will set the beneficiary up on oxygen within a couple of hours after the beneficiary arrives at his home. DME Supplier B also services patients discharged from the hospital. The hospital asks DME Supplier B to provide a “traveling tank” for the beneficiary to use while being transported from the hospital to his home. Once DME Supplier A delivers the concentrator, then DME Supplier B will retrieve the tank from the beneficiary. If the beneficiary is unable to use a traveling tank, then the beneficiary will likely need to remain in the hospital.

Are the above scenarios legally compliant? In answering this question, we need to first look at a 13-year-old OIG Advisory Opinion, after which we will review two recent Advisory Opinions.

On November 8, 2006, the OIG posted Advisory Opinion No. 06-20 that sets out a restrictive OIG view towards two business practices pertaining to home oximetry testing. Pursuant to the first practice, the DME company would provide beneficiaries with free home oxygen until the beneficiaries qualify for Medicare coverage for oxygen. Under the second practice, the DME company would pre-screen beneficiaries by running overnight pulse oximetry tests on them and then reporting the test results to the physician.

The OIG stated that the practices would implicate both the federal beneficiary inducement statute and the federal anti-kickback statute.

In making this statement, the OIG offered its opinion that:

• both programs would constitute remuneration to the beneficiaries who receive them;
• the remuneration provided under the practices would likely influence beneficiaries to select the DME company (providing the free services) as their supplier of oxygen or other Medicare-payable goods and services; and
• the DME company (providing the free services) would know, or should know, that the provision of items and services under the two practices would likely influence beneficiaries’ selection of the company for oxygen or other Medicare-payable supplies.

Beneficiary Inducement Statute
Under the beneficiary inducement statute, a person who offers or transfers 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, may be liable for civil monetary penalties (“CMPs”). The beneficiary inducement statute defines “remuneration” to include, without limitation, waivers of copayments and deductible amounts (or any part thereof) and transfers of items or services for free or for other than fair market value. The statute and implementing regulations contain a limited number of exceptions.

In the Conference Committee report accompanying the enactment of section 1128A(a)(5), Congress expressed its intent that inexpensive gifts of nominal value be permitted. The Office of Inspector General (“OIG”) expressed its interpretation of “inexpensive” or “nominal value” to mean a retail value of no more than $10 per item or $50 in the aggregate per patient on an annual basis and noted that it would periodically review these limits and adjust them according to inflation, if appropriate. Effective December 7, 2016, the OIG is interpreting “nominal value” as having a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis.  As with the OIG’s previous interpretations, the items may not be cash or cash equivalents.

Affordable Care Act (“ACA”) and OIG Regulations
Notwithstanding the prohibition contained in the beneficiary inducement statute, the ACA provides exceptions to what might constitute “remuneration” under the CMPs, including an exception for remuneration that “that poses a low risk of harm and promotes access to care.” In December 2016, 10 years after Advisory Opinion No. 06-20, the OIG issued final regulations regarding patient incentive arrangements. The OIG defines “care” (in the context of “access to care”) as “access to items and services that are payable by Medicare or a state health care program for the beneficiaries who receive them.” The OIG interprets “promoting access to care” as “improving a particular beneficiary’s, or a defined beneficiary population’s, ability to obtain items and services payable by Medicare or a state health care program.”

Promoting access to care includes the removal of “socioeconomic, educational, geographic, mobility or other barriers that could prevent patients from seeking care (including preventive care) or following through with a treatment plan.” As an example, the OIG makes a distinction between free child care and movie tickets: “[P]roviding free child care during appointments also could promote access to care and help a patient comply with a treatment regimen. In contrast, offering movie tickets to a patient whenever the patient attends an appointment would not fit in the exception; such remuneration would be a reward for receiving care and does not help the patient access care, or remove a barrier that would prevent the patient from accessing care.”

The OIG set out different factors and analysis tests for the “low risk of harm” component. The OIG stated that remuneration would pose a low risk of harm to Medicare and Medicaid beneficiaries and federal health care programs by (i) being unlikely to interfere with, or skew, clinical decision making, (ii) being unlikely to increase costs to federal health care programs or beneficiaries through overutilization or inappropriate utilization, and (iii) not raising patient safety or quality of care concerns.

OIG Advisory Opinion 17-01
In conjunction with its regulations, the OIG released Advisory Opinion 17-01 (“AO 17-01”), which expanded on its “low risk of harm” analysis by including additional factors to examine when assessing patient benefits. In addressing “skewing clinical decision making,” health care providers and suppliers should look at whether (i) eligibility to receive the remuneration is conditioned on receipt of a particular service from the supplier and/or (ii) the physician receives remuneration that encourages referring eligible patients to the supplier. In addressing “increased costs to federal health care programs,” the supplier should look at whether the patient incentive arrangement will shift the remuneration cost to federal health care programs. In addressing “overutilization,” the supplier should look at whether (i) it is actively marketing the program to attract patients, (ii) the program is being offered before the patient decides to use the supplier, and (iii) the offered remuneration is encouraging patients to seek out unnecessary or poor quality of care. If the answer is “yes” to one or more of these factors, then it is likely that the patient incentive arrangement does not result in a “low risk of harm.”

When discussing activities that facilitate access to care, the OIG says that “promoting access to care” constitutes “improving a particular beneficiary’s, or a defined beneficiary population’s, ability to obtain items and services … .” This includes removing “socioeconomic, educational, geographic, mobility or other barriers that could prevent patients from seeking care … or following through with a treatment plan.” However, the OIG is careful to distinguish activities that directly provide access to care from activities that are not directly related. For instance, “providing free child care during appointments … could promote access to care … [while] offering movie tickets to a patient whenever the patient attends an appointment … would be a reward for receiving care and does not help the patient access care … .” According to the OIG, the following examples promote access to care:

• A physician practice purchases a subscription to an internet-based food and activity tracker that offers information on healthy lifestyles for diabetic patients. This helps the patient understand and manage interaction between disease state and lifestyle and creates a record that facilitates interactions with the physician for future care planning.
• A hospital sends patients home with inexpensive devices that record data that is then transmitted to the hospital or the patient’s physician. This increases the patient’s ability to capture information necessary for follow-up care and to comply with the patient’s treatment plan.
• A provider/supplier provides patients with an item that dispenses medications at a certain time with the correct dosage. This pertains to adherence to the treatment plan (i.e., may reduce errors associated with the patient not remembering or misunderstanding the physician’s instructions).

OIG Advisory Opinion 19-03
The latest OIG guidance on providing free products and services designed to promote access to care is set out in OIG Advisory Opinion 19-03 (“AO 19-03”). The scenario described in the AO is as follows:

• The Requestor is a nonprofit medical center that provides inpatient and outpatient hospital-based services.
• The Clinic is an affiliate of the Requestor that offers primary care and certain specialty services at several facilities located in the geographic region that the Requestor serves.
• The Requestor and Clinic are under the control of an integrated health system operating in three states (“Health System”).
• The Requestor has developed a program to provide free, in-home follow-up care to certain patients who the Requestor certifies are at higher risk of admission or readmission to a hospital.
• Under an existing arrangement (“Current Arrangement”), the Requestor offers in-home care to patients with congestive heart failure (“CHF”) who qualify for participation, and under a proposed arrangement (“Proposed Arrangement”), the Requestor would expand the program to qualifying patients with chronic obstructive pulmonary disease (“COPD”).
• According to the Requestor, the goals of both arrangements are to increase patient compliance with discharge plans, improve patient health, and reduce hospital inpatient admissions and readmissions.
• Clinical nurse leaders screen patients to determine if they meet the following eligibility criteria for the Current Arrangement. First, a patient must have CHF and be (i) currently admitted as an inpatient to the Requestor, or (ii) a patient of the Requestor’s CHF Center who was admitted as an inpatient to the Requestor within the previous 30 days. Second, the clinical nurse leader must identity the patient as high risk for hospital inpatient readmission using a risk assessment tool utilized throughout the industry to predict the risk of unplanned readmission or emergency department visits subsequent to a hospital discharge. Third, the patient must have arranged to receive follow-up care at the CHF Center. If a patient does not plan to seek follow-up care, intends to receive follow-up services elsewhere, or expresses uncertainty about where he or she will receive follow-up care, then the patient is not informed of the Current Arrangement. Fourth, the patient must be willing to enroll in the Current Arrangement after consultation with the clinical nurse leader. Finally, the patient must be discharged to, or reside at, a personal residence or an assisted living facility (“ALF”) in the Health System’s service area.
• The Proposed Arrangement generally would have the same eligibility requirements as the Current Arrangement.
• The Requestor offers the Current Arrangement, and would offer the Proposed Arrangement, to any patient who meets the eligibility criteria, regardless of the patient’s health insurance status or his or her ability to pay for medical services. The Requestor certifies that it does not, and would not, advertise or market the arrangements to the public. Further, the Requestor does not, and would not, publicize the arrangements on its website.

Under both arrangements, patients who meet all eligibility criteria, and who choose to participate, receive two visits from a community paramedic each week for approximately 30 days following enrollment. Each visit takes place in the patient’s home or Assisted Living Facility and lasts approximately 60 minutes, during with time the community paramedic may perform some or all of the following activities (collectively, the “Services”):

• review the patient’s medication;
• assess the patient’s need for follow-up appointments;
• monitor the patient’s compliance with the discharge plan of care or the patient’s disease management;
• perform a home safety inspection; and
• perform a physical assessment, which may include checking the patient’s pulse and blood pressure, listening to the patient’s lungs and heart, checking any wounds, running an electrocardiograph, drawing blood and running blood tests using a portable blood analyzer, or administering medication.

The community paramedic uses a clinical protocol to deliver interventions and to assess whether a referral for follow-up care is necessary. The community paramedic documents all activities and interventions he or she performs during the course of the visit in the patient’s electronic medical record. If a patient requires care that falls outside the community paramedic’s scope of practice, the community paramedic directs the patient to follow up with his or her established provider. For urgent but nonlife-threatening medical needs, the community paramedic calls the patient’s established provider, and such provider follows up with the patient as he or she deems appropriate.

In many cases, the Requestor or the Clinic is the patient’s established provider. If a patient requires care unrelated to his or her CHF or COPD for which he or she has no established provider, the community paramedic contacts the Requestor or the Clinic, as applicable, to determine if the Requestor or the Clinic can address any immediate needs, but the patient may obtain care from the provider of his or her choice, and the community paramedic informs the patient of this fact. According to the Requestor, this approach fosters integrated care delivery for patients and improves patients’ adherence to their treatment plans, which is particularly important for patients with chronic diseases.

The Requestor and the Clinic bill, and would bill, for any follow-up services they provide outside the scope of the arrangements at the same rate that they would bill for such services if the patient was not participating in the arrangements. The Requestor employs, on either a full-time or part-time basis, the community paramedics who provide the Services. Neither the Requestor nor the Clinic compensates, or would compensate, any employee or contractor based on the number of patients who enroll in the arrangements. All costs associated with the community paramedic visits provided under the arrangements are, and would be, allocated to the Requestor.

With one exception, the Services are not covered or reimbursed by federal health care programs when performed by a community paramedic. One Medicaid program reimburses for community paramedic services that Requestor represents are similar to the Services, but the Requestor represents that it does not, and would not, bill this Medicaid program for the Services. Neither patients nor any payors are, or would be, billed for the Services, and the Requestor does not, and would not, shift any costs related to the arrangements to Medicare, Medicaid, other payors, or individuals.

In reviewing the Current Arrangement and the Proposed Arrangement, the OIG observed that the arrangements could potentially violate the federal anti-kickback statute (“AKS”) and the federal beneficiary inducement statute. Notwithstanding the foregoing, the OIG concluded that it would not bring an enforcement action against the arrangements under these statutes. This conclusion is based on the following:

• According to the OIG, the Services provide a significant benefit to patients in the form of free health care services and care management furnished in their homes. As such, the Services constitute remuneration from the Requestor to patients participating in the arrangements. The OIG further states that the remuneration could influence a patient to select Requestor or the Clinic for federally reimbursable items and services. And, according to the OIG, the “Promotes Access to Care” exception under the beneficiary inducement statute does not protect the arrangements.
• Although the remuneration implicates the beneficiary inducement statute, the OIG believes that the arrangements’ benefits outweigh any risk of inappropriate patient steering that the beneficiary inducement statute was designed to prevent. For example, before learning about the arrangements, patients already must have selected the Requestor or the Clinic for follow-up services related to their CHF or COPD. With respect to future services unrelated to their CHF or COPD, the community paramedics direct patients to follow up with their established provider. Patients are informed that they have the right to choose their provider. Of particular importance is that the arrangements foster integrated care delivery, which is particularly important for individuals with chronic diseases because it improves their adherence to their treatment plans.
• If the arrangements work as intended, they are unlikely to lead to increased costs to federal health care programs or patients through overutilization or inappropriate utilization. To the extent that the arrangements increase utilization of health care services, such an increase likely would reflect appropriate utilization from patients receiving medical necessary care as a result of the arrangements. Further, the arrangements would result in overall savings to federal health care programs if they successfully achieve the goals of improving patient health and reducing hospital inpatient admissions and readmissions.
• The risk that the arrangements will interfere with or skew clinical decision making is low.
• The arrangements would not be marketed or publicized.
• The scope and duration of the Services appear reasonably tailored to accomplish the goals of increasing patient compliance with discharge plans, improving patient health, and reducing hospital admissions and readmissions.

Application to the Four Scenarios
In reviewing the 2016 OIG regulations and the three Advisory Opinions, we observe the OIG taking a conservative view in 2006 when it states that it is impermissible for a DME supplier to (i) allow a beneficiary to use an oxygen concentrator free of charge before the beneficiary undergoes the oxygen qualification test and (ii) conduct oxygen pre-screens on beneficiaries. But then in the 2017 and 2019 Advisory Opinions, we see the OIG taking the position that the provision of free health care services may be permissible if the intent—and practical effect—is to open up to beneficiaries access to health care (i.e., access that the beneficiary may be denied because of socio-economic and/or other factors). If we would analyze the above four scenarios only under the 2006 Advisory Opinion, we would likely be conservative with our analysis. However, if we analyze the four scenarios under the 2006 Advisory Opinion and the two recent Advisory Opinions, we will likely be less conservative if certain safeguards in place. So, let us look at the four scenarios described at the beginning of this article:

• Scenario 1 – The supplier can have a policy in place that says that if the supplier places a concentrator on a beneficiary before coverage is determined, then the supplier will instruct the beneficiary that he needs to pay daily rent for the concentrator. Inasmuch as the Medicare monthly rental allowable for concentrators is low, one would think that the daily rental charged by the supplier would be low. If the beneficiary responds by saying that he does not have the financial ability to pay the daily rental, then the supplier can have the beneficiary fill out a financial hardship form, after which the supplier can determine whether or not to waive the daily rental. Essentially, this is the same procedure that the supplier can follow when it comes to waiving copayments. In addition to the foregoing, the supplier can assert that not charging the beneficiary daily rent for the concentrator is justified because:
• As previously discussed, the beneficiary inducement statute has a “nominal value” exception that states that a supplier can offer a non-monetary gift to a beneficiary that has a retail value of $15 or less; and if the supplier offers multiple gifts to a beneficiary, then the multiple gifts cannot (in the aggregate) have a retail value in excess of $75 over a 12-month period. Assume that fair market value (“FMV”) daily rent for a concentrator is $4. The supplier can argue that allowing the beneficiary to use the concentrator free of charge (for e.g., seven days) complies with the nominal value exception. That is, each “gift” consists of daily use of the concentrator, each gift has a value of $4, and the combined value of the gifts is $28.
• Separate and apart from the beneficiary inducement statute, the DME supplier can argue that the intent behind providing the concentrator for free is not to induce the beneficiary to purchase/rent a covered item from the supplier but, rather, the intent is (i) to provide the beneficiary access to health care and (ii) to reduce the risk of the beneficiary being admitted to the hospital—thereby saving money for the Medicare program. Ideally, the physician will provide something in writing to the supplier that states that if the beneficiary is not immediately placed on oxygen, then it is likely that he will end up in the hospital in a very short period of time.
• Scenario 2 – The supplier can have a policy in place that says that if the supplier conducts a pre-screen on a beneficiary, then the supplier will instruct the beneficiary that he needs to pay an FMV fee to the supplier for the pre-screen. If the beneficiary responds by saying that he does not have the financial ability to pay for the pre-screen, then the supplier can have the beneficiary fill out a financial hardship form, after which the supplier will determine whether or not to waive the fee for the pre-screen. In addition:
• If an FMV fee for the pre-screen is $15 or less, then the supplier can argue that the free pre-screen complies with the nominal value exception to the beneficiary inducement statute.
• Separate and apart from the beneficiary inducement statute, the DME supplier can argue that the intent behind providing the free pre-screen is not to induce the beneficiary to purchase/rent a covered item from the supplier but, rather, the intent is (i) to provide the beneficiary access to health care and (ii) to reduce the risk of the beneficiary being admitted to the hospital—thereby saving money for the Medicare program.
• Scenario 3 – The discussion set out above in Scenario 1 applies here.
• Scenario 4 – This is an interesting scenario. The delivery of the tanks benefits the beneficiary and, hence, the beneficiary inducement statute comes into play. If the “retail value” of providing the oxygen tanks is less than $15, and if the retail value of retrieving the tanks is less than $15, then the supplier can assert that the arrangement complies with the nominal value exception to the beneficiary inducement statute. Now, let’s switch gears and look at this arrangement from the viewpoint of the hospital. The hospital is financially motivated to discharge the patient. If the patient remains in the hospital because there are no tanks to facilitate the patient going home, then the hospital may start losing money on the patient. By delivering and retrieving the tanks, the supplier might be construed to be “providing something of value” to the hospital (i.e., facilitating the discharge of the patient). The hospital is a referral source to the supplier. Hence, the federal anti-kickback statute may be implicated. As such, the safest course of action is for the hospital to pay the supplier for the short-term provision of oxygen tanks to facilitate discharge. The compensation should be the FMV equivalent of the supplier’s services. If the supplier elects to deliver/retrieve tanks without charge, then the supplier can argue that the federal anti-kickback statute is not violated because the intent of the arrangement is not to motivate the hospital to refer patients to the supplier; rather, the intent is to provide access to care to patients.

It is unknown if the above arguments will be persuasive to a government enforcement agency.  Before engaging in any of the above scenarios, the DME supplier needs to seek advice from its health care attorney.

AAHOMECARE’S EDUCATIONAL WEBINAR

The OIG is Loosening Up:  Providing Free Services Within Legal Parameters

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Markus P. Cicka, Esq., Brown & Fortunato, P.C.
Tuesday, August 20, 2019
2:30-3:30 p.m. EASTERN TIME

There are two legitimate reasons as to why a DME supplier desires to provide “value-added” services and products to its patients. First, doing so can improve the patient’s health and, hopefully, prevent a trip to the hospital. Secondly, providing value-added services and products helps distinguish the supplier from its competitors. In going down this path, the supplier needs to be aware that while it is acceptable to provide value-added services and products, it is not acceptable for the supplier to provide so much that it “crosses the line” to offering prohibited inducements. Doing so will violate the federal beneficiary inducement statute and the federal anti-kickback statute. This webinar will discuss how a DME supplier can provide value-added services and products while avoiding violating these two statutes. In particular, the webinar will focus on recent OIG guidance that encourages health care providers to provide free services and products to Medicare beneficiaries in which such services and products are designed to promote the beneficiaries’ health. In addition to discussing what the supplier can do in providing free products and services, the webinar will discuss what the supplier cannot do.

Register for The OIG is Loosening Up:  Providing Free Services Within Legal Parameters on Tuesday, August 20, 2019, 2:30-3:30 p.m. ET, with Jeffrey S. Baird, Esq. and Markus P. Cicka, Esq., of  Brown & Fortunato, PC.

FEES:
Member: $99.00
Non-Member: $129.00

AAHomecare’s Retail Work Group

The Retail Work Group is a vibrant network of DME industry stakeholders (suppliers, manufacturers, consultants) that meets once a month via video conference during which (i) an expert guest will present a topic on an aspect of selling products at retail, and (ii) a question and answer period will follow. The next Retail Work Group video conference is scheduled for September 12, 2019, at 11:00 a.m. Central. Kevin Brown, All-Star Medical, will present “Finding Your Retail Niche.” Participation in the Retail Work Group is free to AAHomecare members. For more information, contact Ashley Plauché Manager of Government Affairs, AAHomecare ([email protected]).

Jeffrey S. Baird, JD, is Chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Texas. He represents pharmacies, infusion companies, HME companies 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 [email protected].