AMARILLO, TX – DME suppliers live in the proverbial glass house. If a supplier is doing something it should not be doing, somebody knows about it. That “somebody” might be an employee … or a competitor…or a third party payor. DME suppliers have a number of resources they can access to guide them in entering into legally compliant arrangements. One resource is Advisory Opinions (AOs) issued by the Office of Inspector General (OIG). There are multiple AOs on the OIG website. Each AO is normally specific to a certain type of provider or supplier. This article discusses three AOs that are particularly relevant to DME suppliers.
In OIG Advisory Opinion No. 18-02, the Requestor provided free sample ostomy products to patients at the request of a patient or provider following surgery. The OIG determined that the Beneficiary Inducement Statute was not implicated because while the Requestor distributes and sells ostomy products, it does not “own or operate, directly or indirectly, any entity that files claim for payment” for the ostomy products or for other items or services reimbursable by a Federal health care program. As such, the Requestor is not a “provider, practitioner, or supplier” for purposes of the Beneficiary Inducement Statute and would “not influence a beneficiary to make any future purchases from a particular provider, practitioner, or supplier.”
Assume that a DME supplier (i) furnishes free samples, (ii) files claims for payment to federal health care programs (“FHCPs”), and (iii) the sample products are reimbursable under FHCPs. There is a risk that the government could view sample products provided by the supplier as an inducement to steer a patient to, or continue to order, such products from the supplier. The arrangement might implicate the Beneficiary Inducement Statute and, if so, the supplier would need to meet an exception to avoid penalties.
The DME supplier might desire to structure the free sample program to meet the Nominal Value Exception to the Beneficiary Inducement Statute. Under the Nominal Value Exception, the supplier may provide the patients free sample products with a retail value of $15 or less per item. The total aggregate value of the products provided to a patient over a 12-month period may not exceed $75. The OIG has not expanded further on the meaning of “per item.” The strict reading of the exception suggests that the DME supplier may be able to send several different sample products (e.g., Product A and Product B) to a patient because each product is a different item. However, if the supplier provides multiple samples of the same product (e.g., three samples of Product A) then a risk exists that the government will count all the samples as one item.
Another available exception is the Promote Access to Care exception. The OIG has interpreted the intent of the exception as to protect “items or services that should improve a patient’s ability to access care and treatment, not inducements to seek care.” One way this may be accomplished is by removing “socioeconomic, educational, geographic, mobility, or other barriers that could prevent patients from getting necessary care (including preventative care) or from following through with a treatment plan.”
The OIG within its Final Rule commentary provided several different examples of arrangements that would meet the exception. For example, providing free child care to a patient so that the patient could attend a program to assist with the treatment of the health condition. Providing self-monitoring tools could also meet the exception. “For example, a hospital might send a patient home with an inexpensive device to record data, such as weight or blood pressure, that could be transmitted to the hospital or the patient’s physician. This remuneration could increase the beneficiary’s ability to capture information necessary for follow-up care and to comply with the treatment plan….”
In OIG Advisory Opinion Number 17-01, the Requestor owns a hospital that operates a Level I trauma center and treats patients residing in rural and medically underserved areas. The hospital wished to provide free and reduced-cost hotel lodging and meals to patients who reside in rural and underserved areas. Qualifying patients would receive free or reduced-cost lodging for one night before and up to two nights after treatment at the hospital. The same patients would also receive free or reduced-cost hospital cafeteria meals, not to exceed a value of $15 per overnight stay. The qualifications a patient had to meet included: (i) residing within 90 or miles from the hospital and lives in a medically underserved area; (ii) a household income that does not exceed 500% of the Federal poverty level and meets the hospital’s financial need criteria; and (iii) meeting other qualifications.
In its analysis, the OIG determined that the arrangement implicated the Beneficiary Inducement Statute but meets the requirements of the Promote Access to Care Exception. Specifically, the OIG found that the free meals and lodging would remove certain socioeconomic and geographic barriers for the qualified patients seeking medically necessary care from the hospital. The free lodging near the hospital would also remove potential geographic or mobility barriers by enabling patients to seek any early morning treatments or post-treatments at the hospital. The arrangement also posed a low risk of harm to FHCPs because:
- It is unlikely to interfere with or skew clinical decision-making because the patient’s eligibility is not conditioned upon receipt of a particular service nor is the hospital paying a provider to refer the patient to the hospital;
- It is unlikely to increase costs to FHCPs because the hospital’s costs for the free meals and lodging will not be shifted to an FHCP; and
- It will not raise patient safety or quality-of-care concerns because the arrangement promotes patient safety by preventing and detecting post-treatment health concerns.
Contrast this to OIG Advisory Opinion Number 19-03 whereby the OIG determined the arrangement did not meet the exception. The arrangement involved a non-profit medical center offering free, in-home follow-up services to patients with congestive heart failure and that sought to expand these services to patients with chronic obstructive pulmonary disease. The OIG acknowledged that “some forms of remuneration that remove impediments to compliance with a treatment plan and some types of post-discharge support could promote access to care.” However, not all of the provided services (specifically, an at-home safety assessment) promotes a patient’s access to care. Moreover, the safety assessment does not remove socioeconomic, educational, geographic, or other barriers for the patient.
Despite this, the OIG advised that it would not impose sanctions against the medical center and cited the following factors:
- The arrangement would likely not induce patients to choose the medical center because the patients already made their selection prior to learning of the free services.
- The services provided are not reimbursable by FHCPs and are unlikely to lead to increased costs or overutilization.
- The risk that the arrangement will interfere with or skew clinical decision making is low because the medical center does not compensate any employees.
- The medical center does not advertise or market the program to the public.
- The scope and duration of the services provided appear to be reasonably tailored to the medical center’s goal of increasing patient compliance with discharge plans, improving patient health, and reducing unnecessary hospital inpatient admissions and readmissions.
In sum, the OIG Advisory Opinions suggests that the focus of the OIG’s analysis is on the provider’s motivation for giving a patient something of value. If the DME supplier provides a free sample with intent to steer patients to choose, or continue to use, the DME supplier as the patient’s DME provider, then the Beneficiary Inducements Statute may be implicated.
The DME supplier can mitigate the risk of a sample program implicating the Beneficiary Inducement Statute by implementing the following controls:
- Advise patients participating in the sample program that he or she is not obligated to choose the DME supplier.
- Do not compensate any physicians and/or employees arranging for the provision of samples to the patients.
- Do not advertise or market the sample program to patients.
- Only provide medically necessary sample products to patients. Such products must be tailored to the patients’ needs to avoid any unnecessary orders.
Jeffrey S. Baird, Esq., 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 email@example.com.
AAHOMECARE’S EDUCATIONAL WEBINAR
Managed Care Contracts: Key Provisions
Jeffrey S. Baird, Esq., Brown & Fortunato
Monday, June 13, 2022
1:30-2:30 p.m. CENTRAL TIME
DME suppliers serve multiple categories of patients, including the elderly (Medicare) and those on the lower end of the socio-economic scale (Medicaid). Both the Medicare and Medicaid programs are gravitating towards “managed care.” Approximately 40% of Medicare beneficiaries are signed up with Medicare Advantage Plans (“MAPs”), while approximately 70% of Medicaid beneficiaries are signed up with Medicaid Managed Care Plans (“MMCPs”). These percentages are increasing. MAPs and MMCPs work essentially the same way: (i) the government health care program contracts with a “Plan” that is owned by an insurance company; (ii) the Plan signs up patients; (iii) the Plan signs contracts with hospitals, physicians, DME suppliers and other providers … these providers/suppliers will take care of the Plan’s patients; and (iv) the government program pays the Plan that, in turn, pays the provider/supplier. In order to serve MAP and MMCP patients, DME suppliers must sign managed care contracts. In so doing, the supplier needs to be careful. Not only must the contract provide sufficient reimbursement to the supplier, but the contract will have some “trap” provisions that may be harmful to the supplier. This program will discuss the most important provisions that are contained in managed care contracts. The program will discuss how the supplier can negotiate with Plans; and the discussion will point out the provisions that are often non-negotiable and the provisions that are open to negotiation.