On March 4, the Department of Health and Human Services (“HHS”) Office of the Inspector General (“OIG”) issued a favorable result in OIG Advisory Opinion No. 26-03, regarding a Requestor’s proposal to offer discounts to certain ambulatory surgery centers (“ASCs”) on intraocular lenses (“IOLs”) and supplies in cataract surgery.
The discounts would be contingent on physician practices—with ophthalmic surgeons performing cataract surgery at the ASCs—purchasing and entering into subscription agreements for the Requestor’s software product (the “Proposed Arrangement”).
The Requestor, a medical technology manufacturer and distributor, sought to determine whether the Proposed Arrangement “would constitute grounds for the imposition of sanctions under the exclusion authority at section 1128(b)(7) of the Social Security Act (the ‘Act’) or the civil monetary penalty provision at section 1128A(a)(7) of the Act, as those sections relate to the commission of acts described in section 1128B(b) of the Act (the ‘Federal anti-kickback statute’)” (the “AKS,” for purposes of this post.).
The OIG concluded that although the Proposed Arrangement, if undertaken, would generate—if the requisite intent were present—prohibited remuneration under the AKS, it “would not impose administrative sanctions on the Requestor under sections 1128A(a)(7) or 1128(b)(7) of the Act, as those sections relate to the commission of acts described in the [AKS].”
OIG Advisory Opinion No. 26-03
The OIG began its legal analysis by noting that the AKS “makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, the referral of an individual to a person for the furnishing of, or the arranging for the furnishing of, any item or service reimbursable under a federal health care program.” The prohibition includes “remuneration to induce, or in return for, the purchasing, leasing, or ordering of, or arranging for or recommending the purchasing, leasing, or ordering of, any good, facility, service, or item reimbursable by a Federal health care program.”
While finding that the reduction in price at issue did not meet the definition of a “discount” under an AKS safe harbor provision—because the reduction is conditioned not only on the purchase of the product, but also requires additional action—the OIG concluded that “the risk of fraud and abuse presented by the Proposed Arrangement is sufficiently low under the [AKS] for the OIG to issue a favorable advisory opinion.” It found that the Proposed Arrangement:
- should not increase costs to federal health care programs or result in overutilization;
- presents a low risk of interference with clinical decision-making; and
- does not present an inappropriately high risk of steering from the practice to the ASC, or of unfair competition.
“Here, the referral source (the Practice) must purchase the Software at full price for the ASC (the referral recipient) to get discounts on items included in its Facility Fee for the surgery,” the opinion states. “If the opposite were true (i.e., if an ASC were paying full price for an item or service that resulted in a Practice—a referral source to the ASC—receiving discounts or other remuneration), then the risk of inappropriate steering would be much higher, and we may have come to a different conclusion.”
Takeaways
The OIG’s Advisory Opinion emphasizes that its conclusion is limited in scope to the Proposed Arrangement in question and is issued only to the Requestor; it cannot be relied upon by anyone else. The opinion may not be introduced into evidence by someone other than the Requestor, and it will not bind or obligate any agency other than HHS.
Despite the favorable ruling, the HHS OIG as well as the Department of Justice (“DOJ”) continue to take fraud and abuse in health care seriously, especially when federal reimbursement through Medicare and Medicare is at stake. The DOJ may seek civil penalties through the False Claims Act (“FCA”) as well as the criminal AKS. The OIG Advisory Opinion, in fact, expresses “no opinion herein regarding the liability of any person under the [FCA] or any other legal authorities for any improper billing, claims submission, cost reporting, or related conduct.”
If you have questions regarding liability in this area, particularly in the health care space, please reach out to the author.
Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this post.
