United States: New OIG Rules Change Patient Incentive Program Landscape: Where Are The Limits Now?

Last Updated: April 20 2017
Article by Tony Maida, Emily J. Cook and Tiffany T. Mason


With health care becoming more consumer-driven, health care providers and health plans are wrestling with how to incentivize patients to participate in health promotion programs and treatment plans. As payments are increasingly being tied to quality outcomes, a provider's ability to engage and improve patients' access to care may both improve patient outcomes and increase providers' payments. In December 2016, the Office of Inspector General of the US Department of Health and Human Services (OIG) issued a final regulation implementing new "safe harbors" for certain patient incentive arrangements and programs, and released its first Advisory Opinion (AO) under the new regulation in March 2017. Together, the new regulation and AO provide guardrails for how patient engagement and access incentives can be structured to avoid penalties under the federal civil monetary penalty statute (CMP) and the anti-kickback statute (AKS).

With health care becoming more consumer-driven, many health care providers and health plans are wrestling with how to incentivize patients to participate in, and adhere to, health promotion programs and treatment plans. As payments are increasingly being tied to quality outcomes, a provider's ability to effectively engage patients and improve patients' access to care may both improve patient outcomes and increase providers' payments. In December 2016, the Office of Inspector General of the US Department of Health and Human Services (OIG) issued a final regulation implementing new "safe harbors" for certain patient incentive arrangements and programs, and released its first Advisory Opinion (AO) under the new regulation in March 2017. Together, the new regulation and AO provide guardrails for how patient engagement and access incentives can be structured to avoid penalties under the federal civil monetary penalty statute (CMP) and the anti-kickback statute (AKS).

New Regulation

OIG's new regulation interprets the changes made to the beneficiary inducement provisions of the CMP by the Affordable Care Act (ACA). The CMP prohibits offering "remuneration" to individuals eligible for federal health care program benefits that the offeror knows or should know are likely to influence beneficiaries' selection of particular providers, practitioners or suppliers. The ACA added an exception to permit "certain remuneration that poses a low risk of harm and promotes access to care."

The regulation addresses three main concepts:

  • Access to Care: 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." OIG explained that its interpretation encompasses providing the tools necessary for removing "socioeconomic, educational, geographic, mobility, or other barriers that could prevent patients from seeking care (including preventive care) or following through with a treatment plan."

OIG's preamble example illustrates this distinction. OIG states that providing free child care to individuals to attend a smoking cessation program (in instances where smoking cessation programs are covered by Medicare or a state health care program) removes a potential socioeconomic barrier (child care costs) to the patient's ability to seek care. In contrast, offering movie tickets to individuals to attend smoking cessation programs does not remove any barriers to seeking care or complying with a treatment plan.

  • Care: OIG defines "care" in "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." This means that the exception may not cover remuneration that encourages beneficiaries to access services that could promote general wellness, unless those services are covered by the individual's Medicare or state health care program benefit. This "care" limitation may result in some incentives being permissible in some states but not others depending on the applicable Medicaid scope of benefits or differences between Medicare Advantage plan benefits.
  • Low Risk of Harm: OIG stated that remuneration would pose a low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid 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.

In its March 2017 AO 17-01, OIG discussed listed some factors in its analysis, such as whether:

  1. eligibility to receive the remuneration is conditioned on the receipt of a particular service from the provider;
  2. the physician receives remuneration that encourages referring eligible patients to the hospital;
  3. the provider shifts the remuneration's cost to the programs or claims the costs of the remuneration on its cost report;
  4. the provider advertises the remuneration;
  5. the remuneration is offered it to patients prior to their scheduling services; and
  6. the remuneration could appear to encourage patients to seek out unnecessary or poor quality care.

Takeaways from the New Regulation

Promote, rather than reward, access to care. Organizations seeking to create or modify their patient incentive programs in response to these new rules should note the distinction between "promoting access" and "rewarding" patients. OIG's favorable view of "promoting" access through removing barriers over "rewarding" access by encouraging patients to seek care may prove to be a blurry line in practice. Also, organizations will need to note what items and services qualify as "care" in their applicable jurisdiction. The rule's construction may create a situation of haves and have-nots–the more generous the Medicaid managed care plan or Medicare Advantage plan benefits, the more flexibility organizations have to assist patients in seeking covered care. Finally, it is not entirely clear why "rewards" are not permitted when viewed under a public health lens. Whether through providing free child care or movie tickets, successful attendance at a smoking cessation program would likely improve a beneficiary's health regardless of whether their federal benefits covered the program, as well as benefit the federal health care programs in the long run by eliminating unhealthy behavior that contributes to increasing health care costs. 

Facilitating patient-physician communication or compliance with a treatment plan is a safe zone. The new rule favors remuneration that acts to improve patient-physician communication and the patient's involvement in managing their care and health conditions, with the apparent goal of better health outcomes. OIG provides three examples: (1) a primary care group practice's purchase of a subscription to a Web-based food and activity tracker that offers information about healthy lifestyles for its diabetic patients; (2) a hospital sending its patients home with inexpensive devices that record data (such as weight or other vitals) that is then transmitted to the hospital or primary care provider; and (3) providing patients with an item that dispenses medications at a certain time at the correct dosage.

In the first two examples, OIG notes that these forms of remuneration promote access to care by preparing both the patient and the physician for follow-up care. Example (1) "would help the patient understand and manage the interaction between lifestyle, disease, and prescribed treatment and create a record that would facilitate interactions with the physician for future care-planning." Example (2) "increases the beneficiary's ability to capture information necessary for follow-up care and to comply with the treatment plan." Both examples facilitate patient-physician communication, as one equips the patient with resources that allow for informed decision-making and compliance, and the other offers the physician easier access to the information necessary for providing quality care. OIG endorses Example (3) because "[the item] is a tool that enables the patient to access the right drugs at the appropriate dosage and time" and, as such, may reduce errors associated with the patient misremembering or misunderstanding physicians' instructions.

Remember: cash or "cash equivalents" are unacceptable. OIG defines "cash equivalents" as items that can be converted to cash (e.g., checks) or that are used like cash (e.g., general purpose debit cards). However, OIG would not consider "gift cards that can be redeemed only at certain stores for a certain purpose, like a gasoline gift card" as cash or cash equivalents. When providing gift cards, providers should be particularly mindful that OIG's threshold for nominal non-cash gifts is $15 per gift and $75 per beneficiary annually. 

Look at other applicable exceptions and safe harbors. Other new CMP exceptions and safe harbors can protect certain benefits that do not fall within the access to care exception. For example, there are specific exceptions for retailer rewards programs, providing free or discounted items to individuals in financial need and for remuneration that promotes access to preventive care. Free or discounted local transportation services that fall within the scope of the AKS's new safe harbor would also qualify for protection. OIG clarified that remuneration that meets an AKS safe harbor is also excepted from the beneficiary inducements CMP. These additional exceptions and safe harbors have similarly detailed requirements, meriting a close analysis of a proposed program to ensure that it qualifies.

Double-check AKS analysis if no available safe harbor. Patient engagement programs also implicate the AKS. The AKS prohibits knowingly and willfully offering or paying remuneration to a person to induce or reward ordering or purchasing items or services paid for by a federal health care program. The ACA only changed the definition of "remuneration" in the CMP; the AKS does not contain a definition of "remuneration" and OIG has not created one. Fortunately, OIG is also charged with interpreting the AKS and has issued various advisory opinions examining particular arrangements under the AKS and CMP. In AO 17-01, OIG reviewed a patient assistance program involving free lodging and meals for certain patients and concluded that the arrangement, which did not meet an AKS safe harbor, posed minimal AKS risk for the same reasons OIG discussed under the CMP analysis. In the absence of seeking an advisory opinion for a particular incentive program, providers should separately review proposed programs for compliance issues under both AKS and CMP statutes.

Is the CMP implicated in the first place? OIG notes several times that the CMP is not implicated at all if the provider offering the remuneration does not know or should not know that it is likely to influence the individual to seek items or services from a particular provider, practitioner or supplier. OIG provides some examples, including a hospital providing an incentive to a beneficiary to follow up with a physician post-discharge without regard to who that physician may be and without recommending any physician in particular. Although this example is somewhat vague (perhaps on purpose), it is possible that, in some circumstances, OIG could view incentives to seek post-discharge care as likely to influence the beneficiary to seek items or services from that hospital in the future.

The key to this analysis appears to be the likelihood of this outcome, which may depend on the nature of the incentive and the circumstances of the particular patient. For example, patients who are "frequent flyers" may not require any additional incentive to seek care at that hospital in the future, and thus the remuneration would not make their return any more likely than before. However, one reason for their "frequent flyer" status may be the lack of a regular primary care physician, perhaps due to barriers similar to those addressed in the CMP rule. Incentivizing such patients to seek a primary care physician may remove a barrier, which could result in the patient not returning to the hospital. OIG also references providing patients with educational or informational materials about community resources, such as assistance for housing, food or domestic violence counseling, and post-discharge patient follow-up contacts as not implicating the CMP. These activities could be considered supportive care or normal discharge planning that ensures patients are equipped to manage the life circumstances that impact their health conditions.

Will the Rule Disappear? Last, and certainly not least, the ACA's fate is uncertain at this time. Consequently, it is not clear whether the changes to the CMP will remain in an ACA "repeal and replace" effort. If the CMP reverts back to its pre-ACA form, the statutory support for the new exceptions and safe harbors will disappear. However, lawmakers may be incentivized to keep in place provisions, such as the access to care exception, that arguably benefit patients and providers, while posing minimal risk of increasing costs to the federal government. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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