On December 23, 2020, the Department of Health and Human Services Office of Inspector General (the “OIG”) issued Advisory Opinion No. 20-08 (the “Advisory Opinion”) addressing the use of gift cards to incentivize patients to utilize health care services. While gift cards themselves are not a new topic for the OIG in the area of beneficiary inducement, the OIG takes a position in the Advisory Opinion regarding the acceptability of gift cards for “big-box” retailers that could give providers reason to reevaluate their use of gift cards.
Background
The Civil Monetary Penalty Law (“CMP Law”) prohibits the offer or transfer of remuneration to any Medicare or Medicaid beneficiary that the person or entity knows or should know is likely to influence the beneficiary to select a particular provider, practitioner or supplier to provide items or services payable by Medicare or Medicaid. Violations of the CMP Law may result in a civil monetary penalty of not more than $20,866 for each item or service. In addition, a violation could result in an assessment of up to three times the amount claimed for the item or service. The OIG may also initiate administrative proceedings to exclude the provider from participation in the federal health care programs. The definition of remuneration under the CMP Law is “anything of value” and includes the transfer of any items or services for free or less than fair market value.
There are a number of exceptions to the CMP Law's prohibitions on beneficiary inducement. Many of these exceptions are established in statute or regulation, such as an exception for incentives that promote the delivery of preventive care. The OIG has also created an additional exception through subregulatory guidance for incentives of nominal value, i.e., less than $15 per item and less than $75 annually per patient (the “Nominal Value Exception“). In addition, the OIG has stated that “cash or cash equivalents” fall outside the Nominal Value Exception.
The OIG initially took this position in 2002, before plastic, credit-card like gift cards became ubiquitous (see OIG special advisory bulletin). Based on OIG statements that an item was a cash equivalent if it was “convertible to cash,” like a check, most providers stayed away from offering gift cards to patients. In 2016, however, the OIG refined this definition, stating, “OIG considers ‘cash equivalents' to be items convertible to cash (such as a check) or that can be used like cash (such as a general purpose debit card, but not a gift card that can be redeemed only at certain stores or for a certain purpose, like a gasoline gift card).”
In December 2020, the OIG published regulations amending certain existing safe harbors and implementing new safe harbors to the Anti-Kickback Statute ("AKS"). In promulgating the new Arrangements for Patient Engagement and Support to Improve Quality, Health Outcomes, and Efficiency Safe Harbor ("Safe Harbor"), the OIG included additional guidance regarding the treatment of gift cards under the AKS. In the commentary for the applicable Safe Harbor (limited to in-kind remuneration), the OIG opined that "some gift cards would be considered in-kind remuneration eligible for safe harbor protection."
The OIG proceeded to specify that "[g]ift cards that can be redeemed only for certain categories of items (such as fuel-only gift cards redeemable at gas stations) could meet the in-kind requirement under this safe harbor. Gift cards satisfy the in-kind requirement only if their potential use is limited to certain categories of items or services that meet the conditions of the safe harbor." 85 Fed Reg. 77684, 77790 (2020). The OIG also provided the example of a gift card for a service that delivers ingredients necessary for a healthy meal, which would meet the in-kind requirement and would be protected if the other Safe Harbor conditions are satisfied. Conversely, the OIG clarified that it considers gift cards offered by large retailers or online vendors that sell a wide variety of items (such as big-box stores) to be cash equivalents and therefore not eligible for protection under this Safe Harbor, as they "could easily be diverted from their intended purpose or converted to cash."
Advisory Opinion No. 20-08 seems to adopt the OIG's guidance in December 2020 promulgating the new Safe Harbor undercutting the OIG's previous statement in 2016.
Advisory Opinion No. 20-08
Advisory Opinion No. 20-08 concerns a federally qualified health center (“FQHC”) that sought to offer a one-time $20 gift card to patients (or their parents or guardians) under the age of 19 who previously missed two or more scheduled preventive and early intervention care appointment appointments (“Care Appointments”) within six months (“Eligible Patients”). Under the proposed arrangement, the FQHC would first call an Eligible Patient and notify them of the opportunity to receive the $20 gift card, the Eligible Patient would have to attend a Care Appointment and the FQHC would furnish the gift card to the Eligible Patients upon checkout after the Eligible Patient attended the Care Appointment and a FQHC staff member verified the patient's eligibility. To be eligible, patients must have scheduled the Care Appointments only after hearing about the $20 gift card incentive from FQHC staff (i.e., a patient would not be eligible if they scheduled the Care Appointment on their own without knowing of the incentive). The stated purpose of the arrangement was to improve the attendance rate for Eligible Patients, a goal which was initiated after the FQHC's studies showed that 30% of its pediatric patients missed one or more preventive and early intervention Care Appointments. Eligible Patients or their parents or guardians would be given an option to choose one $20 gift card from four select retailers, including one “big-box” store, i.e., one that sells a wide variety of items.
In conducting its analysis of the arrangement posed in the Advisory Opinion, the OIG concluded that the arrangement implicated the CMP Law as well as the Anti-Kickback Statute, and also concluded that there were no applicable exceptions that protected the arrangement. Of note, and amongst other reasons, the OIG opined that the gift cards would not be protected by the CMP Law exception which protects incentives that promote access to care with a low risk of harm partly because “one of the gift cards offered under the Proposed Arrangement would be to a retailer that is a big-box store, i.e., it sells a wide variety of items ...[and] such gift cards are not ‘items or services' and are considered cash equivalents that are not protected by the exception.” Notably, the OIG did not identify the retailer or further define what it believes constitutes a “big-box” retailer, so it is unclear whether a gift card for a grocery store, drug store or convenience store would meet the exception. The OIG's comment in this Advisory Opinion is a deviation from the commentary in the 2016 Final Rule where the OIG stated that cash and cash equivalents included debit cards and checks: items that were convertible to cash, but seems consistent with the new guidance under the new AKS Safe Harbor primarily because the OIG believes that big-box gift cards can be diverted from their intended use or converted to cash.
Although the OIG concluded that the gift cards would not satisfy an applicable CMP Law exception, the OIG nonetheless offered a favorable opinion and stated it would not impose sanctions. OIG's favorable finding was due in large part to the presence of the following safeguards:
- The pool of Eligible Patients is narrowly defined to include only those established patients who previously had two scheduled appoints but missed those appointments in the preceding six months;
- The proposed arrangement is unlikely to increase the cost to the Federal health care programs or lead to overutilization. Any increase in cost borne from the Eligible Patients attending their scheduled appointment would reflect appropriate utilization;
- The proposed arrangement is not advertised outside of the information provided to Eligible Patients and would not harm competition;
- The pool of Eligible Patients would only receive the $20 gift card one time even if they continued to miss appointments;
- The $20 gift card was of “modest value” even though the “big-box” type of gift card was a cash equivalent; and
- The proposed arrangement was narrowly tailored to accomplish the goal of improving attendance rates of these pediatric patients. Furthermore, the $20 gift card is paired with patient education, an eligibility verification process, documentation requirements and an annual effectiveness review.
As with all Advisory Opinions, only the party that requested the Advisory Opinion can rely on it as a source of binding legal authority.
Practical Takeaways
Even though gift cards have been discussed previously in various OIG guidance over the years, this Advisory Opinion together with the OIG's guidance around the new Safe Harbor is the first time the OIG has taken the position that gift cards to "big-box" retailers are identified as impermissible "cash or cash equivalent" incentives under the CMP Law.
Providers should consider evaluating their patient assistance and incentive policies and consider using items and services other than “big-box” gift cards. Providers should also consider including an audit of patient assistance and incentive activities on their annual Compliance Work Plans. If a potential compliance issue is uncovered, providers should be aware that interpreting and applying the Nominal Value Exception can be tricky. Its status as an “exception” created through guidance means that a facts-and-circumstances analysis, conducted with a clear understanding of existing regulations and guidance, is usually called for. Nonetheless, if there are sufficient safeguards in place, even a gift card incentive that is over the nominal value limit of $15 per item or $75 in the aggregate could be supportable.
Originally Published by Hall Render, January 2021
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