OIG provides more guidance on free services

Elizabeth E. Hogue, Esq., Burtonsville, MD

The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services, the primary enforcer of fraud and abuse prohibitions, issued another Advisory Opinion on July 30, 2007, which provides additional guidance to providers about giving free items to potential patients. Specifically, the OIG responded to a request from home medical equipment (HME) suppliers for guidance on whether it is appropriate to provide an in-home congestive heart failure (CHF) assessment with oximetry testing to patients in their homes.

The suppliers proposed to provide patients diagnosed with CHF with an in-home assessment with oximetry testing at no charge in order to determine whether patients qualify for receipt of oxygen paid for by the Medicare program. The clinical assessment would include an evaluation of heart rate, respiratory rate, blood pressure, breath sounds, level of dyspnea, peripheral edema, abdominal pain or swelling, medication profile, and mobility. The patient also would receive education regarding his/her condition, including tips about how to recognize and self-manage symptoms. In addition, the patient would undergo pulse oximetries in their own homes conducted at rest, with activity, and overnight. The value of this testing is approximately $22. The HME suppliers further pledged that they would not seek reimbursement for any of the above services.

In addition, the services would be publicized through communications by sales and marketing staff directed exclusively to physicians and their staff members. Information about these services would not be communicated to patients directly or included in marketing materials. Beneficiaries would, therefore, learn of the services from their physicians.

Finally, the suppliers who requested the Advisory Opinion pointed out that recipients of these services would remain free to choose any HME company of their choice. In fact, the suppliers promised to provide each participant with a written freedom of choice disclosure.

Based upon the above facts, the OIG concluded that HME suppliers that provide the above services free of charge may violate the federal anti-kickback statute. The OIG stated that the first issue is whether the free assessment with oximetry testing constitutes remuneration paid to beneficiaries who receive them. The key to resolving this issue, said the OIG, is the value of the gift to beneficiaries. The value of the oximetry alone is $22, which exceeds the limits set by the OIG in a special fraud alert in August 1995, which prohibits giving free items in excess of $10 at a time and $50 in a calendar year.

Moreover, and equally important, said the OIG, even if the tests provided have no value for the purpose of qualifying for Medicare coverage, the suppliers propose to deliver the testing services to beneficiaries in a manner that would lead reasonable beneficiaries to believe that they are receiving valuable services that may expedite access to covered oxygen supplies and contribute to a successful clinical outcome.

The second issue, according to the OIG, is whether the remuneration provided is likely to influence beneficiaries to select the HME dealers as the source of their oxygen or other goods and services reimbursable by the Medicare program. The OIG concluded that the likely answer to this issue was "yes." Beneficiaries' own physicians would typically recommend the suppliers for assessments with oximetry testing. It would be reasonable and probable for beneficiaries to assume that their own physicians similarly recommend the suppliers' other goods and services.

In addition, while providing free assessments with oximetry testing, the suppliers would have the opportunity to initiate relationships with beneficiaries. It is reasonable and probable that beneficiaries would select suppliers with whom they are already familiar for future purchase. The fact that the assessment with oximetry testing would be offered at home without charge increases the chances that beneficiaries would take advantage of the offer, thus maximizing opportunities for the suppliers to initiate relationships with beneficiaries prior to their selection of suppliers.

The third issue addressed by the OIG is whether the suppliers know or should know that the provision of free services would be likely to influence beneficiaries' selection of the suppliers for oxygen or other supplies paid for by the Medicare program. The provision of assessments with oximetry testing services without charge, the administration of services in patients' homes, the role of beneficiaries' own physicians in recommending the suppliers, and the offer of these services to CHS patients who are likely to require Medicare reimbursable goods and services in the near future appears to the OIG to be calculated to generate subsequent business for the suppliers.

Based upon the above, the OIG concluded that the proposed arrangement likely violates the anti-kickback statute and that suppliers who provide these free services are likely to be subject to civil money penalties.

What should providers do in response to the latest OIG Advisory Opinion on the subject of giving services at no charge to beneficiaries? It is absolutely crucial for providers of all types to put policies and procedures in place or to review and, if necessary, revise existing policies and procedures that govern all free services provided to beneficiaries, including the conduct of so-called health fairs or screenings. These policies and procedures must be established and implemented to take into account all of the OIG's guidance on this topic.

In addition, providers should develop and implement a process of continuous monitoring of compliance with these policies and procedures.