OIG Issues Advisory Opinion Modification

On June 21, 2013, the U.S. Department of Health & Human Services, Office of Inspector General (“OIG”) issued Modification of OIG Advisory Opinion 06-13 regarding whether proposed modifications to a Requestor’s Existing Arrangement, which provides annual individual grants to help patients with blood-related cancers, including Federal health care program beneficiaries, to pay their health insurance premiums and medical cost-sharing obligations, would materially increase risk to Federal health care programs. The Requestor sought the OIG’s opinion after modifying its Existing Agreement, to which the OIG issued OIG Advisory Opinion No. 06-13 (“Original Advisory Opinion”) on September 18, 2013. The OIG concluded that the modifications to the Existing Arrangement would not affect their conclusion in the Original Advisory Opinion.

Under the Existing Arrangement, the Requestor provides annual individual grants to help patients with blood-related cancers, including Federal health care beneficiaries, to pay for their health insurance premiums and medical cost-sharing obligations. The Requestor pays premium assistance grants directly to the patient’s insurance company and pays cost-sharing assistance grants directly to physicians, provides, and suppliers of items and services. Currently, the Requestor pools donations into five disease funds, which provide financial grants consisting of premium and cost-sharing assistance.

The Requestor proposed to modify the Existing Arrangement by first staggering its patient grant application renewal process based on the date the Requestor initially approves a patient’s application. Second, the Requestor proposes to create a reserve system in which the Requestor would reserve the maximum annual funding allowed for each enrollee within the disease category upon approval of the enrollee’s initial claim submission. If the enrollee doesn’t file an additional claim within 90 days, the remaining unspent funds reserved for the enrollee would be release. Third, the Requestor proposes to establish a cap for some of its disease funds on the amount of financial assistance provided by the Requestor to each enrollee for premium assistance. Fourth, the Requestor proposes to use a pharmacy benefit manager (“PBM”) to administer copayment assistance at the enrollee’s pharmacy point of sale through the use of a membership card. The Requestor would include in the PBM contract a prohibition of the PBM influencing an enrollee’s selection of a particular product, practitioner, provider, supplier, or insurance plan. To preserve an enrollee’s right to use the pharmacy of his or her choice, enrollees that elect to use a pharmacy outside the PBM’s network would pay the coinsurance at the pharmacy and submit a claim for reimbursement to the Requestor. The Requestor would make no referrals or recommendations regarding specific providers, practitioners, suppliers, products, or plans.

The OIG found that the Requestor’s modification were largely administrative in nature. In particular, the OIG noted that the Requestor is a charity with limited resources. The OIG stated that all safeguards that led them to determine that the Existing Agreement entailed minimal risk that donor contributions would improperly influence referrals by the Requestor, and beneficiaries would not likely be improperly influenced in their selection of a particular provider, practitioner, supplier, or product, remain in place. In a footnote to the opinion, the OIG stated that the safeguards described in the Original Advisory Opinion have been strengthened in one respect because in support of the modification, the Requestor certified that each of its disease funds covers cost-sharing for many categories of drugs, and that none of these funds have covered, nor would any cover, only one drug or the drugs of only one pharmaceutical manufacturer.

The OIG concluded that the modifications do not materially increase risk to Federal health care programs and did not affect their conclusion in the Original Advisory Opinion that the Existing Arrangement would not constitute grounds for the imposition of civil monetary penalties and although it could potentially generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals were present, the OIG would not impose administrative sanctions. The OIG also highlighted the fact that the Requestor was a charity who focuses on financially needy patients. The OIG did reiterate that the Existing Arrangement could generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals of Federal health care program business were present, but the OIG would not in this instance.

If you have any questions regarding this Advisory Opinion, please contact Brian Heaton at (317) 238-6354 or bheaton@kdlegal.com or Tom Hutchinson at (317) 238-6254 or thutchinson@kdlegal.com.