OIG OKs Offering Patients Gift Cards for Returning At-Home Test Kits

Offering patients gift cards as an incentive to receive lab tests can get you into trouble under federal fraud laws. However, as with any other aspect of healthcare compliance, the rules governing gift cards aren’t black and white. A new U.S. Department of Health and Human Services Office of Inspector General (OIG) Advisory Opinion (AO) 23-03 sheds some light on which conditions permit a lab to offer their customers a gift card for returning at-home kits for lab testing.¹

The At-Home Colorectal Cancer Screening Kit

Issued on March 24, AO 23-03 involves the first and only non-invasive colorectal cancer screening test approved by the FDA for individuals who are at average risk for colorectal cancer. The test is covered by Medicare Part B once every three years for beneficiaries 50 years of age or older who meet certain medical criteria. In June 2016, the US Preventive Services Task Force (USPSTF) recommended the test for cancer screening for adults aged 45 to 75 who are at average risk.² The test is performed by only one lab, which is a wholly owned subsidiary of the company that manufactures the test.

Although it’s an at-home product, the test is not sold over the counter. Physicians must prescribe the kit for the patient. Upon receiving an order, the lab ships the kit to the patient’s home. The patient then collects their own stool sample and ships it along with the kit to the lab in a prepaid, preaddressed package. The company contacts patients upon receiving the order to verify the address, encourage them to ask questions, and request that they return the kit in a timely manner.

The Proposed Arrangement

Despite sending out reminders, the company determined that 30 percent of patients don’t return their kits to the lab for analysis. Under the proposed arrangement, if the lab doesn’t receive the kit after two attempts by the company to contact the patient, the company would send the patient a reminder along with an offer to provide a prepaid Visa, Mastercard, or other gift card of up to $75 for returning the kit by the deadline stated in the reminder letter.

As the OIG notes, offering a gift card to patients who belong to Medicare or other federal health programs could run afoul of two different federal anti-fraud laws banning the offering and payment of “remuneration” in exchange for referrals.

The Beneficiary Inducements CMP

The Beneficiary Inducements CMP, aka, section 1128A(a)(5) of the Social Security Act (Act), provides for imposition of civil monetary penalties (CMP) for offering or transferring “remuneration” to a Medicare beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier for the order or receipt of an item or service covered by Medicare.

The OIG concluded that the gift cards in this case wouldn’t constitute “remuneration” under the Beneficiaries Inducements CMP. This is because the so-called “preventive care” exception (section 1128A(i)(6)(D) of the Act) states that the ban on offering remuneration to influence patients’ healthcare choices doesn’t apply to incentives to promote the delivery of preventive care services as long as those services aren’t tied to other services reimbursed by Medicare or state health programs. The regulations implementing the Act define “preventive care” as including a clinical service “described in the current [USPSTF] Guide to Clinical Preventive Services” that is reimbursable by Medicare or an applicable state health program.³

The OIG concluded that the proposed gift card arrangement satisfied the preventive care exception, noting that the colorectal screening test whose use would be promoted by offering the gift card was, in fact, listed in the current USPSTF Guide. The OIG also noted that the gift card in this case wouldn’t be convertible to cash. That’s significant because the regulations specifically state that the preventive care exception doesn’t apply to “cash or instruments convertible to cash.” Nor was use of the test directly tied to other Medicare services, even though patients who test positive may subsequently get a colonoscopy or other additional tests.

 The Anti-Kickback Statute

The OIG noted that just because the gift cards weren’t remuneration under the Beneficiary Inducements CMP doesn’t mean they don’t constitute remuneration under the Anti-Kickback Statute (AKS), which makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, a referral for furnishing or arranging for the furnishing of, any item or service reimbursable under a federal health program. The OIG found that gift cards to patients do amount to “remuneration,” noting that “remuneration” includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.

The OIG Approves the Arrangement

Despite its AKS concerns, the OIG concluded that the fraud risks were minimal and approved the proposed arrangement. While this seems like an encouraging development, in an email interview with G2 Intelligence, Nashville healthcare attorney Danielle Sloane cautions against treating the AO as a green light for broadly offering patients gift cards. One important takeaway for other labs and providers contemplating such arrangements is just how narrow and fact-dependent the opinion is, she says. The best way to explain this is to look at the three reasons the OIG gave for approving the arrangement.

1. Minimal Risk of Overutilization

The OIG found it unlikely that the proposed arrangement would result in overutilization or increased costs to federal healthcare programs. Each patient would be limited to one gift card per 36-month period to align with Medicare coverage rules (and USPSTF recommendations). Gift cards wouldn’t be provided to all patients, only those who had already received two return notifications and then returned the kit within the deadline specified in the third reminder letter. In addition, the company wouldn’t be in a position to indirectly pass on the costs associated with the gift cards to federal healthcare programs since the test was reimbursed at a set rate under the Medicare Clinical Laboratory Fee Schedule (CLFS).

2. Promotion of Public Health Purpose

Another factor limiting the AO’s applicability to other providers and situations is that the proposed arrangement would advance a compelling public health purpose. Colorectal cancer is the third most commonly diagnosed cancer in the US, with over 152,000 new cases and 52,550 deaths expected in 2023, according to the American Cancer Society.⁴ Screening has been found effective in preventing cancer deaths and the proposed arrangement would promote compliance with testing protocols recommended by the USPSTF and deemed medically necessary under Medicare coverage rules. Only patients for whom the test was actually ordered would receive the gift card and only after they used the kit to get the testing their providers wanted them to receive. Besides, the OIG added, for a test requiring patients to handle their stool, a gift card might be necessary to incentivize patient adherence.

3. Safeguards to Prevent Abuse

Sloane stresses the importance of the safeguards the company had to promise to implement to curb the risk of fraud and abuse, including the following:

• Advising patients in the reminder letter offering the gift card that the card couldn’t be used for products or services provided by the company
• Implementing processes to ensure that it didn’t inadvertently send gift cards to patients that had already received a gift card from the company in the past 36 months
• Not running ads or promoting the gift card arrangement to consumers—patients would only find out about it when they received the reminder letter
• Refraining from advertising or marketing the proposed arrangement or offering or paying any remuneration to test prescribers in connection with the arrangement
• Excluding from the gift card program any test that was ordered by practitioners arranged for through the company’s website

Sloane suggests that the final safeguard is of particular importance. “The gift card program carved out any situation where the laboratory could be perceived as a referral source to the practitioners ordering the test; the patients are only eligible for a gift card where the practitioner order is truly independent of the laboratory.”

Takeaway

This is hardly the first time that the OIG has addressed the compliance ramifications of offering patients gift cards. A notable example is AO 20-08 approving a proposed arrangement by a medical center to offer pediatric patients gift cards as an incentive to show up for a preventive and early intervention care appointment that had to be rescheduled due to the patient’s cancellation.⁴ Again, the OIG’s approval for these two arrangements does not mean that providing gift cards to patients broadly is fair game. Each arrangement needs to be specifically considered for the risk of overutilization, public health outcomes, and safeguards against abuse, before determining whether gift cards can be distributed. Additionally, a gift card or other inducement that doesn’t constitute remuneration under the Beneficiaries Inducements CMP may still be illegal remuneration under the AKS.

Bottom Line: The rules governing gift cards and kickbacks are highly complex, intricate, and case-specific. The only thing that’s clear is just how unclear the requirements are. That’s why you should take nothing for granted and seek counsel when contemplating such arrangements.

References:

1. https://oig.hhs.gov/documents/advisory-opinions/1109/AO-23-03.pdf
2. https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/colorectal-cancer-screening-june-2016
3. https://www.law.cornell.edu/cfr/text/42/1003.110
4. https://oig.hhs.gov/documents/advisory-opinions/771/AO-20-08.pdf
5. https://oig.hhs.gov/faqs/general-questions-regarding-certain-fraud-and-abuse-authorities/