OIG OKs Pharma Company’s Use of Financial Help for Patients
Recent Advisory Opinion sheds light on offering patients financial assistance so they can receive the provider’s products and services.
Just about any time your lab enters a business arrangement with patients, ordering physicians, or other referral sources, it runs the risk of liability under the Anti-Kickback Statute (AKS), Stark Law, and other federal healthcare fraud laws. Looking at U.S. Department of Health and Human Services Office of Inspector General (OIG) advisory opinions that address the kinds of arrangements you’re contemplating can help you manage these risks. Here’s a quick briefing of Advisory Opinion (AO) 23-01, the first issued by the OIG this year, which sheds light on offering patients financial assistance so they can receive the provider’s products and services.
Why OIG Advisory Opinions Are So Important
However, this approach is in some ways like walking around in a suit of metal during a thunder storm and seeing if you get struck by lightning. A much less risky alternative is to seek an advisory opinion from the OIG on the legality of your proposed arrangement. While not carrying the force of binding law, advisory opinions shed light on how the OIG interprets and applies the law to real-life business arrangements.
However, the advisory opinion process is not completely without cost and risk, especially if the OIG gives your proposed arrangement a thumbs down. The good news is that you can still get a lot of insight from advisory opinions without actually getting one yourself. Just piggyback on other labs and providers that have gotten advisory opinions on their own arrangements and go to school on what they did right and wrong. True, no two arrangements are ever exactly the same. But an advisory opinion is a testing ground that reveals the OIG’s legal concerns and the safeguards you may be able to implement in your own business arrangements to allay those concerns.
Advisory Opinion 23-01
Issued on Feb. 17, Advisory Opinion 23-01 involves a pharma company patient support arrangement similar to others the OIG has green lighted in the past.1 The requestor in this case was a pharma company that manufactures a regenerative tissue-based drug to treat pediatric patients with an ultra-rare primary immunodeficiency disorder requiring significant utilization of diagnostic, surgical, and medication services.
The drug, which must be surgically implanted in the muscles of the patient’s thigh, is currently the only treatment available to rebuild the immune system of individuals who have the disorder. Because it’s made out of thymus tissue provided by donors, the drug must be delivered within three hours after it’s manufactured. There’s only one FDA-approved manufacturing site and one treatment center that performs the surgery. Patients must come to the site five to 11 days before the procedure to undergo testing, clinical evaluation, and immunosuppressive therapy. They must then remain as inpatients for two to seven days after implantation.
Proposed Arrangement
The pharma company wanted to offer benefits making it possible for eligible patients who don’t live near the center to receive the drug, including:
- Round-trip medical, as opposed to commercial, flights for the patient and up to two accompanying caregivers
- Ground ambulance travel to and from the airport
- Modest lodging in a single hotel room for up to $150 per night, if charitable housing isn’t available
- Coverage of up to $50 in out-of-pocket expenses per day for one caregiver or $100 per day for two caregivers
To qualify, patients diagnosed with the disorder must demonstrate financial need, live at least two driving hours away from the treatment site and have either no or “insufficient” insurance coverage.
OIG Determination
Even though the beneficiary inducements could constitute illegal remuneration under the AKS, the OIG said it wouldn’t take enforcement action against the company in connection with the arrangement. The key factors weighing in the OIG’s decision:
- The arrangement “facilitates safe access” to the drug for patients that can’t afford medical or ambulance travel and can’t safely travel long distances by car or commercial airline
- The drug is a one-time, potentially curative treatment, which makes the arrangement less problematic than one involving benefits for an initial dose of a drug to induce patients to keep purchasing it
- The fact that the disorder is so rare and the drug is manufactured and administered in only one location minimizes the risk of the arrangement’s resulting in “interference with clinical decision-making, overutilization, or inappropriate utilization” or of a healthcare professional’s realizing a financial benefit from diagnosing the disorder and prescribing the drug
- The arrangement is unlikely to inappropriately increase federal healthcare program costs, especially since the drug is the only potentially curative treatment option for the disorder
- Patients must meet clear medical and financial criteria to be eligible for assistance under the arrangement, including no or insufficient insurance coverage
Takeaway
Paying or offering inducements to Medicare and other federal healthcare program beneficiaries to influence their selection of which lab or other provider to use violates both the AKS and Beneficiaries Inducement Civil Monetary Penalties (CMP) law. The whole point of the assistance the pharma company offered to patients in this case was to enable them to use the drug. The reason this arrangement passed muster is that the disorder treated by the drug was so rare and that the pharma company was the only manufacturer of the drug. You can’t really influence a selection when there’s only one product to select.
In addition, as noted above, the arrangement in AO 23-01 is similar to those the OIG approved in previous advisory opinions involving patient assistance for travel, lodging, and meals, including AO 21-08, AO 20-02, and AO 20-09.2,3,4 In each case, the drug was a one-time, potentially curative treatment and/or helped to facilitate increased access to care. What made the arrangement in AO 23-01 even more compelling than the ones in the previous advisory opinions is that there was only one site that could manufacture and administer the drug.
It’s also noteworthy that even with all of these sympathetic and special facts, the pharma company still had to implement safeguards to reduce the potential risk of illegal remuneration to make the arrangement palatable to the OIG, including:
- Limiting the pool of eligible patients to those who lived more than 2 hours away, thereby reducing the risk of overlap between the prescribing physician and surgeon performing the implantation
- Agreeing not to advertise the availability of assistance under the arrangement
- Promising that it would require patients, caregivers, flight vendors, and ground transportation vendors to agree not to seek reimbursement from Medicare or other federal healthcare programs for any of the costs covered by the pharma company under the arrangement
Although AO 23-01 involves a pharma company, the basic principles could still apply to laboratory testing arrangements. That’s particularly true of the agreement not to advertise and certify that vendors involved in the arrangement won’t seek federal healthcare reimbursement for the services provided to patients under the arrangement.
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