On Jan. 15, 2020, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued Advisory Opinion No. 20-02 which addresses whether a pharmaceutical manufacturer providing financial assistance to patients constitutes grounds for the imposition of sanctions under the civil monetary penalty provision prohibiting inducements to beneficiaries, section 1128A(a)(5) of the Social Security Act (the Act), the exclusion authority at section 1128(b)(7) of the Act or the civil monetary penalty provision at section 1128A(a)(7) of the Act. These sections relate to the commission of acts described in section 1128B(b) of the Act, the federal anti-kickback statute.

The OIG advised that it will not impose administrative sanctions under the above-listed sections of the Act for the specific scenario described but noted that similar circumstances could create prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals of federal health care program business were present.

The requestor in the opinion is a pharmaceutical manufacturer that manufactures a drug that serves patients ranging from children to adults. The drug is a personalized medicine made from the patient’s own cells and is a one-time, potentially curative treatment. The drug carries a black box warning of life-threatening reactions and certain neurological toxicities. The drug’s prescribing information requires physicians to monitor patients for symptoms two or three times during the first week following drug infusion and to instruct patients to remain within proximity of the administering facility for at least four weeks after infusion. The Federal Drug Administration (FDA) requires the requestor to have a Risk Evaluation and Mitigation Strategy (REMS). Only REMS-certified physicians may prescribe and administer the drug. Consistent with its REMS, the requestor entered into arrangements with certain inpatient and outpatient facilities to safely infuse its drug. These centers also perform leukapheresis services — a procedure in which white blood cells are separated from the patient’s blood sample.

When inpatient hospitals infuse the drug, they receive a per-discharge payment rate based on the Medicare Severity Diagnosis Related Group (MS-DRG) to which the discharge is assigned. In addition to this payment, hospitals may also receive a New Technology Add-On Payment (NTAP) that will vary based on a hospital’s total inpatient covered charges and overall cost-to-charge ratio.

The requestor certified that proximity to the center following infusion is important for patient safety because providers in a patient’s local community may not have the appropriate training to treat the potential reactions to the drug. The requestor asserted that indigent patients or rural patients could be disproportionately impacted by significant health risks or even death from the drug if they cannot travel, and stay in proximity, to a center after receiving the drug. Without the arrangement, the requestor noted that physicians may admit patients who are prescribed the drug to a center as inpatients to ensure that the patient can receive treatment if negative reactions occur, or they may choose not to prescribe the drug.

Under the arrangement, the requestor assists eligible patients, between the ages of 18-25 years old, and up to two caregivers with travel, lodging, meals and certain out-of-pocket expenses they incur during and after the patient’s drug infusion. For patients 26 and older, the requestor provides the same support for a patient and one caregiver. The requestor does not provide assistance with patient travel or expenses associated with initial patient consultations, leukapheresis or follow-up visits beyond the post-infusion monitoring required by the drug’s prescribing information. The requestor does not authorize lodging under the arrangement to a patient treated by a center when the requestor has knowledge that the patient is eligible to receive lodging from the center, and such lodging is available for that patient’s use. The requestor also certified that it does not advertise the arrangement. Patients do not learn about, or become eligible for, the arrangement until they have been diagnosed with the appropriate disease and are prescribed treatment with the drug. Under the arrangement, the requestor provides reimbursement for gas and tolls or arranges for transportation via bus, rail, rental car or air travel for a patient and caregiver(s) to and from the closest center accepting patients using a third-party travel vendor.

Assistance under the arrangement is available for one round-trip from the patient’s and each caregiver’s place of residence to a center. The requestor’s travel vendor also arranges for a single, shared hotel room located near a center for the patient and caregiver(s) during drug treatment and post-treatment monitoring. The requestor also provides reimbursement for certain out-of-pocket expenses up to $50 per day per person (e.g., meals, parking or taxi fare between the hotel and the center). To receive reimbursement for out-of-pocket expenses, patients or caregivers must submit written receipts to the requestor documenting expenses. Patients receive assistance for four weeks post-infusion; however, if the patient’s physician determines that it is medically necessary to monitor the patient for risks of negative outcomes for longer than four weeks, the requestor provides assistance for the duration of monitoring deemed necessary by the physician.

Eligible patients are patients who have been prescribed the drug for an FDA-approved indication and have a household income that does not exceed 600 percent of the federal poverty level, who live more than two hours driving distance or 100 miles from the nearest center accepting patients and who have no insurance for non-emergency medical travel. The requestor offers the arrangement to eligible patients regardless of their provider or insurance status. To participate in the arrangement, the patient and caregiver(s) must agree not to request reimbursement from federal health care programs for costs covered under the arrangement. The requestor certified that it does not bill or otherwise shift the costs of the arrangement to the federal health care programs.

The OIG analyzed whether the requestor’s arrangement implicates the anti-kickback statute, as well as whether it is likely to influence a beneficiary’s selection of a particular provider, practitioner or supplier for the order or receipt of any item or service reimbursed by Medicare or a state health care program under the Beneficiary Inducements CMP.

The Anti-Kickback Statute

The OIG found that the arrangement implicates the anti-kickback statute because it involved remuneration to beneficiaries, the centers providing treatment and the physicians prescribing the drug. However, the OIG elected not to impose sanctions on the requestor because 1) its focus is on aiding financially needy or indigent patients and increasing access to care; 2) the arrangement allows physicians to meet the FDA’s safety requirements connected to this drug; 3) Under the REMS, the number of physicians who can prescribe and administer the drug is limited and the requestor certified that it does not require physicians nor centers to prescribe its drug exclusively and that any facility who meets the safety requirements may administer the drug; 4) the drug is a one-time, potentially curative treatment, and the requestor does not advertise the arrangement; 5) only patients who live greater than two-hours driving distance away from a center and who are ineligible to receive lodging from a center may take part in the arrangement; and 6) the OIG is unaware of any existing authority that would allow the secretary to pay for these non-medical services.

Beneficiary Inducements CMP

Because the requestor is a pharmaceutical manufacturer, it is not a “provider, practitioner, or supplier” for purposes of the Beneficiary Inducements CMP; however, an offer of remuneration by a pharmaceutical manufacturer to a beneficiary to influence the beneficiary to select a particular provider, practitioner or supplier would implicate the Beneficiary Inducements CMP. The benefits under the arrangement constitute remuneration for purposes of the Beneficiary Inducements CMP from the requestor to beneficiaries participating in the arrangement. Thus, the OIG concludes that this remuneration could reasonably influence a patient to select a physician or center in the requestor’s network that the patient may not otherwise have selected to receive federally reimbursable items and services. Accordingly, the OIG determined that the arrangement implicates the Beneficiary Inducements CMP.

However, the OIG concluded that the arrangement satisfies the Promotes Access to Care Exception to the Beneficiary Inducements CMP. The OIG first examined whether the remuneration offered under the arrangement improves a beneficiary’s ability to obtain items and services payable by Medicare or Medicaid, and as it had determined that the secretary has no authority to cover non-medical expenses and the requestor does not offer the arrangement if a center will provide lodging, this was found to be the case. Next, the OIG determined that the arrangement posed a low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs. The Promotes Access to Care Exception to the Beneficiary Inducements CMP states that remuneration poses a low risk of harm if it is: (i) unlikely to interfere with, or skew, clinical decision making; (ii) unlikely to increase costs to federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (iii) does not raise patient safety or quality-of-care concerns. As the arrangement is designed to increase patient safety, the OIG found that it was permissible and satisfies the low-risk-of-harm provision of the Promotes Access to Care Exception to the Beneficiary Inducements CMP.

The OIG’s Past Stances on Patient Assistance Programs (PAP)

In numerous prior advisory opinions, the OIG has approved charitable programs that can help financially needy beneficiaries with health care expenses. In 2005, the OIG issued additional guidance in a special advisory bulletin that considered fraud and abuse concerns associated with PAPs. The 2005 bulletin provided that certain cost-sharing subsidies provided by bona fide, independent PAPs unaffiliated with drug manufacturers do not raise anti-kickback statute concerns, even if the PAPs receive manufacturer contributions. The 2005 bulletin also set forth factors that the OIG considers to be fundamental to a properly structured PAP, including that: no drug manufacturer donor (or its affiliate) exerts any direct or indirect influence or control over the PAP; the PAP awards assistance in a truly independent manner that severs any link between the drug manufacturer donor’s funding and the beneficiary; the PAP awards assistance without regard to the drug manufacturer’s interests, or the beneficiary’s choice of product, provider, practitioner, supplier or Part D drug plan; the PAP provides assistance based upon a reasonable, verifiable and uniform measure of financial need that is applied in a consistent manner; and the drug manufacturer does not solicit or receive data from the PAP that would facilitate the manufacturer in correlating the amount or frequency of its donations with the number of subsidized prescriptions for its products.

On May 30, 2014, the OIG issued a supplemental special advisory bulletin regarding Independent Charity Patient Assistance Programs, which updated the 2005 special advisory bulletin. In the 2014 bulletin, the OIG stated that although PAPs provide important safety net assistance to financially needy patients, these programs also present a risk of fraud, waste and abuse with respect to federal health care programs. The 2014 bulletin described problematic features of PAPs that require scrutiny under fraud and abuse laws and expanded the list of factors that the OIG considers fundamental for a properly-structured PAP. Specifically, the OIG addressed three additional areas of concern related to disease funds, eligible recipients and the conduct of donors. In conjunction with its publication of the 2014 bulletin, the OIG sent letters to recipients of previous favorable advisory opinions, requesting the independent charities certify compliance with the additional factors outlined in the 2014 bulletin.

Any person or entity wishing to implement or participate in a PAP should be mindful of this previous guidance and the limited situations in which the OIG has blessed such arrangements (as in Advisory Opinion 20-02).