On March 29, 2023, OIG posted Advisory Opinion No. 23-03 regarding a laboratory’s proposed arrangement to provide a prepaid card of up to $75 to encourage individuals to return the sample collection kit associated with the laboratory’s colorectal cancer screening test. OIG concluded that it would not impose administrative sanctions under the civil money penalties law relating to beneficiary inducements (the Beneficiary Inducements CMP), as the prepaid gift card would satisfy the preventive care exception to the definition of “renumeration,” and the proposed arrangement presented a minimal risk of fraud and abuse under the federal Anti-Kickback Statute.

The colorectal cancer screening test (the Test) is the first and only FDA-approved non-invasive stool-based DNA colorectal screening test available to patients who are at average risk for developing colorectal cancer. The laboratory is the only laboratory that performs the Test.

Medicare covers the Test once every three years for Medicare beneficiaries aged 45 or older who meet certain criteria. In the November 2022 rulemaking, in which the age for coverage was reduced from 50 to 45, CMS stated that it has “recognized there are several advantages to choosing a non-invasive stool-based [colorectal cancer] screening test as a first step compared to a screening colonoscopy, including relative ease of administering the test and potentially reducing the experience of unnecessary burdensome preparation and invasive procedures.” As of January 2023, Medicare’s Clinical Laboratory Fee Schedule provides that the laboratory is reimbursed approximately $500 for each Test performed.

To conduct the Test, the laboratory ships the Test sample collection kit directly to the patient’s home.  The patient then collects their own stool sample and ships the Test collection kit with the stool sample back to the laboratory using a prepaid, preaddressed package.  The laboratory generally contacts patients to encourage them to promptly return the test kits and follows up at least once by multiple communication methods if the laboratory has not received the kit in a timely manner, including by way of phone calls, text messages, emails, and letters.  Even so, the laboratory’s data shows that more than thirty percent of patients fail to return the kit back to the laboratory.

Under the Proposed Arrangement, the laboratory would send the patient a reminder letter to return the kit with an offer to send the patient a prepaid card up to $75 (the Gift Card).  This would occur only: (1) between 14 and 180 days after the patient received the Test sample collection kit; and (2) after at least two patient contacts were unsuccessful in encouraging the patient to return the test collection kit.

The Laboratory would implement safeguards related to this Proposed Arrangement, including:

• The Gift Card could not be used for any services by the laboratory.
• Each patient would be limited to one gift card per 36 months, a time period which aligns with Medicare’s coverage for the Test.
• Apart from the letter offering the prepaid card, the laboratory would not engage in any promotion or advertisement of the proposed arrangement.

OIG concluded that the arrangement implicates the Beneficiary Inducements CMP and the federal Anti-Kickback Statute because the discount program may induce referrals for services since the laboratory’s offer of the Gift Card would be likely to influence patients eligible for Medicare or State health care programs to receive a reimbursable service from the laboratory. 

OIG determined that the prepaid card would not constitute renumeration under the Beneficiary Inducements CMP, as the Proposed Arrangement would satisfy the preventative care exception to the definition of “remuneration” under the Beneficiary Inducements CMP for two reasons.  First, the Test is a specific clinical service described in the US Preventive Service Task Force’s Guide to Clinical Services.  Second, the Gift Card would not be convertible to cash, nor would it be disproportionately large in relationship to the value of the preventative care service.

Regarding the federal Anti-Kickback Statute, OIG noted that the offer of the Gift Card could constitute renumeration even if not under the Beneficiary Inducements CMP. OIG also noted its “long-standing concerns” about remuneration that could: (1) influence a patient’s choice of care; (2) create incentives for offsetting remuneration; or (3) favor providers and suppliers with greater financial resources. 

OIG, however, concluded that the proposed arrangement would present a minimal risk of fraud and abuse under the federal Anti-Kickback Statue for the following reasons:

• The proposed arrangement is unlikely to lead to improperly increased costs to federal health care programs, as the prepaid card would only be available to patients once every three years, the prepaid card is unlikely to influence a prescriber to order the Test, and the Test is reimbursed at a fixed rate under the Clinical Laboratory Fee Schedule.
• The proposed arrangement would promote patient compliance with a screening test for colon cancer where more than 30 percent of patients fail to return the kit currently and the gift card would only be provided to patients who do not return the kit after at least three reminders and within a specified time period.
• Finally, the proposed arrangement contains safeguards, including a lack of any advertising of the Proposed Arrangement. 

The OIG Advisory Opinion is available here.