OIG Issues Favorable Advisory Opinion on FQHC Limited Issuance of Gift Cards

by King & Spalding
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In a recent favorable advisory opinion, the OIG reviewed a Federally qualified health center’s (FQHC) proposal to offer $20 grocery store gift cards to certain patients in capitated managed care plans as an incentive for such patients to receive health screenings or other clinical services (Proposed Arrangement).  Based on the facts, the OIG determined that the Proposed Arrangement would not constitute grounds for the imposition of civil monetary penalties (CMPs) and that the OIG would not impose administrative sanctions on the FQHC under the under the anti-kickback statute.

As part of its Medicaid program, the State in which the FQHC is located (State) engaged local managed care plans to provide services for reimbursement on a capitated basis. The FQHC was selected as a contracted provider by some of those managed care plans.  Each managed care plan would assign its enrollees to specific contracted providers like the FQHC by reviewing factors such as the enrollees’ geographic location and the contracted provider’s available capacity, and an enrollee would have to request reassignment to a different contracted provider if desired.  If an enrollee failed to use the FQHC, the FQHC still would remain the enrollee's assigned provider, and the FQHC's payments would remain the same.

Under the Proposed Arrangement, the FQHC sent letters to capitated Medicaid managed care plan enrollees (regardless of health status) who either: (1) were newly assigned to the FQHC, or (2) were assigned to the FQHC at least one year prior but had not been seen by the FQHC (Eligible Enrollees).  The letters, which were the only source of marketing, offered the Eligible Enrollee a gift card redeemable for $20 in groceries in exchange for a visit to the FQHC for a health screening or any other clinical service. The gift cards were presented to the Eligible Enrollee along with health educational materials and information regarding FQHC visits.  Additionally, the Eligible Enrollee was limited to only one gift card in a twelve-month period.

Although the OIG found that the gift card would constitute remuneration to Federal health care program beneficiaries and would be of more than nominal value, the OIG determined that the Proposed Arrangement would not constitute grounds for the imposition of CMPs because the gift card was unlikely to influence beneficiaries to select the FQHC as their contracted provider.  Beneficiaries were assigned to a provider based on neutral factors such as location, and they would have to affirmatively request a reassignment to the FQHC.  Furthermore, the gift card was of "modest value" and could not be exchanged for cash or services from the FQHC.  The OIG also noted that the gift card was not advertised to anyone other than certain beneficiaries already assigned to the FQHC. 

Along the same lines, the OIG found that the Proposed Arrangement was of "minimal risk" of fraud and abuse under the anti-kickback statute.  The Proposed Arrangement would not result in increased costs to the Federal health care programs, as the gift cards were offered only to Eligible Enrollees, and Medicaid would not change the capitated payments made to the managed care plans based on the nature or number of services the FQHC provided to the Eligible Enrollees.  Additionally, the gift card proposal was limited in marketing and the value of the gift card modest. 

The OIG noted that the FQHC's mission was to provide healthcare to a poor and underserved community and that the Proposed Arrangement would further benefit the population that the FQHC served by engaging them in their healthcare.  The OIG’s advisory opinion may be read here.

Reporters, John Richter, Washington, D.C., + 1 202 626 5617, jrichter@kslaw.com, and Christina A. Gonzalez, Houston, +1 713 276 7340, cagonzalez@kslaw.com.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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