OIG Rejects Pharmacy’s Plan for Per-Fill Referral Fees, Or Be Careful What You Ask For


In its most recent advisory opinion, the Office of Inspector General (OIG) of Health & Human Services rejected a referral arrangement proposed by a national specialty pharmacy chain.

Advisory Opinion No. 14-06, issued August 15, addressed a plan by the chain to reimburse local pharmacies for referrals of patients in need of specialized drugs that the local pharmacies did not dispense.  In the scenario described in the request for an opinion, a patient needing a specialty drug—say, one for HIV/AIDS or hemophilia—presents a prescription to the local pharmacy.  For one reason or another, the local pharmacy is unable to dispense the drug.  So it refers the patient to the specialty pharmacy chain.  The specialty chain fills the prescription and also provides counseling by a team of professionals, sends renewal reminders, and assists in finding financial assistance.

For its part, the local pharmacy provides “support services,” such as keeping patient-specific records, counseling on medication use, advising about specialty access, providing ongoing assessments for refills, and transmitting information to the specialty chain.

Now for the dicey part.  The specialty chain would compensate the local pharmacy each time it referred a patient for a prescription or renewal—paying what the opinion termed a “Per-Fill Fee.”  The chain certified that the fee would be no more than “market value” for the support services provided by the local pharmacy.  In other words, the fee would be for the support services and not for the referral.

The OIG didn’t buy it.  Nor did it accept the specialty chain’s assertion that without the chain’s help, a local pharmacy couldn’t figure out where to refer patients for specialty drugs.  The opinion contains a footnote explicitly noting that the OIG is “skeptical” of the claim.

The OIG concluded that the proposal would involve remuneration for referrals that would violate the Anti-Kickback Statute.  It would run the risk of encouraging local pharmacies to refer patients for the sake of earning more Per-Fill Fees.  The Medicare program could suffer because of the resulting increase in referrals.

So be careful what you ask for.


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.

© Faegre Baker Daniels | Attorney Advertising

Written by:


Faegre Baker Daniels on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.