Recently, the U.S. Department of Health and Human Services, Office of Inspector General (“OIG”) issued an Advisory Opinion (17-02) that allows for waivers or reductions of cost-sharing amounts owed by financially needy Medicare beneficiaries in connection with certain clinical research studies conducted at a non-profit medical center.  In the advisory opinion, the OIG concluded that the proposed arrangement would not constitute grounds for the imposition of sanctions under the civil monetary penalty against beneficiary inducements (“Beneficiary Inducements CMP”), or under the anti-kickback statute (“AKS”).  

The Requestors were a regional non-profit hospital (“Hospital”) that operates an outpatient facility (“Center”) which furnishes comprehensive wound care services, primarily to patients with chronic, non-healing wounds, and a biomedical company (“Biomedical Company”).  The Biomedical Company manufactures biodynamic therapies for wound care (“Wound Care System”) which therapies have been approved by the Food & Drug Administration (“FDA”) for the management of ulcers and exuding wounds.   The Wound Care System and related items and services, if furnished in connection with a CMS-approved clinical study, are eligible for Medicare coverage based on the Medicare Coverage with Evidence Development (“CED”) framework.  CMS approved three separate protocols (each a “Study”) under the CED framework to study the treatment of Medicare beneficiaries’ chronic, non-healing wounds using the Wound Care System and the Center was designated as a Study site.

Although Medicare covers the Wound Care System and related items furnished to study-enrolled beneficiaries, Medicare beneficiaries who are enroll in a Study are responsible for copayments owed for services or items received in connection with the Study.  Medicaid, however, does not necessarily cover items or services provided in connection with clinical research studies, even in the context of a CMS-approved CED study.  As a result, Medicare beneficiaries who are also Medicaid beneficiaries (dual-eligible beneficiaries) may be deterred from participating in a Study because of their cost-sharing obligations.  To address this concern, the Requestors proposed to reduce or waive the cost-sharing amounts for financially needy Medicare beneficiaries participating in the Study.

The OIG first determined that the proposed arrangement implicated the Beneficiary Inducement CMP and the AKS, because the reduction or waiver of a cost-sharing amount for wound care therapy furnished in connection with the Studies for Medicare beneficiaries may constitute prohibited remuneration to induce referrals.  However, after analyzing the proposed arrangement, the OIG concluded that the arrangement satisfied all of the criteria of the exception for the waivers of cost-sharing amounts because:

• The cost-sharing reduction or wavier would not be offered in any advertisement or solicitation and the investigator would inform the potential Study participant of the possible cost-sharing reduction only after the beneficiary informed the Study investigator that he or she may not have the financial resources to cover the cost-sharing amount;
• The reduction or cost-sharing amounts would not be routinely made; rather the reduction or waiver would be contingent on the beneficiary's inability to pay the amounts owed, based on the Center's determination on a case-by-case basis, using the Hospital’s financial need policy and substantiated through required documentation, including (a) payroll check stubs from the most recent three months, (b) the most recent tax return (if payroll checks are unavailable), (iii) unemployment records, (iv) documentation of government benefits, and (v) any of the r financial documentation reasonably required by the Hospital; and
• The reduction or waiver of the cost-sharing amount would be offered only once the Center determines, in good faith, that the individual is in financial need.

As a result, the OIG concluded that the proposed arrangement would not constitute grounds for the imposition of sanctions under the Beneficiary Inducements CMP or the AKS.  Although the advisory opinion can only be relied upon by the Requestors, it provides valuable insight into how the OIG will analyze and apply the waiver of cost-sharing amounts in a clinical trial setting.