On October 20, 2023, OIG issued a negative Advisory Opinion in response to a proposal from a cochlear implant manufacturer (Requestor) to offer and provide free compatible hearing aids to certain patients (Proposed Arrangement). These patients include federal healthcare program beneficiaries who receive cochlear implants manufactured by Requestor.

Requestor manufactures cochlear implants for some patients who may be candidates for bimodal hearing. Bimodal hearing is the combined use of a hearing aid in one ear with a cochlear implant in the other ear. Hearing aids are not covered by Medicare. Under the Proposed Arrangement, Requestor proposed offering a “bimodal hearing bundle” where eligible bimodal hearing candidates would receive a free hearing aid with the purchase of a cochlear implant.

OIG concluded that the Proposed Arrangement would implicate the federal Anti-Kickback Statute because the free hearing aid offered to patients may induce them to order and purchase the cochlear implant, which is reimbursable by federal healthcare programs. OIG explained that the safe harbor for patient engagement and support would not apply because the value of the hearing aid exceeds the safe harbor’s monetary cap, which is $570 for calendar year 2023.

OIG also explained that it has “longstanding and continuing concerns” regarding the provision of free items and services to federal healthcare program beneficiaries because of potential “steering, unfair competition, improper utilization, and quality and cost concerns.”

OIG also concluded that the Proposed Arrangement would implicate the civil monetary penalty provision prohibiting inducements to beneficiaries (Beneficiary Inducements CMP) because it may influence a beneficiary to choose Requestor’s hearing aid in states where Requestor bills Medicaid or Medicaid managed care for the hearing aid, which may be paid, in whole or in part, by Medicare or a state healthcare program. OIG explained that the exceptions to the Beneficiary Inducements CMP would not apply, and the Proposed Arrangement would cause a risk of steering and unfair competition.

Based on the above, OIG concluded that the Proposed Arrangement (with the requisite intent) would violate the federal Anti-Kickback Statute and would also be subject to sanctions under the Beneficiary Inducements CMP.

OIG Advisory Opinion No. 23-08 can be found here.