On June 17, 2022, OIG issued a favorable advisory opinion allowing involving an arrangement in which a durable medical equipment (DME) manufacturer makes zero-interest financing available to its customers. The advisory opinion is OIG Advisory Opinion 22-13.

More specifically, the DME manufacturer entered into agreements with two third-party financial institutions that make zero-percent interest financing options available to qualified DME suppliers who are experiencing financial difficulty with respect to the DME purchased from the DME manufacturer. According to the DME manufacturer, the proposed arrangement would allow smaller DME manufacturers to compete with larger DME manufacturers that can self-finance or obtain their own third-party financing to purchase and sell DME that may be subject to a lengthy reimbursement timeline.

After careful consideration of the facts, OIG determined that although the arrangement would produce renumeration prohibited by the federal anti-kickback statute (the AKS) if the requisite intent were present, OIG would not impose sanctions on the DME manufacturer.

OIG considered the following factors in deciding that the arrangement ultimately provided a low risk of fraud and abuse under the AKS:

• Although the financing is beneficial to the customer, the customers do not receive a discount on the price of the DME. Approximately 97.5% of the customers repay the entire amount, but over a longer time period (the remainder default on the loans).
• The risk-bearing lenders that evaluate each customer using their own independent process reduce the risk of providers, suppliers and manufactures subsidizing or forgiving loans to encourage referrals.
• The DME manufacturer’s agreement to receive less than the total amount paid by the customer by paying a finance charge to the lenders does not increase the risk of fraud and abuse because the lender is not a health care provider, or otherwise in a position to make referrals to the DME manufacturer.
• The arrangement does not increase the cost to federal health care programs or encourage overutilization.
• The lender(s) and DME manufacturer share default liability in the arrangement. This shared liability minimizes the risk that the DME manufacturer will actively seek interest-free financing arrangements on a customer’s behalf.

The full text of Advisory Opinion 22-13 is available here.