The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently published Advisory Opinion 22-14, in which it analyzed an ophthalmology practice's proposal to offer continuing education (CE) programs for local optometrists (“Proposed Arrangement") within the context of the federal Anti-Kickback Statute (“AKS"). In providing a partially favorable opinion as detailed below, the OIG shed further light on the concepts of free or reduced-cost goods or services and "substantial independent value" under the AKS.
Under the Proposed Arrangement, an ophthalmology practice (Requestor) would offer CE programs to local optometrists that would address new technology and pharmacological practice treatment protocols related to ophthalmic surgeries. The Requestor sought an advisory opinion on the Proposed Arrangement, with four potential methods of financing the CE programs:
- Under Arrangement A, the Requestor would charge all attendees a registration fee that is consistent with fair market value for such CE programs. The collection of such registration fees would comport to the estimated overall cost of the CE program such that any revenue shortfall or overage would not be substantial. The Requestor would cover any revenue shortfalls while donating any excess revenue to a local charity.
- Under Arrangement B, the Requestor would cover the entirety of the cost of the CE programs, without charging any registration fee to the attendees.
- Under Arrangement C, the Requestor would 1) not charge any registration fee to attendees, but 2) seek funding from industry sponsors (g., medical device and pharmaceutical companies). If the funding from sponsors results in a shortfall, the Requestor would cover the difference and, if the funding results in an overage, any such amounts would be donated to a local charity.
- Under Arrangement D, the Requestor would 1) charge a registration fee to attendees, and 2) seek funding from industry sponsors (e.g., medical device and pharmaceutical companies). Again, if the revenue from the registration fees and sponsors results in a shortfall, the Requestor would cover the difference and, if they result in an overage, any such amounts would be donated to a local charity.
The OIG analyzed each proposed arrangement separately under the AKS. Specifically, the OIG analyzed whether any of the four proposed arrangement involved problematic remuneration 1) to the Requestor, who may be a referral source for the industry sponsors, and/or 2) to the attendees, who may also be in a position to refer federal healthcare beneficiaries to the Requestor or prescriber, or order the industry sponsors' products (e.g., drugs and medical devices). The OIG issued a favorable opinion to Arrangement A but expressed concerns about Arrangements B, C, and D as follows:
- The OIG opined that Arrangement A posed a sufficiently low level of risk under the AKS because a registration fee would be charged to the attendees and no industry sponsors would fund the program. Although the registration fees may nevertheless result in the Requestor having to cover any shortfalls, any such amounts would not be substantial. That is, the OIG appears to be stating that because the value of any remuneration from the Requestor to the attendees, if any, would not be substantial, the risk of fraud and abuse is sufficiently low, particularly where the CE programs exhibited other low-risk aspects (further detailed below).
- The OIG opined that Arrangement B posed more than a minimal risk of fraud and abuse because the CE program would be entirely free to all local optometrists who may be in a position to refer federal healthcare program business to the Requestor. The OIG stated that because the free goods or service in question (i.e., provision of free CE programs) conferred an independent value to the optometrists, it could induce the optometrists to refer surgical patients to the Requestor, which may result in inappropriate patient steering.
- The OIG also opined that Arrangement C posed more than a minimal risk because 1) as in Arrangement B described above, the CE program would be entirely free to all local optometrists, but also 2) the sponsorship of these CE programs by industry sponsors, such as medical device or pharmaceutical manufacturers, could induce the Requestor and the attendees to prescribe or order a sponsoring company's products, including those reimbursable by a federal healthcare program.
- Finally, the OIG also opined that Arrangement D posed more than a minimal risk because although the attendees would be charged a registration fee, the CE programs would still be sponsored by industry sponsors, relieving the Requestor of paying any expenses that the Requestor would otherwise incur. Given that the Requestor is in a position to prescribe or order the sponsoring company's products, the OIG stated that it could not conclude that the arrangement would pose a sufficiently low risk of fraud and abuse.
The OIG has long utilized the concept of "substantial independent value" in evaluating whether the provision of any free or reduced-cost goods or services to a potential referral source of federal healthcare program business poses heightened risks under the AKS. In Advisory Opinion 22-14, the OIG has again applied the same concept in the context of free educational programs, showing that even bona fide educational programs could pose heightened risks of fraud and abuse.
However, the OIG's differing opinions on Arrangement A compared to Arrangements B, C and D show that an analysis under the AKS is truly a facts-and-circumstances analysis, involving a detailed review of each proposed arrangement, the type and amount of "remuneration" involved and the parties implicated in the arrangement.
It is important to note that in its favorable opinion on Arrangement A, the OIG analyzed the Proposed Arrangement with the understanding that the CE programs did not involve any of the suspect characteristics that the OIG has traditionally viewed as problematic. For instance, the OIG noted that 1) the CE Program had actual and relevant substantive information related to treatment of patients, 2) only modest food items (e.g. bagels, coffee, pizza, etc.) would be provided to the attendees, and 3) the CE Program would take place at a venue that is appropriate and conducive to educational presentations, without any entertainment or recreational events. Additionally, the OIG noted that the CE Program would not target any particular optometrists such as high prescribers of industry sponsors' products or those that have historically referred patients to the Requestor.
Physicians, prescribers, manufacturers and other stakeholders should be aware of the fact that the provision of free or reduced-cost goods or services could implicate the AKS, even when provided in connection with educational programming. Each arrangement should be analyzed carefully, taking into account the specific facts and circumstances to determine the attendant risk.