Per-Click Compensation for Philanthropic Entity’s COVID-19 Vaccine Site Low Risk of Fraud According to OIG

McGuireWoods LLP

As previously discussed, on April 3, 2020, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a process for inquiries to be submitted to OIG about whether administrative enforcement discretion would be provided for certain arrangements directly connected to the 2019 novel coronavirus (COVID-19). OIG established this process to provide regulatory flexibility to ensure necessary care responding to COVID-19, particularly with respect to the federal anti-kickback statute (AKS) and civil monetary penalty (CMP) beneficiary inducement prohibition provisions. OIG responses are publicly available through a frequently asked questions (FAQ) posting on the OIG COVID-19 portal. OIG has continued to update this FAQ since its initial publication, including inquiries discussed in our August 27 post, most recently providing guidance on the following question:

Can a non-provider philanthropic entity contract to provide certain administrative services to a health care provider relating to the operation of COVID-19 vaccination sites and be compensated on a per-vaccine basis?

A non-provider philanthropic organization (the Organization) questioned whether it could provide certain administrative services in exchange for compensation from its contracted health care providers based on a per-vaccine (or per-click) basis. OIG noted how compensation practices that involve “per patient,” “per click,” or “per order” payment arrangements with parties in a position, directly or indirectly, to refer or recommend an item or service payable by a Federal health care program implicate and may violate the Federal anti-kickback statute. For the reasons discussed herein, however, OIG opined that in light of the COVID-19 pandemic, the proposed arrangement presented a low risk of fraud and therefore it would provide its enforcement discretion.

The Organization proposed to provide contracted health care providers administrative services including arranging for the physical vaccination sites, data systems, online and web-based scheduling, site development and training, and reporting to state agencies. Each health care provider would bill third-party payors, including Federal health care programs, for the vaccines provided at the site. Then such health care provider would share a portion of the collected vaccine reimbursement (after a certain number of shots per hour) with the Organization.  Effectively, the OIG described an arrangement where after the health care provider covered its own costs, including costs of staffing, that it would share a portion of the balance with the Organization.

As disclosed safe guards, the Organization committed to complying with guidelines from both the state health department and the U.S. Centers for Disease Control and Prevention. The COVID-19 vaccines administered at the sites would be approved by the U.S. Food & Drug Administration (FDA), or subject to an FDA-issued emergency use authorization. Finally, the organization’s provision of administrative services to health care providers would not operate in conjunction with any other arrangement or agreement between and among the Organization, the health care provider, and Federal health care program beneficiary who receives vaccinations from one of the sites, or any other person or entity in a position to refer or arrange for the referral of items or services reimbursable by a Federal health care program.

In light of the safeguards and OIG’s belief that due to “the unique circumstances of the COVID-19 public health emergency” that there would be a low risk of vaccine overutilization, OIG did not believe the risk of fraud under the arrangement were high. Implicit, as well, was that the Organization with a philanthropic purposes would be unlikely to trigger additional referrals for services reimbursed by Federal health care programs. OIG, therefore, was comfortable that such an arrangement could proceed. On the other hand, by restating concerns with per-click arrangements, the OIG made clear that outside of the COVID-19 pandemic and arrangements proposed to address care for this circumstance, OIG would continue to carefully scrutinize arrangements and ensure they did not lead to overutilization.

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.

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