HHS OIG Publishes FAQ and Advisory Opinion on Cash, Cash Equivalents, and Gift Cards

Recently, the United States Department of Health and Human Services Office of Inspector General (HHS OIG) published a new frequently asked question (FAQ) document and advisory opinion. Both documents focused on how to analyze arrangements that may involve providing cash, cash equivalents, and/or gift cards to Medicare and/or Medicaid beneficiaries under the beneficiary inducements prohibition provision of the Civil Monetary Penalty Law (CMP) and Anti-Kickback Statute (AKS).

Frequently Asked Questions Document

In the FAQ document, HHS OIG notes the differentiation between various types of remuneration under the CMP and AKS. HHS OIG notes that “cash” is considered “monetary payments in the form of currency,” including funds transferred electronically through an application such as Venmo, CashApp, PayPal, or Zelle.

“Cash equivalents,” on the other hand, are items that are convertible to cash, such as a check or a prepaid gift card. In recent years, the definition expanded to include gift cards from “big box stores,” that sell products that can be “diverted from their intended purpose or converted to cash.” Providers have long had questions about what the exact definition of “big box store” was and where the line should be drawn. In the FAQ, HHS OIG notes that gift cards that can be redeemed for only a limited category of items or services, such as a gas card or food delivery service gift card would be considered in-kind remuneration, as would a gift card to a big box store that may only be used to purchase a particular item or select categories of items. For example, a gift card to a store where you can only use the card to purchase fresh food items, such as produce. This differentiation is important because an unrestricted gift card would not be able to qualify for safe harbor protection under the AKS or CMP exception, but a gas card, gift card to a small produce store, or a big-box store gift card that was restricted to a certain item or categories of items may be able to qualify (assuming all other safe harbor requirements are met).

Finally, “instruments convertible to cash” does not mean “cash equivalent,” but instead is a subset of “cash equivalents.” The FAQ cites a prepaid Visa or MasterCard gift card as being a “cash equivalent” but not an “instrument convertible to cash.”

Advisory Opinion 23-03

A week after publishing the FAQs, HHS OIG posted Advisory Opinion (AO) 23-03, clarifying the difference between a “cash equivalent” and an “instrument convertible to cash.” In the AO, HHS OIG outlines a proposal by a laboratory to provide a prepaid card (i.e., Visa or MasterCard) with a value of up to $75 to certain individuals – including federal health care program beneficiaries – to encourage the individuals to return the sample collection kit associated with a stool-based DNA colorectal cancer screening test.

Under the proposal, the patient’s provider would order the test and submit an order to the laboratory for the test. The lab would then ship the test sample collection kit directly to the patient and make at least two patient contacts (telephone, text message, email, or letter) to encourage the patient to return the kit to the lab. If the lab did not receive the kit after the two patient contacts, the lab would then send the patient a letter that says if the patient returns the kit within a certain time, the lab will send them a prepaid Visa or MasterCard gift card with a value of up to $75. Patients would only be eligible for 1 gift card in a 3-year period and the gift card could not be redeemable for items or services provided by the lab.

The gift card would not be advertised in any patient-focused promotions, nor would it be advertised or marketed to the prescribers. Prescribers would not receive any remuneration under the proposal and the proposal would not apply if the prescriber orders the test directly from the laboratory’s website.

In keeping with the FAQs outlined above, HHS OIG found the prepaid card – such as a MasterCard or Visa prepaid card – to be a “cash equivalent” but not an “instrument convertible to cash.” HHS OIG found that the proposal would implicate both the CMP and AKS but that the prepaid gift card would fall under the Preventive Care Exception under the CMP. It would fall under the exception because the test is a recommended preventive care service in the current United States Preventive Services Task Force (USPSTF) Guide to Clinical Preventive Services; $75 is not disproportionately large in comparison to the value of the preventive care; and the test would not be tied to the provision of additional services that are reimbursable by federal health care programs.

Disproportionate Value

The AO also outlines how to evaluate whether the value of remuneration is disproportionately large in comparison to the value of the preventive care service. The value can go beyond just the Medicare reimbursement amount, but can also include factors such as potential benefits to the beneficiary or the future health care costs that can be reasonably expected to be avoided as a result of engaging in the preventive care.

While that doesn’t create a bright-line rule, HHS OIG goes a step further and notes that in a different situation, “an incentive with a value of up to $75 would be disproportionately large in relationship to a preventive care service reimbursed at approximately $500,” showing that it is a fact-dependent analysis.