Recently, the United States Department of Health and Human Services Office of Inspector General (HHS OIG) issued an advisory opinion that touched upon a relatively new safe harbor to the federal Anti-Kickback Statute, the 2021 safe harbor for “Care Coordination Arrangements to Improve Quality, Health Outcomes.”
Background and Request
The advisory opinion was drafted in response to a request from a manufacturer of cochlear implants. The manufacturer – not identified in the opinion – wanted to offer and provide a free compatible hearing aid to certain patients, including Federal health care program beneficiaries, who receive a cochlear implant manufactured by the company.
The requesting company noted that patients are able to choose the manufacturer from which their medical provider orders the cochlear implant and sound processor (which can be manufactured by two different companies). Additionally, some patients who receive the device in question may be candidates for bimodal hearing (i.e., combined use of a hearing aid in one ear and a cochlear implant in the other).
As noted above, the requesting company proposed to offer a bimodal hearing bundle: the cochlear implant device and a free compatible hearing aid to eligible bimodal hearing candidates. The cochlear implant would be purchased by the hospital or ambulatory surgical center from the requesting company and the hearing aid would be provided by the company for free along with the device. The device would be implanted by the medical provider at the hospital/ambulatory surgery center and the hearing aid would later be programmed and fitted by an audiologist. Receipt of the free hearing aid would be conditional upon purchasing the cochlear implant device and the estimated value of the free hearing aid would range from $1,180 to $2,240.
The requesting company further proposed to either: (i) not impose any financial need criteria for the provision of the Hearing Aid; or (ii) establish financial need criteria to provide the Hearing Aid only to those whose household incomes are at or below 300 percent of the Federal Poverty Level.
Rationale
HHS OIG noted that one of the safe harbors in the Anti-Kickback Statute is for arrangements for patient engagement and support to improve quality, health outcomes, and efficiency protects certain in-kind items, goods, or services furnished by a VBE participant to a patient in the target patient population. The safe harbor includes a number of limitations, including that the aggregate retail value of patient engagement tools and supports furnished to a patient by a VBE participant on an annual basis cannot exceed a monetary cap, which for calendar year 2023 was $570.
HHS OIG concluded that “based on the relevant facts…we conclude that the Proposed Arrangement, if undertaken: (i) would generate prohibited remuneration under the Federal anti-kickback statute, if the requisite intent were present, which would constitute grounds for the imposition of sanctions under sections 1128A(a)(7) and 1128(b)(7) of the Act; and (ii) would generate prohibited remuneration under the Beneficiary Inducements CMP, which would constitute grounds for the imposition of sanctions under the Beneficiary Inducements CMP and section 1128(b)(7) of the Act, as that section relates to the commission of acts described in the Beneficiary Inducements CMP.”
This is because the manufacturing company would offer and provide remuneration in the form of a free hearing aid to eligible patients that may induce them to arrange for the ordering and purchasing of the cochlear implant, an item reimbursable by Federal health care programs. The safe harbor for arrangements for patient engagement and support to improve quality, health outcomes, and efficiency would not apply because, among other reasons, the value of the Hearing Aid exceeds the current monetary cap, $570, imposed by that safe harbor.
As is the case with advisory opinions, this opinion is only limited to the relevant facts presented by the requesting company in connection with the proposed arrangement. Therefore, the opinion cannot be relied on by anyone other than the requesting company, though it does help to shed some insight into current thinking by HHS OIG.