Summary of OIG Advisory Opinion 09-12 

Issued August 7, 2009, and posted August 14, 2009
Written by Claire Turcotte; reviewed by Julie Kass*

In Advisory Opinion 09-12, the Office of Inspector General (OIG) concluded that an arrangement involving a proposal for a government entity to subsidize co-payments for outpatient prescription drugs owed by certain financially needy Medicare Part D enrollees (Proposed Arrangement) would not constitute grounds for the imposition of sanctions under the civil monetary penalty law prohibiting inducements to beneficiaries and also would not result in administrative sanctions under the anti-kickback statute.

The Proposed Arrangement involves a political subdivision operating under state law that functions as the planning agency for alcohol, drug addiction, and mental health services for the counties in its service district (Requestor). In that role, the Requestor must assess the needs for mental health and drug and alcohol treatment, set priorities, and plan for necessary programs. The Requestor contracts with providers for mental health and drug and alcohol treatment services (Mental Health Centers) for the needs of 5,000 residents and does not provide any direct services. Under the Proposed Arrangement, if patient needing medications is eligible for Medicare Part D, the Mental Health Center also determines whether the patient qualifies based on financial need for a subsidy of the co-payment applicable under Medicare Part D for the medications. If eligible, the Mental Health Center would inform the patient and the Mental Health Center would pay the subsidy of the co-payment to the pharmacy of the patient's choice for medications covered by Part D. The pharmacy would enter into an arrangement with the Mental Health Center to bill the Mental Health Center for the subsidized co-payment instead of billing the patient. The Requestor would reimburse the Mental Health Center for such co-payments.

In determining whether the Proposed Arrangement violated the civil monetary penalty law, OIG found that under the facts certified by the Requestor, the risk of violation was low. In particular, OIG noted that although the donor would provide something of value (payment of the Part D co-payment) that benefits the federal healthcare program beneficiary, that remuneration is not likely to influence the beneficiary to choose any particular provider, practitioner, or supplier for the following reasons:

1. The Requestor's co-payment subsidy would not be advertised, the beneficiary would be screened for eligibility by the Mental Health Center (a provider already selected by the beneficiary before his or her receipt of the subsidy), and all Mental Health Centers would provide the subsidy on equal terms, all of which render the co-payment subsidy unlikely to influence the beneficiary's choice of a mental health provider. OIG also pointed out that the subsidy would be available to a small number of residents who are geographically dispersed, making word-of-mouth transmission of information about the Mental Health Centers' subsidy unlikely to affect a beneficiary's choice of a mental health provider.
   
   
2. The co-payment subsidy is not contingent upon the beneficiary's use of any particular pharmacy.
   
   
3. The payment of the subsidy is not contingent up the choice of any particular Part D plan.

In addition, OIG noted that the Proposed Arrangement was part of a comprehensive regulatory to ca arrangement re for the mental health needs of the residents served by the Requestor where state law required the Requestor to plan and make arrangements for items and services to meet their needs, including enabling financially needy Medicare beneficiaries to obtain prescription drugs from pharmacies in an efficient and economical manner.

For the same reasons, OIG concluded that it would not impose administrative sanctions under the anti-kickback statute.

*The Fraud and Abuse Practice Group Leadership would like to thank Advisory Opinions Committee Members Claire Turcotte, Esquire (Bricker & Eckler LLP, Cincinnati-Dayton, OH), and Julie Kass, Esquire (Ober Kaler, Baltimore, MD), for writing and reviewing, respectively, this summary.