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Summary of OIG Advisory Opinion 11-16 

Issued November 8, 2011, and posted November 15, 2011
Written by Claire Turcotte; reviewed by Julie Kass

On November 8, 2011, the U.S. Department of Health and Human Services, Office of Inspector General (OIG) issued favorable Advisory Opinion 11-16 relating to a nonprofit institution's (Requestor's) domiciliary services program providing transportation, lodging, and meal assistance for patients and their families without regard to financial need and depending on criteria such as anticipated length of stay and distance from the nonprofit institution (the Program). Although the Proposed Arrangement potentially implicates the Anti-Kickback Statute (AKS), as well as the proscription against beneficiary inducement under the Civil Money Penalties (CMP) law, OIG concluded that it would not subject Requestor to administrative sanctions under AKS or CMP.

Requestor is an internationally known nonprofit institution dedicated to finding cures for catastrophic diseases in children through research and treatment, and focuses on infectious diseases, pediatric cancers, non-malignant hematologies (e.g., sickle cell disease), and genetic disorders. Most of Requestor's patients are part of clinical research protocols, and acceptance for treatment at Requestor's facilities is based largely on protocol eligibility. Requestor receives more referrals for qualified patient applications than it can accommodate. To obtain treatment, many patients must travel or temporarily relocate to Requestor's metropolitan area. Requestor does not bill children or their families for the cost of medical care, including copayments or deductibles, but rather relies heavily on donations raised by charity. The remainder of Requestor's operating revenues comes from third-party payors, including federal healthcare programs and research grants, which are insufficient to cover Requestor's patient care costs. The Program is funded by charity, and none of the costs of the Program services are covered by federal healthcare programs or other third-party payors. Requestor certified that it does not shift costs of the Program to those payors.

Under the Program, Requestor provides transportation, lodging, and meal assistance for patients and families. The Program's services are intended to improve access to care, enhance infection control to reduce the risk of infection in immune-suppressed patients, help ensure clinical research protocol compliance, enhance quality of life, and reduce stress for patients and families, receiving therapies at Requestor. The Program is not advertised or marketed to patients, families, or referring physicians, but many referring physicians are likely aware of the Program. Patients are informed of the Program by Requestor only after they are accepted to Requestor's facility for treatment.

OIG acknowledged that the Program potentially implicates AKS and the CMP's proscription against beneficiary inducement because Requestor provides items of value to beneficiaries under the Program. Nonetheless, for the following reasons, OIG concluded that it would not subject Requestor to administrative sanctions under the beneficiary inducement CMP or AKS:

  • Requestor is reimbursed less than one quarter of its costs of treatment for the federal healthcare program beneficiaries it treats. The balance of these costs is covered by charity, and all of the costs of the Program are funded by charity. OIG found it unlikely that Requestor provides the Program services to generate additional federal healthcare program services (for which it is reimbursed only one quarter of its costs) when it already receives more referrals of qualified patient applications than it can accommodate;

  • Because Requestor's healthcare services are unique and not susceptible to overutilization, and are offered through clinical research protocols not offered elsewhere, it is unlikely that the Program will induce patients to self-refer to Requestor for unnecessary services or select Requestor versus an alternative provider;

  • The Program's services ease hardships due to travel and relocation, thereby enabling Requestor's patients to participate in and remain compliant with Requestor's research and treatment protocols;

  • Many of Requestor's patients have compromised immune systems and require special hygienic lodging, such as are offered through the Program;

  • Meal assistance and other items provided by the Program allow patients and families to meet basic needs, and are small in value as compared with other Program services and the treatment itself; as a result they are unlikely to influence beneficiaries to seek unnecessary services or choose Requestor versus another provider;

  • The Program services are unlikely to induce patients to choose Requestor because the Program is not advertised or marketed and patients are informed about the Program only after acceptance for treatment by Requestor;

  • The Program is unlikely to increase costs to federal healthcare programs because Requestor does not claim any costs or shift costs to the federal healthcare programs or other third-party payors; and

  • The Program furthers the substantial public benefits obtained from Requestor's specialized care and research and its mission to find cures for catastrophic diseases in children.

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

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