OIG Issues Advisory Opinion on Proposal to Waive or Reduce Cost-Sharing Amounts Under a Medicare CED Study.

The Department of Health and Human Services (HHS) Office of Inspector General (OIG) recently issued an advisory opinion regarding a hospital outpatient facility’s proposal to waive or reduce cost-sharing amounts for certain financially needy patients.  The cost-sharing amounts are owed by certain Medicare beneficiaries for items and services provided as part of a clinical research study.  The advisory opinion was requested by a hospital and a biomedical company (the “requestors”).  The requestor hospital (the “Hospital”) is a non-profit, full-service, 171-bed regional medical center (“Hospital”).  The Hospital provides both inpatient and outpatient services and operates an outpatient facility (the “Center”) that provides comprehensive wound care services, mainly to patients with chronic, non-healing wounds.  The requestor biomedical company (the “Biomedical Company”) manufactures biodynamic therapies including their “Wound Care System” product.

In December 2016, Medicare cleared the Center to participate in a Medicare Coverage with Evidence Development (“CED”) clinical study program for the Wound Care System.  Under the CED study framework, Medicare covers the Wound Care System and related study items and services for Medicare beneficiaries enrolled in the study.  The study beneficiaries are responsible for any copayments for these items and services.  Dual-eligible beneficiaries under both Medicare and Medicaid, however, may not be able to afford the cost-sharing amounts for the study items, as Medicaid may not cover their cost-sharing amount associated with clinical research studies.  These cost-sharing obligations may deter dual-eligible patients from participating in the study.  As such, under the proposed arrangement, the Center would non-routinely reduce or waive cost-sharing amounts owed by financially needy Medicare beneficiaries for those items and services provided pursuant to the study.  The requestors sought an advisory opinion as to whether their proposed arrangement would be susceptible to: 1) civil monetary penalty (CMP) sanctions under the beneficiary inducements provisions; and/or 2) actions under the exclusion authority and CMP provisions of the federal Anti-Kickback Statute (AKS).

The OIG found the following:

• The proposed arrangement implicates both the AKS and the Beneficiary Inducement CMP. However, based on the facts provided, it would not (1) constitute grounds for sanctions under the CMP Beneficiary Inducements provision; or (2) subject the requestor to administrative sanctions under the AKS;
• The requestors and the Center would not offer a reduction or waiver of cost-sharing amounts in any advertisements or solicitations as part of the proposed arrangement;
• During the process for obtaining participant consent for the study, the investigator or another appropriate staff member at the Center would inform potential participants that cost-sharing may apply to some of the items and services furnished as part of the study. If the potential participant then indicated their inability to afford the cost-sharing amounts, only then would the patient be informed of a possible cost-sharing reduction or waiver.
• The Center would not routinely waive or reduce cost sharing amounts under the proposed arrangement. Instead, the Center would base such decisions on the individual Medicare beneficiary’s inability to pay the cost-sharing amounts owed.  The Center would determine financial need on a case-by-case basis, through an application process and substantiated by required documention and in accordance with the Hospital’s financial need policy.
• If the Center determined, in good faith, that the participant was in financial need, only then would it reduce or waive the cost-sharing amounts. To determine eligibility, the Center would use objective criteria based on the potential study participant’s family income level as measured against certain percentages of the Federal Poverty Level.
• The Center would determine financial need in a uniform manner, using an application process, and in compliance with the Hospital’s financial need policies and procedures.

The OIG opinion concluded that the Proposed Arranged included all of the safeguards required to satisfy the exception for waivers of cost-sharing amounts.  Accordingly, the waivers and reductions would not constitute remuneration under the Beneficiary Inducement CMP.  Further, the OIG would not subject the requestors to administrative sanctions under the AKS in connection with the proposed arrangement.

The OIG’s Advisory Opinion is available at: https://oig.hhs.gov/fraud/docs/advisoryopinions/2017/AdvOpn17-02.pdf.