Insurers constantly  look for ways both to attract new enrollees and to retain existing membership. The competition is stiff in many areas of the country, and there were instances historically where plans gave away valuable merchandise such as child car seats, to “encourage” individuals in their choice of plans.  Federal law now strictly prohibits gifting anything of value by Medicare and Medicaid health plans.  It is not uncommon for insurers to offer inexpensive items to potential enrollees, such as branded pens and mousepads, at insurance coverage events. However, insurers must tread carefully to avoid any appearance of “inducement” to enroll or stay with a plan as they decide what they can give away to potential or existing enrollees.

Gift cards are one example of something of value that can result in exposure to a claim of inducement for the unwary health plan. However, in August of 2022, the OIG issued an opinion allowing for the provision of gift cards to Medicare Advantage plan enrollees who complete educational modules as part of an online learning tool.  Below is an overview of the applicable federal law and the OIG’s analysis.

There are primarily two federal laws that address inducement:

The Federal Anti-Kickback Statute (AKS). The AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce the referral of an individual to a person for the furnishing of any item or service reimbursable under a federal healthcare program. The statute’s prohibition also extends to remuneration to induce the purchasing, ordering of, or arranging for any good, service, or item reimbursable by a federal health care program. For purposes of the federal anti-kickback statute, “remuneration” includes the transfer of anything of value, directly or indirectly, in cash or in kind. The statute covers any arrangement where one purpose of the remuneration is to induce referrals for items or services reimbursable by a federal health care program. Conviction can lead to fine, imprisonment and exclusion from federal healthcare programs, including Medicare and Medicaid. An AKS violation is also a violation of the federal False Claims Act.  

Beneficiary Inducements Civil Monetary Penalties Law (CMPL).  The Beneficiary Inducements CMPL provides for the imposition of civil monetary penalties against any person who offers remuneration to a Medicare or State health care program beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier for the order or receipt of any item or service for which payment may be made, in whole or in part, by Medicare or a State health care program. “Remuneration” is defined to include “transfers of items or services for free or for other than fair market value.”

As noted in 2002 OIG Guidance on the topic of inducement,

“Section 1128A(a)(5) of the Social Security Act bars the offering of remuneration to Medicare or Medicaid beneficiaries where the person offering the remuneration knows or should know that the remuneration is likely to influence the beneficiary to order or receive items or services from a particular provider. The “should know” standard is met if a provider acts with deliberate ignorance or reckless disregard. No proof of specific intent is required. The “inducement” element of the offense is met by any offer of valuable (i.e., not inexpensive) goods and services as part of a marketing or promotional activity, regardless of whether the marketing or promotional activity is active or passive. For example, even if a provider does not directly advertise or promote the availability of a benefit to beneficiaries, there may be indirect marketing or promotional efforts or informal channels of information dissemination, such as “word of mouth” promotion by practitioners or patient support groups. In addition, the OIG considers the provision of free goods or services to existing customers who have an ongoing relationship with a provider likely to influence those customers’ future purchases.”

The definition of “remuneration” in section 1128A(i)(6) contains five specific exceptions:

• Non-routine, unadvertised waivers of copayments or deductible amounts based on individualized determinations of financial need or exhaustion of reasonable collection efforts. Paying the premiums for a beneficiary’s Medicare Part B or supplemental insurance is not protected by this exception.
• Properly disclosed differentials in a health insurance plan’s copayments or deductibles. This exception covers incentives that are part of a health plan design, such as lower plan copayments for using preferred providers, mail order pharmacies, or generic drugs. Waivers of Medicare or Medicaid copayments are not protected by this exception.
•  Incentives to promote the delivery of preventive care. Such incentives may not be in the form of cash or cash equivalents and may not be disproportionate to the value of the preventive care provided.
• Any practice permitted under an anti-kickback statute safe harbor at 42 CFR 1001.952.4.
• Waivers of copayment amounts in excess of the minimum copayment amounts under the Medicare hospital outpatient fee schedule.

In addition, Congress expressed its intent that inexpensive gifts of nominal value be permitted. Accordingly, the OIG interprets the prohibition to exclude offers of inexpensive items or services, and no specific exception for such items or services is required. The OIG has interpreted inexpensive to mean a retail value of no more than $10 per item or $50 in the aggregate per patient on an annual basis. Gift cards are generally prohibited.

OIG Clarification on Gift Cards as an Inducement

The OIG recently issued an advisory opinion which provides clarification on the topic of gift cards being offered to Medicare beneficiaries by health plans. Advisory opinions cannot be used as precedent by other organizations to defend their own arrangements, but do shed light on how the OIG may interpret certain business decisions in the future. 

In the recent advisory opinion, the organization that sought the advisory opinion (the “Requestor”) submitted the following facts for consideration: The Requestor operates an online learning tool that educates patients on potential risks, benefits, and expectations relating to surgeries (the “Program”). The Program consists of two modules. The first module aims to: (i) help patients understand their diagnosis (or diagnoses) and explain their symptoms; (ii) educate patients on discussing their diagnosis (or diagnoses) with their primary care providers; and (iii) educate patients on non-surgical treatment options. The second module is for patients who choose a surgical treatment option. The Program is designed to enhance the patient experience, increase patient literacy about surgery, reduce the incidence of inappropriate surgeries, and mitigate complications, errors, and infections for those surgeries that do occur.

Requestor contracts with certain Medicare Advantage Organizations (each, an “MAO”) to offer the Program to enrollees in their MA plan(s) and charges each MAO on a per-member, per-month basis for its services. Under the Arrangement, Enrollees who complete the first module of the Program, along with a survey, receive a $25 gift card to a retailer. The gift cards may be for a big-box store or a retailer that is an online vendor that sells a wide variety of items. Requestor awards the gift card after completion of the first module (and survey) because that module is broadly applicable to all patients who may face a decision regarding surgical versus non-surgical treatment options now or at some future time. Each Enrollee may only receive one $25 gift card annually. The gift card is not contingent on the Enrollee undergoing surgery, pursuing a non-surgical treatment option, receiving any additional treatment, or demonstrating surgery literacy on the survey

The Requestor certified that the Program does not refer to or recommend any provider, practitioner, supplier, or service.  The Program contains no information about particular providers, practitioners, suppliers, or services. Instead, the Program directs patients to contact their primary care provider for additional information.

The OIG has reviewed this Arrangement and made the following findings:

First, the Arrangement is unlikely to increase costs to Federal health care programs or result in inappropriate utilization and could potentially have the opposite effect. The Program is designed to improve patient literacy regarding surgery, reduce the incidence of medically inappropriate surgeries, and mitigate complications, errors, and infections for the surgeries that do occur. These aims may have the effect of improving patient safety and reducing inappropriate utilization, and they could also decrease Federal health care program costs if the Program works as intended.

 Second, the OIG believes the Arrangement would likely not meaningfully influence a beneficiary’s selection of a particular MA plan because Requestor does not advertise the Program or the Arrangement to beneficiaries who are not Enrollees, and Requestor’s standard contract with MAOs prohibits the MAO from including information about the gift cards offered under the Arrangement in the MAO’s marketing communications to prospective enrollees. Also, any risk of influence is reduced by the limited frequency and modest value of the reward (i.e., once per year and $25), and the Requestor has implemented various safeguards to monitor and ensure compliance with these features of the Arrangement.

Lastly, the Arrangement is unlikely to impact competition among health care providers, practitioners, or suppliers. The Program describes the various types of surgical facilities that are available for surgical procedures, but the Program does not refer to or recommend—or even include any information about—any particular provider, practitioner, supplier, or service.

Beneficiary Inducements CMPL:  In evaluating the Arrangement under the Beneficiary Inducements CMPL, the OIG considered whether Requestor would know that the remuneration it provides to beneficiaries is likely to influence their selection of a particular provider, practitioner, or supplier for the order or receipt of any item or service for which payment may be made, in whole or in part, by Medicare or a State health care program. The OIG concluded that that, although the provision of a gift card under the Arrangement is clearly remuneration to a Medicare program beneficiary, the Arrangement would not implicate the Beneficiary Inducements CMPL. The remuneration to Enrollees under the Arrangement (i.e., the gift card) is provided upon completion of the first module of the Program. Because the Program does not refer to or recommend any provider, practitioner, supplier, or service (the Program contains no information about particular providers, practitioners, or suppliers), the remuneration provided to Enrollees is not likely to influence an Enrollee’s selection of a particular provider, practitioner, or supplier. To the extent the remuneration has the potential to influence a beneficiary’s selection of a particular MA plan, it was noted note that an MA plan is not a provider, practitioner, or supplier for purposes of the Beneficiary Inducements CMP.

Conclusion

Based on its analysis of the facts and law, the OIG  concluded that: (i) although the Arrangement would generate prohibited remuneration under the Federal anti-kickback statute if the requisite intent were present, the OIG would not impose administrative sanctions on Requestor as those sections relate to the commission of acts described in the Federal anti-kickback statute; and (ii) the Arrangement does not constitute grounds for the imposition of sanctions under the Beneficiary Inducements CMPL.

As insurers seek to encourage potential and existing enrollees in their choice of Medicare Advantage plans, there are limits to incentives that are permitted.  The AKS and Beneficiary Inducements CMPL both create strong guardrails against arrangements which can lead to fraud and abuse related to federal healthcare programs. However, the recent OIG opinion demonstrates notable flexibility on gift cards and patient engagement programs, and provides insight into the OIG’s evolving view of these programs. Therefore, as plans develop creative ways to improve patient engagement through the use of gift cards and other forms of remuneration, seeking OIG approval remains a sound approach to avoid potential exposure and potential exclusion.