HHS-OIG Issues Unfavorable Opinion on Third-Party Federal Health Care Program Exclusion Screening and Monitoring Arrangement

The U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) recently released Advisory Opinion 25-04, an unfavorable opinion regarding the federal Anti-Kickback Statute (AKS) and civil monetary penalty laws (CMP) against beneficiary inducements as applied to third-Party Federal health care program exclusion screening and monitoring arrangements. 

Background

In this opinion, a medical device company had customers, including hospitals, health systems, and ambulatory surgical centers (ASCs), which required the medical device company to pay for a third-party to screen and monitor the medical device company for exclusion from Federal health care programs and ensure the medical device company’s compliance with other healthcare laws. Existing healthcare laws require the medical device company’s customers to screen and monitor the medical device company's exclusion from Federal health care programs and compliance with healthcare laws. 

To receive the monitoring and screening services from the third-party company, the medical device company had to pay the third-party company an estimated annual subscription fee of $450,000.  The third-party company also has contracts with the medical device company’s customers that the medical device company is not a party to. 

HHS-OIG’s Findings

HHS-OIG found that the proposed arrangement implicates the AKS be the medical device company would pay the third-party company fees for screening and monitoring the medical device company’s exclusion from Federal health care programs and to ensure compliance with certain other legal requirements, the costs of which otherwise would be incurred by its customers, and the payment of these fees may induce its customers to purchase items or services from the medical device company that may be reimbursable by a Federal health care program.

In reaching its conclusion, HHS-OIG cited the following concerns:

• The medical device company would pay for a valuable service that its customers otherwise would cover, which presents anti-competitive risks and risks of inappropriate steering.
• HHS-OIG has longstanding and continuing concerns regarding the provision of free items or services by individuals and entities, including device manufacturers, to customers that could lead to the ordering and provision of an item or service payable by Federal health care programs. 

HHS-OIG ultimately concluded that the proposed arrangement would generate prohibited remuneration under the AKS which, with the requisite intent, would constitute grounds for the imposition of sanctions. 

Key Takeaways

The Advisory Opinion affirms HHS-OIG’s longstanding concerns related to, and strong stance against, arrangements with inappropriate steering and competition reduction risks.

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