HHS-OIG Advisory Opinion 26-09: Free Orthodontic Treatment Program Cleared Under Anti-Kickback Statute With Proper Safeguards

Background

HHS-OIG recently released Advisory Opinion No. 26-09, a favorable opinion regarding the federal AKS as applied to a pediatric dental services provider offering free orthodontic treatment to a limited number of existing patients.

The proposed arrangement involves a pediatric dental and orthodontic services provider (the  dental provider) offering free, comprehensive orthodontic treatment to three existing patients per year. The free orthodontic treatment is provided as a standalone benefit with no financial relationship to any other item or service offered by the  dental provider.

Under the proposed arrangement, the dental provider would select the recipient patients using objective, predetermined criteria applied uniformly across its patient population. A treating dentist or orthodontist first must nominate patients who are cavity-free and demonstrate good oral hygiene. Then, the dental provider would select the three recipients based on a combination of clinical need, financial hardship, and community impact. Patients with any type of health insurance or none at all would be eligible. If a patient is insured, the dental provider would require documentation that the patient’s insurer denied coverage of the orthodontic treatment. Patients would not be able to nominate themselves for the free service. 

Also, the dental provider would limit promotion and publicity of the proposed arrangement.  Specifically, the dental provider would not publicize to patients that the dental provider selects recipients from its current patient population or that the proposed arrangement presents an ongoing opportunity for selection. Additionally, the dental provider would not advertise the proposed arrangement in its offices or target messages to current or potential patients that the treatment is free. Although the  dental provider would reference the proposed arrangement on its website and/or social media platforms, the sole purpose of such references would be to highlight the arrangement’s community impact rather than solicit participation in the program.

HHS-OIG Finds AKS Risk But Declines Sanctions — Five Safeguards That Made the Difference 

HHS-OIG found that the proposed arrangement implicated the AKS as providing free orthodontic care constitutes remuneration to the patients receiving the care and could lead to the practice providing additional items or services reimbursable by Medicare or Medicaid. HHS-OIG expressed its particular concern that an entity or individual providing free items or services to patients may lead to ordering and providing additional, unnecessary items or services. However, HHS-OIG concluded it would not impose administrative sanctions because the arrangement has appropriate safeguards in place and presents sufficiently low risk of fraud and abuse.

Orthodontic treatment is generally excluded from Medicare coverage and receives limited reimbursement under Medicaid. Also, the  dental provider will not seek reimbursement for the free orthodontic treatment provided under the proposed arrangement. As a result, the proposed arrangement carries a limited risk of generating increased costs to federal healthcare programs. 

HHS-OIG noted the following factors in support of its favorable conclusion: 

• The proposed arrangement uses objective eligibility criteria that limit the risk of patient steering toward the dental provider’s other services covered by federal health care programs.
• The free orthodontic treatment is offered only to existing patients and is not contingent on the patient’s use of, or referral to, any item or service reimbursable by a federal healthcare program.
• Orthodontic treatment is generally not covered by Medicare and is limited in coverage under Medicaid, which reduces the potential fraud and abuse in federal healthcare programs.
• The dental provider has implemented safeguards to ensure the arrangement does not function as a vehicle to induce referrals or reward past or future use of federal healthcare program items or services.
• The proposed arrangement is not likely to steer patients to seek orthodontic or other dental care from the dental provider, given that it will not be advertised to current or prospective patients and would only be referenced on the dental provider’s website to highlight its community service aspect. 

With respect to the Civil Monetary Penalty law (CMP), HHS-OIG concluded that the proposed arrangement could induce beneficiaries to select the  dental provider for dental or orthodontic services reimbursable by a federal healthcare program, and that the proposed arrangement does not satisfy any exceptions in the CMP. However, HHS-OIG relied on its enforcement discretion in concluding that it would not impose sanctions for the proposed arrangement. 

What Dental Providers Must Do Before Launching a Charitable Treatment Program 

This favorable advisory opinion demonstrates HHS-OIG’s willingness to exercise discretion in enforcing the AKS and CMP. It also indicates that HHS-OIG will decline to impose administrative sanctions on arrangements that offer otherwise-uncovered services free of charge, where the arrangement is structured with meaningful safeguards and avoids influencing clinical decision-making or generating increased costs to federal healthcare programs.

Orthodontic and dental providers considering charitable or promotional treatment programs should ensure eligibility criteria are objective, consider the relationship between the free service and federal healthcare program-covered services, and document adequate structural safeguards.