HHS-OIG Issues Favorable Advisory Opinion on Donor-Subsidized Pooled Special Needs Trust Fees

Overview of the Proposed Arrangement 

HHS-OIG recently issued Advisory Opinion 26-19, a favorable opinion on Oct. 22, and posted it on Oct. 27. The opinion addresses a proposal by a nonprofit, 501(c)(3) tax-exempt organization (the requestor) that formed, and serves as trustee of, a pooled special needs trust. Special needs trusts are irrevocable trusts established under federal law for the benefit of individuals with physical or mental disabilities, allowing them to become and remain eligible for public assistance programs such as Medicaid and QMB. QMB is available to individuals who are entitled to Medicare Part A, are eligible for Part B, and have incomes below 100% of the federal poverty level; for QMB enrollees, Medicaid pays Medicare Parts A and B premiums, deductibles, coinsurance, and copayments. QMB+ refers to individuals who qualify for QMB and for full Medicaid benefits. In a pooled special needs trust, the resources of multiple individuals are combined and must be managed by a nonprofit organization. 

The requestor currently charges individuals, including federal healthcare program beneficiaries, up to $200 per month (user fees) to cover the costs of operating the trust and helping beneficiaries maintain QMB or QMB+ status, such as monthly account monitoring, annual state reviews, bill paying, and trust disbursements. Under the proposal, the requestor would solicit and accept donations from individuals and entities, potentially including healthcare providers, suppliers, and drug and device manufacturers, to subsidize user fees for individuals who meet objective financial need criteria.

Eligible individuals would be Medicare beneficiaries already enrolled in QMB or QMB+, and the requestor would not inform them of the subsidy until after enrollment. The requestor does not charge for its QMB and QMB+ enrollment assistance and would not use donations to cover those costs.

HHS-OIG’s Longstanding Caution Regarding Donor-Supported Assistance Programs 

In the opinion, HHS-OIG reiterated its longstanding view that patient assistance programs can provide an important safety net for patients and that it supports charitable efforts to help financially needy beneficiaries, provided the assistance does not violate the AKS or other laws. HHS-OIG emphasized, however, that it has consistently cautioned that such programs must be independent of donor influence and must not serve as a conduit for payments from donors to patients.

Why HHS-OIG Found the Arrangement Sufficiently Low Risk Under the AKS

HHS-OIG concluded that, although the arrangement could generate prohibited remuneration under the AKS if the requisite intent were present, it would not impose administrative sanctions because the arrangement presents a sufficiently low risk of fraud and abuse for the following reasons:

• Low risk of overutilization. Donations would subsidize user fees that help eligible individuals maintain QMB and QMB+ coverage. Although continued enrollment would result in federally reimbursable care, nothing suggested that the resulting utilization or costs would be inappropriate.
• Low risk of steering. The requestor would not directly inform subsidized individuals of donors’ identities; would not suggest, guide, or steer them toward any donor; and would not make recommendations about care.
• Objective, neutral eligibility. Subsidies would be awarded on a first-come, first-served basis, subject to available funding, using a reasonable, verifiable, and uniformly applied measure of financial need, with monthly and annual eligibility verification. Eligibility decisions would not take into account the identity of any provider, practitioner, supplier, or product used; the identity of any referral source; or the amount of any donor’s contributions.
• Unrestricted donations and true independence. Donations would be unrestricted and not contingent on any referrals, recommendations, or other future actions. Donors would have no direct or indirect control over, or influence on, the requestor’s operations, and no donor may serve on the requestor’s independent board, which is subject to a strict conflict-of-interest policy.
• Limited donor reporting. Donors would receive only aggregate information: the number of subsidized individuals, the number of qualifying individuals for whom funding was insufficient to subsidize their user fees, the aggregate subsidy amount, and projected funding needs. They would receive no individual-specific information or data that would allow them to correlate their donations with the use of their products or services. The requestor would publicly identify donors on its website and in its quarterly and annual reports.

For the same reasons, HHS-OIG concluded that the subsidies would be unlikely to influence a beneficiary to select a donor who is a provider, practitioner, or supplier and therefore would not give rise to sanctions under the Beneficiary Inducements CMP. 

Limitations of the Opinion

As with all advisory opinions, Advisory Opinion 26-19 may be relied on only by the requestor and applies only to the arrangement described. HHS-OIG expressly declined to opine on whether the trust satisfies federal requirements for pooled special needs trusts, and it expressed no opinion on the federal physician self-referral law (the Stark Law), liability under the False Claims Act, or any other law not specifically addressed.

Key Takeaways for Organizations Seeking Donor Support for Beneficiary Assistance 

Nonprofits and trustees considering similar donor-funded subsidy programs, particularly those that accept donations from healthcare providers, suppliers, or manufacturers, should consider adopting the safeguards reflected in the opinion:

• Maintain independence. Retain complete, independent discretion over who receives assistance; accept only unrestricted donations; and keep donors off the board under an enforced conflict-of-interest policy. 
• Use neutral eligibility rules. Apply objective, verifiable financial need criteria uniformly and award assistance on a first-come, first-served basis, without regard to donors’ interests or beneficiaries’ choice of provider or product. 
• Avoid steering. Do not tell beneficiaries which donors funded their assistance, and do not make referrals or recommendations about care. Public donor lists on a website or in periodic reports were acceptable on the facts of this opinion. 
• Limit donor data. Share only aggregate information with donors and never share data that could allow donors to correlate their contributions with the use of their items or services. 
• Separate assistance from enrollment. Consider limiting assistance to beneficiaries who are already enrolled, notifying them of assistance only after enrollment, and funding any enrollment help without donor dollars.

Donors should also recognize that the opinion offers them no protection. Providers, suppliers, and manufacturers considering similar gifts should make only unrestricted donations, avoid any control over or influence on the charity’s operations or eligibility decisions, and decline any data that would let them correlate their donations with use of their own items or services.