In an Advisory Opinion posted earlier this week, the OIG gave the green light to a charitable pediatric clinic's routine waiver of patient cost-sharing amounts. The OIG's analysis hinged on several factors that, taken together, led the OIG to refrain from exercising its enforcement discretion.
The clinic provides pediatric medical, psychiatric, and dental care, with a mission to improve health outcomes for at-risk children in the impoverished community where it is located. To receive continuing services, a patient must satisfy the clinic's financial need standard by participating in Medicaid or certain other state insurance programs or by presenting evidence of family income that does not exceed 200 percent of the federal poverty level. The clinic occasionally provides emergency services to patients who do not meet its financial need standard, but such services make up a small percentage of the clinic's aggregate services.
The clinic bills and accepts payment from third party payors, but it waives all cost-sharing amounts incurred by patients, including those covered by federal health care programs. However, as noted by the clinic, it waives cost-sharing obligations for very few federal health care program patients because the vast majority have no cost-sharing obligations because they participate in Medicaid or another state insurance program.
The OIG ultimately allowed the clinic's routine waiver of cost-sharing obligations even though it does not fully comply with the CMP Law's exception for the waiver of cost-sharing amounts. For the following reasons, the OIG concluded that the arrangement presents minimal risk under the federal Anti-Kickback Statute and chose not to exercise its enforcement discretion under the CMP Law:
- the clinic rarely waives federal health care program cost-sharing amounts without first verifying financial need;
- the clinic does not advertise the availability of cost-sharing waivers or use the waivers to solicit patients;
- no financial incentives are offered to the clinic's providers to order unnecessary services or to steer patient referrals;
- the clinic is located in an economically depressed area where a large number of children are in poverty and have few health care options; and
- certain other safeguards reduce the risk of overutilization, unnecessary services, and increased federal health care program costs.
As noted in a 1994 Special Fraud Alert and in past Advisory Opinions (see, for example, Advisory Opinion No. 17-02), the OIG's "concerns regarding routine waivers of Medicare cost-sharing amounts are longstanding, and providers that routinely waiver Medicare cost-sharing amounts for reasons unrelated to individualized, good faith assessments of financial hardship may be held liable under the anti-kickback statute." Further, the Department of Justice takes the routine waiver of federal cost-sharing obligations very seriously, as evidenced by settlements in recent years with various providers, including Health Diagnostic Laboratories, Singulex, and Lincare, and by its intervention in a False Claims act case involving a compounding pharmacy and its private equity firm owner.
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