The Office of Inspector General (OIG) of the U.S. Department of Health and Human Services, the primary enforcer of fraud and abuse prohibitions, increased the limits on free items and services that can be given to patients and potential patients effective on December 7, 2016. Specifically, according to the OIG, items and services of nominal value may be given to patients or potential patients that have a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis. The previous limits were $10 per item or $50 in the aggregate per patient on an annual basis.
Under section 1128A(a)(5) of the Social Security Act, persons who offer or transfer to Medicare and/or Medicaid beneficiaries any remuneration that they know or should know is likely to influence beneficiaries’ selection of particular providers or suppliers of items or services payable by the Medicare or Medicaid Programs may be liable for civil money penalties for up to $10,000 for each wrongful act. “Remuneration” includes waivers of copayments and deductibles and transfers of items or services for free or for other than fair market value.
In the Conference Committee report that accompanied the enactment of these requirements, Congress expressed a clear intent to permit inexpensive gifts of nominal value from providers to beneficiaries. In 2000, the OIG initially interpreted “inexpensive” or “nominal value” to mean a retail value of no more than $10 per item or $50 in the aggregate per patient on an annual basis. The OIG also expressed a willingness to periodically review these limits and adjust them based on inflation.
Consequently, effective on December 7, 2016, the OIG increased the limits of items and services of nominal value that may be given by providers and suppliers to beneficiaries to a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis.
Providers may not, however, give cash or cash equivalents. Cash equivalents include gift cards and gift certificates.
In view of some patients’ needs for basic items; such as food, prescribed medications and payment of utility bills; however, these amounts may still seem paltry to many providers. According to the OIG, providers who see that patients need items worth more than these limits should establish relationships with charitable organizations that can provide items and/or services that are not subject to these limits.
It is important to note, however, that relationships between providers and charitable organizations must be independent and charitable organizations must be bona fide. The OIG has rescinded advisory opinions because these requirements were not met. On November 28, 2017, for example, the OIG rescinded Advisory Opinion 06-04 on the basis that the relationship with a charitable organization was not independent.
The notice rescinding the Advisory Opinion says that the OIG is mindful of the importance of helping financially needy beneficiaries of Federal programs receive assistance. The OIG also acknowledged that independent charities can play an important role in advancing this goal. If, however, charities act as a conduit for providers to induce patients to use providers’ services, federal health care programs may be at risk.
In other words, work together to meet the needs of patients, but charitable organizations must maintain independence!