United States: OIG Issues Advisory Opinion Addressing Lodging And Meals Assistance for Financially Needy Patients

Last Updated: March 22 2017
Article by Morris H. Miller

Morris Miller is a Partner in the Tallahassee office

On March 3, 2017, the Office of Inspector General (OIG) of the Department of Health and Human Services issued OIG Advisory Opinion No. 17-01, in which the OIG addressed whether a hospital's proposal to provide free or reduced-cost lodging and meals to certain financially needy patients (1) would constitute grounds for the imposition of civil monetary penalties (CMPs) under Section 1128A(a)(5) of the Social Security Act (the Act), which provides for CMPs against a person who offers or transfers remuneration to a federal health care program beneficiary that the person knows or should know is likely to influence the beneficiary's selection of a particular provider (the CMP Statute), and (2) would violate the Medicare anti-kickback statute, Section 1128B(b) of the Act, which prohibits the offer or payment of remuneration to induce the referral of federal program beneficiaries.

The hospital proposed to offer certain patients residing in rural or underserved areas free or reduced-cost lodging at a hotel near the hospital for one night before, and up to two nights after, treatment at the hospital (rates at the hospital were approximately $70 per night), and meals at the hospital's cafeteria not to exceed a value of $15 per overnight stay. To qualify for the free or reduced-cost lodging and meals, a patient would have to satisfy certain financial need criteria (assistance levels would vary based on the patient's income as a percentage of the federal poverty level), reside at least 90 miles from the hospital and in a medically underserved or health professional shortage area, and satisfy certain other criteria generally relating to the scheduling of the patient's services at the hospital.

Based on the facts underlying the request for the advisory opinion, the OIG concluded that (1) the proposed arrangement would not constitute grounds for the imposition of CMPs because it qualified as remuneration that promotes access to care and poses a low risk of harm to patients and federal health care programs; and (2) although the proposed arrangement could potentially generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals were present, the OIG would not impose administrative sanctions in connection with the proposed arrangement.

In concluding that the proposed arrangement would not violate the CMP Statute, the OIG relied upon a provision of the Affordable Care Act and related regulations that became effective in January, 2017, under which, for purposes of the CMP Statute, "remuneration" does not include remuneration that promotes access to care and poses a low risk of harm to patients and federal health care programs (the "Promotes Access Exception"). In the recent regulations, the OIG interpreted the Promotes Access Exception to apply to:

[i]tems or services that improve a beneficiary's ability to obtain items and services payable by Medicare or Medicaid, and pose a low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs by — (i) [b]eing unlikely to interfere with, or skew, clinical decision making; (ii) [b]eing unlikely to increase costs to Federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (iii) [n]ot raising patient safety or quality-of-care

42 C.F.R. § 1003.110 (2017) (defining "remuneration").

In reaching its conclusion in Advisory Opinion No. 17-01, the OIG considered the following factors important:

  • The free or reduced-cost lodging and meals would promote access to care because they would  remove certain socioeconomic and geographic barriers that could prevent patients from obtaining necessary hospital services and facilitate patients' attendance at treatment appointments to obtain medically necessary care (including enabling patients to attend early morning appointments and to obtain follow-up care after a treatment).
  • The proposed arrangement was unlikely to interfere with clinical decision-making, because the hospital would not condition eligibility for the assistance on the receipt of any particular service provided by the hospital and the hospital would not provide remuneration to any clinician to encourage him or her to refer patients to the hospital.
  • The hospital certified that it would not shift any of the costs of the patient benefits to any federal health care program nor report any of the costs on hospital's cost reports or claims.
  • The hospital would identify patients who were eligible for the benefits only after they had scheduled services at the hospital
  • The hospital would not advertise or market the proposed arrangement to patients, and only a small fraction of the hospital's patients would receive the lodging and meals, making it unlikely that the purpose of the arrangement was to facilitate medically unnecessary or inappropriate care. (The OIG observed that the proposed arrangement would facilitate access to care at the hospital of the patient's choice and reduce risks, including the risk of missed appointments, inherent in long-distance travel immediately before and after a hospital treatment.)
  • The hospital would not provide luxury accommodations or expensive restaurant meals.
  • The hospital would audit and monitor the proposed arrangement under the hospital's compliance program.
  • Nothing in the proposed arrangement appeared to encourage patients to seek out unnecessary or poor quality care (to the contrary, the arrangement would remove logistical and financial obstacles for patients to obtain necessary treatment).

Although the Promotes Access Exception does not apply to the anti-kickback statute, for the same reasons described above, the OIG concluded that the proposed arrangement would not subject the hospital to administrative sanctions under the anti-kickback statute.

The OIG reached a similar conclusion a year ago in OIG Advisory Opinion No. 16-02, which involved an academic medical center that proposed to provide transportation assistance and lodging for pregnant women. Since the issuance of Advisory Opinion No. 16-02, the OIG has promulgated the 2017 regulations concerning Promotes Access Exception, on which Advisory Opinion No. 17-01 was based, as well as the final safe harbor regulations covering the provision of free or discounted transportation services. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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