OIG Views Favorably a Proposal to Operate Website Containing Coupons and Advertising from Health Care Entities

March 28, 2012

On March 27, 2012, the Office of Inspector General ("OIG") posted a favorable, but narrowly defined, Advisory Opinion (Opinion No. 12-02) pertaining to Requestor's proposal to operate a website that would display coupons and advertising from health care providers, suppliers, and other entities (the "Proposed Arrangement").

Under the Proposed Arrangement, the Requestor, a corporation with a practicing physician member and another non-physician member, would contract with physicians and other health care providers and suppliers (the "Providers"), who wish to post coupons for health care items or services. The coupons could include discounts on items or services that are reimbursable by Federal health care programs, provided that such discounts comply with the applicable Federal health care program rules and regulations. As part of the service, the Requestor would not allow Providers to offer "free service" coupons; only coupons for a reduced price or a percentage discount would be permitted. The Providers would be required to give the same discount to any third party payor or insurance carrier that the Provider offers a patient. The Requestor also certified to the OIG that it would not be in a position to make any referrals to Providers that post coupons on the site. Even though one member of the Requestor was a practicing physician, the physician's name would not appear on the website, he would not post any coupons for his own services on the website, and he would not have any financial interest in the Providers the Requestor would contract with under the Proposed Arrangement. The Requestor would offer five (5) membership levels, one of which is a free "Basic" membership, the rest of which require a monthly fee, which would allow a Provider to create a profile, and if it chooses to do so, post coupons for consumers. The fee for the enhanced memberships would be a monthly flat fee.

The Requestor would also offer advertising on the website. Health care practitioners and entities (the "Advertisers") would be able to purchase space on the site for advertisement, including banner and pop-up advertisements. The Requestor certified that the fees for the coupon and advertising would be set in advance by Requestor, would be consistent with fair market value, and would not take into account the volume or value of any referrals or business otherwise generated between the parties for which payment may be made in whole or in part under any Federal health care program.

The potential customers (health care consumers) would pay no fees to access the website and coupons offered thereon. A customer would print a coupon (or download it to a mobile device) and the discount would be applied if the customer receives the service. The customer would not be required to pre-pay to receive the discount. The website would advise patients who submit their own claims of their obligation to report any discounts when submitting a claim.

After evaluating the pertinent facts, in its analysis, the OIG determined that the Proposed Arrangement involved two activities which implicate the federal Anti-kickback Statute ("AKS"): the selling of advertising space and the posting of Providers' coupons. The OIG indicated that both the posting of coupons and advertising on the website constitutes advertising activity. In evaluating advertising, there are a number of factors the OIG considers, including, the identity of the party engaged in the marketing activity and the party's relationship with its target audience; the nature of the marketing activity; the item or service being marketed; the target population; and any safeguards to prevent fraud and abuse. The OIG found that the Proposed Arrangement is sufficiently low risk under the anti-kickback statute for the following reasons:

1. The Requestor is not a health care provider or supplier and would simply operate a website hosting advertising and coupons;

2. The payments from Providers and Advertisers to the Requestor do not depend on the coupons being used by customers or obtaining services from the Providers or Advertisers, the fee is set in advance and does not take into account the volume or value of any referrals or business otherwise generated between the parties;

3. The advertising on the website would not be directed at the customer visiting the site and was akin to advertisements on a publically available website or in print media; and

4. The structure of the coupons decreases risk under the AKS because a customer does not pre-pay for the coupon and, thus, has no up-front investment. This fact, according to the OIG, significantly lowered the risk that a Provider's medical judgment would be improperly influenced to render medically unnecessary or inappropriate services based upon the fact that the Customer purchased a coupon.

The OIG also indicated additional risk existed due to the content of the coupons, which may offer discounts on items or services that are reimbursable by Federal health care programs. For the following reasons, the OIG found that the Proposed Arrangement included sufficient safeguards to mitigate the risks associated with the Requestor's role in posting the discounts:

1. Any discount would result in reduced costs which would benefit the patient as well as the payors, including Federal health care programs, as the discount would apply to the entire item or service, not only to the patient's cost-sharing obligations; and

2. The website's Terms of Use (which Providers must agree to before posting any coupons) require the Providers to comply with the discount safe harbor, which requires that buyers and sellers report any discounts to ensure that such discounts are shared with Federal health care programs; the coupons themselves would explain that the discount must apply to the entire item or service and not just a customer's cost-sharing obligation.

Notably, in its opinion, the OIG (without making specific references) makes it a point to differentiate the Proposed Arrangement from a "Social Coupon" type of situation involving relationships with websites such as "Groupon."

For the combination of the above reasons, the OIG concluded that the payments from the Providers and Advertisers for the Requestor's services associated with the Proposed Arrangement would pose an acceptably low risk of fraud and abuse under the anti-kickback statute and that the Requestor's role in posting the coupons also would be unlikely to improperly influence a beneficiary to choose a particular provider or supplier. However, the OIG does identify two areas of potential concern for which it expressed no opinion (1) Stark law issues in relation to the Physician Member and a person or entity with whom the Requestor would contract under the Proposed Arrangement; and (2) False Claims Act liability of the Requestor if the Requestor knows or should know that the Providers are not providing Federal health care programs with their share of the coupon discounts. Thus, although this ultimately was a favorable opinion, it was narrowly focused and identified potential other areas of concern/liability which fell outside the scope of the OIG's authority. As such, these types of arrangements must be carefully considered before a healthcare provider decides to participate.

For more information, please contact Adrienne Dresevic, Esq., Carey F. Kalmowitz, Esq., or Stephanie Ottenwess, Esq. at (248) 996-8510 or (212) 734-0128 or visit the HLP website.