On July 30, the OIG released advisory opinion no 10-11 (the “Opinion”) which favorably reviewed a company’s proposal to encourage health care providers to use its online program for scheduling meetings with manufacturer representatives by offering the health care provider an opportunity to select a public charity to which the company would make a monetary, charitable contribution in the health care provider’s name.
Under the proposed arrangement, the company is not a health care provider or supplier but offers marketing services to pharmaceutical, medical, and diagnostic product manufacturers. According to the Opinion, the company has developed an online scheduling website, which pharmaceutical, medical, and diagnostic product manufacturers can use to schedule time with health care providers to educate them about new products. Under the proposed plan, manufacturers would pay a fee to enroll in the program and a fee for every five minute intervals of time scheduled with each health care provider. The company would then encourage health care providers to participate in its scheduling program by offering them the opportunity to designate a public charity to which the corporation would make a charitable contribution “in the name of” the health care provider. Further, under the proposed program, the health care provider would not be entitled to a tax deduction as a result of the donation.
The Opinion recognized the importance of charitable contributions from health care providers and suppliers and expressed caution in the exercise of enforcement in this area. However, the OIG also listed several examples of potentially problematic contributions (e.g., contributions to charities that provide free or below market value rate office space to a referral source) which are nothing more than disguised kickbacks intended to induce referrals. With respect to the proposed arrangement, however, the OIG found that the program was not problematic as it was structured to prevent health care providers from receiving any actual or expected economic benefit from the charitable donations (i.e., the donations would be made directly to the public charities), the health care providers would not be entitled to tax deductions, the charities would be 501(c)(3) organizations that are public charities, and would meet the public support test under section 509 (a) of the IRC, the charity would have sole discretion in the use of the donated funds, the funds would not be restricted or earmarked, and the health care providers would have to provide certificates that they (or an immediate family member) are not employees or board members of the charity. Additionally, the company’s proposed arrangement would not be determined by a health care provider’s prescribing choices, thus preventing any potential link between the selected charity and health care provider’s referrals.
Accordingly, the OIG concluded that the charitable contributions would not constitute prohibited “remuneration . . . directly or indirectly . . . in cash or in kind” to the health care providers within the meaning of the anti-kickback statute.
For more information on the anti-kickback statute or OIG opinion 10-11, please call or email Adrienne Dresevic, Esq. or Carey F. Kalmowitz, Esq. of The Health Law Partners at (248) 996-8510 or (212) 734-0128, visit the Compliance specialty page, or the HLP website.