OIG Publishes Favorable Advisory Opinion on Charitable Organization’s Patient Assistance Program for Patients Suffering from a Rare Genetic Disorder

On December 2, 2013, the Office of Inspector General (“OIG”) published an advisory opinion in which it considered whether a charitable organization’s (the “Requestor”) proposal to provide monetary assistance, including Medicare premium assistance, to financially needy patients suffering from a rare genetic disorder (the “Disorder”) violated the Anti-Kickback Statute (“AKS”) or the prohibition on beneficiary inducement under the Civil Monetary Provision (“CMPs”) of the Social Security Act.

Requestor and a related non-profit “Foundation” serve the community of patients suffering from the Disorder, which is currently only treatable with orphan pharmaceuticals. The Foundation and the Requestor share a CEO and board of directors (“Board of Directors”), and the Foundation provides most of the Requestor’s funding in addition to funding research into the cause, treatment, and cure of the Disorder. While the Requestor and Foundation receive some individual charitable gifts, most funding is derived from the gifts of the pharmaceutical manufacturers responsible for manufacturing the drugs used in treating the Disorder (the “Donors”).

The Requestor proposed to provide assistance to financially needy patients suffering from the Disorder through two separate assistance programs. The first program would pay part or all of an eligible patient’s insurance or Medicare premiums (“Premium Assistance Program”) while the second program would pay eligible patients for certain out of pocket expenses, including limited travel expenses and payments for treatments that would not ordinarily be covered by insurance.

To coordinate the program, the Requestor employs a full time Facilitator, with responsibility for coordinating the Patient Assistance Programs, and a separate three member advisory group (the “Advisory Group”) responsible for determining the eligibility of applicants to the program. The Financial need of an applicant will be determined by comparison to national standards of indigence. In its request to the OIG, the Requestor certified that the Advisory Group and Board of Directors were completely independent of the Donors and that no member of either group had a financial relationship or other link to the Donors.

In reviewing the Proposal, the OIG reiterated its previous guidance that industry stakeholders may contribute to the health care safety net through contributions to “independent, bona fide charitable assistance programs,” provided that the charity cannot directly or indirectly exert influence over the donor and the donor does not have ties to the charity that would influence the operations of the charity or the subsidy program. Furthermore, such subsidy program cannot act as a “conduit for payments or other benefits from donors to patients” and cannot influence a patient’s choice of provider, service, or treatment.

While the Proposal had the potential to generate unlawful remuneration under the AKS due, in part, to the Donors charitable gifts funding the Assistance Programs, the OIG believed that certain features of the Proposal’s structure reduced the risk of unlawful remuneration and that it would not seek sanctions under the AKS. Specifically, under the structure of the Program, the Requestor would not assist patients in the payment of copayments, deductibles, and coinsurance; the Patients were not required to seek or receive any particular treatment or any treatment at all to receive funds under the program; and the structure of the Patient Assistance Programs (i.e. grants to patients to assist with insurance premiums) would likely increase the number of providers and treatments available to the Patients and would minimize the Requestor’s ability to influence the patient’s choice of the same.

In its finding that the Proposal was unlikely to result in the unlawful inducement or influence over the patients in choosing providers or treatments in violation of the CMP provision of the Social Security Act, the OIG relied on five factors that it said reduced the risk of such inducement. Specifically, the OIG stated that:

1. The Requestor was independent of the Donors and had “absolute, independent, and autonomous discretion as to the use of donor contributions for the programs.”
2. The Requestor would award assistance to patients in a “truly independent” manner on a first-come, first-served basis. Further, the patients receiving the assistance would be free to select (and change) any providers, suppliers, products, or insurance without interference from the Requestor or its donors.
3. The Requestor’s decision to award assistance would not take into consideration the interests of its donors, nor would it consider the choices made by patient applicants regarding provider, supplier, product, or insurance plan.
4. The Requestor would award assistance based on a “reasonable, verifiable, and uniform measure of financial need that is applied in a consistent manner.”
5. The Requestor would not provide any information about the individual recipients to the Donors apart from the number of patients in the program and the number of patients entering and leaving the program.

Due to the totality of the facts at issue in the opinion as well as the various factors discussed above, the OIG held that it would not sanction the Requestor under the AKS nor would it result in the imposition of CMPs.

For more information regarding this and related issues, please contact Adrienne Dresevic, Esq., or Carey Kalmowitz, Esq. at (248) 996-8510, (212) 734-2128 or visit the HLP website.

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