As previously discussed, on April 3, 2020, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a process for inquiries to be submitted to OIG about whether administrative enforcement discretion would be provided for certain arrangements directly connected to the 2019 novel coronavirus (COVID-19). OIG established this process to provide regulatory flexibility to ensure necessary care responding to COVID-19, particularly with respect to the federal anti-kickback statute (AKS) and civil monetary penalty (CMP) beneficiary inducement prohibition provisions. OIG responses are publicly available through a frequently asked questions (FAQ) posting on the OIG COVID-19 portal. OIG has continued to update this FAQ since its initial publication, including the inquiry discussed in our March 2 post, and also providing guidance on the following question in late 2019:
Can a Federally Qualified Health Center (FQHC), including an entity that receives grant funds or designation under section 330 of the Public Health Service Act, conduct free COVID-19 diagnostic testing that has been cleared or approved by the Food and Drug Administration (FDA), is subject to an FDA-issued Emergency Use Authorization, or is covered by the Medicare program, including for Federal health care program beneficiaries, at community health fairs and via mobile testing in underserved communities impacted by COVID-19?
After receiving funding from a non-governmental donor for free COVID-19 testing to populations that may otherwise have difficulty accessing testing, an FQHC asked OIG if there would be concerns in providing these services to federal healthcare beneficiaries. According to the FAQ response, the FQHC would implement a number of prophylactic safeguards. These safeguards include that (a) the free testing would be provided on a first-come, first-served basis, (b) the test would not be dependent on receiving any other services from the FQHC, (c) the FQHC would not offer any special discounts or additional services to recipients of the free testing, (d) if the patient received a positive result, the FQHC would not direct the patient to the FQHC or any other specific provider, (e) the FQHC would not bill any payor or patients for these tests, and (f) the COVID-19 tests being utilized have been cleared by the FDA, are subject to an FDA-issued Emergency Use Authorization, or are covered by the Medicare program.
Ordinarily, free services, including testing could present risk under the CMP beneficiary inducement provisions because the services have financial value and could lead a patient to choose the provider of the free services for additional billable federal healthcare program items or services. Such a prohibition is broad under the CMP (as well as the AKS). The OIG, recognizing this broad prohibition, has promulgated exceptions to the definition of “remuneration” prohibited under the beneficiary inducement. These exceptions include (i) incentives given to promote preventive care, (ii) items or services given to improve the ability to obtain items and services payable by Medicare or Medicaid, and (iii) items or services for less than fair market value. Notwithstanding this offering being unlikely to qualify for the OIG’s promulgated requirements to meet any of these exceptions, OIG did not really discuss these exceptions yet still approved the free offering by an FQHC of such COVID-19 testing.
In approving the plan, OIG noted how it previously recognized the important role that FQHCs play in delivering care during the COVID-19 pandemic to some of the most vulnerable individuals and communities, and this offering is no exception. The availability of COVID-19 testing remains critical to combatting the current public health emergency. Indeed, while not a focus of OIG’s response, the FQHC applying for discretion appeared from the OIG stated question to stress how it would offer this testing at community health fairs and via mobile testing programs—i.e., in the underserved communities at least in part outside its facility. Likely the FQHC was making clear how it would be targeting underserved communities with necessary testing through their received grant funding. Such test expansion, utilizing skilled and experienced FQHC clinical staff, likely supports efforts of the federal government to increase testing and vaccination sites in communities often harder to serve. Due to these considerations and the safeguards noted above, OIG determined that there is a significantly low risk of fraud and abuse under the AKS and the beneficiary inducements CMP to grant discretion not to bring enforce activity with respect to the proposed arrangement.
The OIG did caution, however, that the arrangement could present additional fraud and abuse risks that they could consider enforcing—the potential direct or indirect financial relationships between the non-governmental donor entity, the FQHC, and the federal healthcare program beneficiaries. Since the FQHC submitting their question did not provide information about its donor, the OIG could not provide comfort on those relationships. One can imagine that if the donor was another healthcare provider, such as a pharmaceutical or device manufacturer and that was advertised, the OIG may have a different answer for the beneficiary inducement consideration. Further, if another provider donated funding to the FQHC in exchange for referrals for other services, OIG may still have significant AKS concerns. Therefore, the OIG asked parties reading this FAQ to assess any fraud and abuse risks that may arise with respect to any direct or indirect financial relationships involving the donor separately.
Ultimately, though, under the narrower discussion on an FQHC providing COVID-19 testing for free, the safeguards listed above were sufficient in OIG’s view to allow such a testing plan without enforcement for improperly inducing federal healthcare beneficiaries.
McGuireWoods will continue to monitor OIG’s release of further FAQs as additional providers utilize this inquiry mechanism. Providers may welcome the flexibility provided by OIG exercising enforcement discretion during the COVID-19 pandemic, recognizing the statements do not bind all investigative bodies who could take a different view. OIG will likely continue to require such arrangements to end at the end of the COVID-19 public health emergency declaration, and therefore, providers should plan for the post-pandemic period depending on the arrangement when utilizing these statements.
McGuireWoods has published additional thought leadership related to how companies across various industries can address crucial COVID-19-related business and legal issues, and the firm’s COVID-19 Response Team stands ready to help clients navigate urgent and evolving legal and business issues arising from the novel coronavirus pandemic.
See related update: Free FQHC COVID-19 Testing Approved by OIG (March 22, 2021)