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 most recent inquiry discussed in our March 22 post, and also providing guidance on the following question:

Can a federally qualified health center (FQHC) with a location in a rural area provide free space to a retail pharmacy that administers COVID-19 vaccinations to FQHC patients and the general public (including Federal health care program beneficiaries)?

A federally qualified health center (FQHC) questioned whether it could provide free space to a retail pharmacy to administer COVID-19 vaccinations to FQHC patients and the general public (including Federal health care program beneficiaries). An FQHC is a non-profit and qualifies for specific reimbursement from the Health Resources and Services Administration (HRSA) beyond Medicare and Medicaid benefits. OIG opined that in light of the unique circumstances of the COVID-19 pandemic, the proposed arrangement presents a low risk of fraud and therefore OIG would apply its enforcement discretion to permit such activities.

The FQHC’s submission to OIG appears to have included that neither the FQHC nor the pharmacy would receive any kind of remuneration other than the free use of space for a vaccination clinic. Implicitly, as well, the general public would access the FQHC to receive these vaccinations.  The pharmacy would manage the entire process of the vaccination clinic, including obtaining patient consents; administering COVID-19 vaccinations to individuals, some of whom may be Federal health care program beneficiaries; observing patients after vaccination and responding to any adverse reactions; and providing all staff, equipment, items and services related to vaccine clinic administration. If a patient of the FQHC receives a vaccine administered by the pharmacy, the FQHC would maintain a record of vaccine administration within the patient’s medical record.

Ordinarily, as noted by OIG, free space to an actual or potential referral source may violate the AKS and would not satisfy the requirements of the space rental safe harbor, 42 C.F.R. § 1001.952(b).  This safe harbor requires fair market value payments, a term of at least one year and other regulatory requirements. Generally by offering space for free, the OIG worries that a healthcare provider may be doing so in order to receive referrals from the provider. In a situation where providers are co-located, OIG could also have concerns that the remuneration is generating referrals by encouraging patients to use the co-located provider.

In light of OIG’s recognition that “vaccine administration is crucial to the COVID-19 pandemic response and that individuals in rural areas may face heightened challenges in accessing vaccines,” OIG did not believe the risks of fraud under the arrangement were high. Based on the challenges individuals in rural areas pose related to the access and distribution of the COVID-19 vaccine, OIG’s view is to allow this arrangement, notwithstanding their normal concern.

Although FQHCs, which must be non-profit, may be in either rural or urban areas, the OIG addressed access for individuals only in rural areas. This FAQ response may lead to additional requests from OIG during the public health emergency. OIG was clear that the arrangement was for space to provide vaccination “access for individuals in rural areas.” Some communities may have limited facilities for vaccination privacy, which may not be present if an urban FQHC offered a similar free space arrangement absent further guidance. Further, OIG has already given flexibility to FQHCs allowing an FQHC to receive funding from a non-governmental donor in order to provide free COVID-19 testing to populations who otherwise may have difficulty accessing such testing despite the potential for a CMP beneficiary inducement violation. OIG did not note whether they would similarly allow other rural providers, such as a hospital, the same flexibility under this FAQ issuance to grant free space to a pharmacy for vaccination clinics.

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.

For related commentary, please see the following posts:
Providers May Offer Incentives to Federal Beneficiaries for Receiving COVID-19 Vaccine (June 9, 2021)
OIG Removes Mandatory Cost-Sharing Obligations for COVID-19 Ambulance Transport Waiver (May 17, 2021)
Per-Click Compensation for Philanthropic Entity’s COVID-19 Vaccine Site Low Risk of Fraud According to OIG (March 2, 2021)
OIG Responds to Free/Discounted Lodging and Free Antibody COVID-19 Test Inquiries (August 27, 2020)
OIG Responds to Physician Group COVID-19 Personal Protective Equipment Arrangement Inquiry (May 17, 2020)
OIG Updates Enforcement Responses to COVID-19 Arrangement Inquiries (May 13, 2020)
OIG Requests Inquiries on Enforcement Related to COVID-19 Arrangements (April 13, 2020)