The Department of Health and Human Services Office of Inspector General (OIG) has released a favorable advisory opinion on an arrangement involving donations from a children’s therapy provider to an independent grant foundation.

According to OIG, although the arrangement would generate remuneration that would be prohibited under the Federal Anti-Kickback Statute (AKS) if the requisite intent was present, the office would not impose administrative sanctions on the company as a result of the arrangement. OIG also noted that the arrangement did not constitute grounds for imposition of sanctions under the Beneficiary Inducements Civil Monetary Penalty statute (Beneficiary Inducements CMP).

Background of Arrangement

The company provides certain “family-powered” therapy services, which are provided by clinicians via telehealth. To be effective, parents or caregivers of children must receive training and commit 15 or more hours weekly to support the provision of these services. The company helped create the foundation as a way to offer financial assistance grants to reduce this financial burden associated with the time commitment required.  According to the advisory opinion, the company donated approximately $300,000 to the Foundation for monthly grants ranging from $50 to $1,800 based on certain eligibility criteria. 

Because the patients’ therapy services are reimbursed by federal health care programs, OIG assessed for potential violations of, and enforcement under, the AKS and Beneficiary Inducement CMP. OIG explained that the problematic remuneration resulted from (1) the company’s role in creating the foundation, as well as its initial investments of staff and ongoing donations, and (2) the foundation’s payment of donated funds to patients/families, which are designed to reduce the financial burdens associated with receiving the therapy.

Basis for Favorable Opinion

OIG determined that the arrangement presented a low risk of fraud and abuse under the AKS, and that there were no grounds for sanction under the Beneficiary Inducements CMP based, in significant part, on the following:

• The arrangement is unlikely to lead to fraud or abuse of federal health care programs given that the family must have a family-powered therapy plan of care in place before applying for a grant, and that the grant is not likely to influence or incentivize the therapy provider to prescribe more services than required (since the donations go directly to the patient or family);
• Donations are not based on conditions, including referral of patients, and the foundation—which has absolute and independent discretion regarding the use of donations—is required to issue grants without consideration of the donor’s interests or the applicant’s choice of therapy provider;
• The company does not request and does not receive data regarding how the foundation uses its donations;
• The company currently has no employees on the foundation’s Board of Directors and will not have any employees or volunteers working for the foundation in the future;
• In identifying eligibility for grants, including the amount of the grant to be provided, the foundation (1) uses reasonable, verifiable, and uniform measures of financial need which are applied in a consistent manner, and (2) does not take into account whether the patient or family used the company as the provider of the therapy services; and 
• The foundation anticipates marketing through methods that would not emphasize any therapy provider over another.

As is always the case for OIG advisory opinions, this advisory opinion is based on the specific facts provided by the requestors and is binding only on the requestors.  However, OIG’s analysis and opinion may serve as helpful guidance to those providers who seek to find creative solutions to helping patients and families receive necessary care.

Reed Smith will continue to follow developments related to health care fraud and abuse enforcement. For more information on this advisory opinion or the impact of OIG’s guidance on your business, or for advice on seeking an advisory opinion, please contact the author or a member of the Reed Smith health care team.