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OIG Issues a Favorable Advisory Opinion on Vendor’s Offer of Gift Cards to Physician Practices for Recommending the Vendor’s Services

The Office of Inspector General (OIG) started 2024 with a flurry of activity by issuing four new Advisory Opinions on January 3, 2024. In one of these Advisory Opinions, the OIG approved a vendor’s referral program that offered gift cards to physician practices that are existing customers in exchange for recommending the vendor’s services to prospective physician customers.  In doing so, the OIG adopts a position that directly contradicts the position that the Department of Justice (DOJ) espoused in multiple False Claims Act (FCA) settlements involving similar referral programs offered by electronic health record (EHR) vendors in which the DOJ alleged these programs violated the federal Anti-Kickback Statute (AKS).

OIG Advisory Opinion 23-15

The requestor (Requestor) is a vendor that provides consulting services to physician practices, including practice optimization services; data analytics services; EHR consulting services; and Medicare Merit-Based Incentive Payment System (MIPS) eligibility checks, training, auditing, and data submission.  MIPS ties physicians’ Medicare reimbursement to their performance on certain quality measures, cost measures, health information technology use, and practice improvement activities. Physician practices that perform well on MIPS receive higher Medicare reimbursement, and physician practices that perform poorly receive reduced Medicare reimbursement. Of note, the Requestor acknowledged that some of its services could result in customers receiving higher reimbursement, though the Requestor’s fees are not tied to the amount of reimbursement clients receive. 

The Requestor proposed to give its current customers who recommend the Requestor’s services to prospective physician practice customers a $25 gift card per recommendation and an additional $50 gift card for each successful recommendation. 

The OIG determined that the Requestor’s proposed arrangement does not implicate the AKS, because none of the Requestor’s services are or would be paid for, in whole or in part, directly or indirectly by a Federal health care program, and the Requestor does not provide any items or services that may be paid by Federal health care program.  While the Requestor’s services might result in higher MIPS-related payments from the Medicare program, the Requestor’s gift cards would not be in return for making referrals for, purchasing, arranging for, or recommending any items or services for which payment may be made by Federal health care programs. 

EHR Settlements

The OIG’s analysis in Advisory Opinion 23-15 seemingly contradicts the DOJ’s position in at least three FCA lawsuits involving similar referral programs offered by EHR vendors. Between 2017 and 2021, the DOJ settled at least three separate lawsuits against CareCloud Health Inc.Athenahealth, Inc., and eClinicalWorks, respectively, all of which involved allegations that gift cards and payments made by the vendors to physician practices to recommend their services to prospective physician practice clients violated the AKS. Though like the Requestor, none of the EHR vendors furnished items or services paid for, in whole or in part, directly or indirectly by a Federal health care program, the DOJ alleged that the vendors’ referral payments were illegal kickbacks that tainted claims submitted by the vendors’ clients for federal incentive payments under MIPS and Meaningful Use Programs. Based on the complaints, the DOJ’s allegations lack an explanation for how these ‘kickbacks’ are in exchange for referrals for, the purchase of, arrangement for, or recommendation for the purchase of any items or services for which payment may be made by Federal health care programs, though the enormous financial penalties that can result from FCA violations may have persuaded the EHR vendors to nevertheless settle the lawsuits. Moreover, all three lawsuits include certain additional facts not present in the proposed arrangement in Advisory Opinion 23-15, including allegations that one of the vendors misrepresented the capabilities of its software; another of the vendors invited physicians to luxury sporting, entertainment, and recreational events; and all of the vendors offered referral bonuses substantially higher than the proposed $25-$50 gift cards proposed by the Requestor. 

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Rachel Yount is a Mintz attorney who focuses her practice on health care industry transactions. Her clients include hospitals, health systems and plans, physician organizations, and pharmacy benefit managers.