Feds let Medicare provider give away $20 grocery cards to lure patients

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The Department of Health and Human Services has given qualified approval for a Medicare provider to give away $20 grocery gift cards to induce seniors to get more taxpayer-funded health screenings, despite concerns the promotion could run afoul of federal anti-kickback laws.

The HHS inspector general, the agency’s internal watchdog, gave the OK in a little-noticed advisory opinion earlier this year, declaring it would not punish the provider’s good intentions even if the giveaway strayed into questionable legal territory.

“The goal of the gift card program was to incentivize patients to receive health screenings and other clinical services,” the inspector general wrote. ”…Although the Proposed Arrangement could potentially generate prohibited remuneration under the anti-kickback statute if the requisite intent to induce or reward referrals of Federal health care program business were present, the Office of Inspector General would not impose administrative sanctions.”

HHS doesn’t normally identify the names of organizations or people who requested advisory opinions, and officials declined to identify the medical facility that is considering the grocery card promotion. Under the plan, the provider would pay the cost of the gift cards out of its own budget, meaning no tax dollars would be used for the promotion. But because the grocery card giveaway would entice seniors to get screenings and other care that would then be charged to taxpayers under Medicare or Medicaid, the legal issues were kicked to the inspector general.

The advisory opinion stands in contrast to courts which have deemed similar cases to be illegal in the past.  Just last year, Walgreens pharmacy had to pay the government $7.9 million after a court ruled it was illegal to try to woo Medicare and Medicaid patients with free gifts.  According to court records, Walgreens offered patients incentives “in the form of gift cards, gift checks and other similar promotions that are prohibited by law, to transfer their prescriptions to Walgreens pharmacies.”

At the time, the inspector general came down against the free gifts.

“This settlement makes clear that corporations seeking increased profits over their patients’ needs will pay a substantial price,” IG Daniel Levinson said at the time.

The legal concerns stem from Section 1128B(b) of the Social Security Act, known as the “anti-kickback statute” which “makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program,” investigators said.

There are many risks surrounding rewards for medical practices, the IG said.

“First, such programs can corrupt the decision-making process, resulting, for example, in over-utilization, increased costs, or inappropriate medical choices. Second, there is potential harm to competing providers and suppliers who do not, or cannot afford to, offer incentives to generate business. Third, these practices could negatively affect the quality of care given to beneficiaries,” the report noted.  “As providers and suppliers race to the bottom by offering increasingly valuable goods or services, the incentive to offset the cost of these inducements by cheating on the quality of the Medicare or Medicaid item or service increases proportionately.”

But the act, which governs Medicare and Medicaid, also makes exceptions when the goal of the giveaways isn’t profit, but to promote general health.  Certain rewards are allowed if they promote “access to care and poses a low risk of harm to patients and Federal health care programs.”

The inspector general thinks the grocery cards fall into the latter category for several reasons.  For starters, Medicare and Medicaid beneficiaries are often assigned a health care provider based on location and family ties, and officials doubted people would take the time to fill out paperwork, petition the government, and drive longer to a different medical facility just to get a $20 gift card.

And the grocery cards wouldn’t be advertised as incentives to draw in a broader sector of the public.  The existence of the giveaway program would only be made known to a select few: Medicare and Medicaid patients assigned to the medical facility who have not been coming in for treatment.  Furthermore, the medical facility is planning to pay for the cards itself, without government funds, and is limiting eligibility to one $20 card offer a year per person.

“We conclude that the proposed arrangement would pose a minimal risk of fraud and abuse under the anti-kickback statute,” investigators concluded.

But, the IG noted, the entire idea has yet to be put into practice.  Its opinion is only for advice, and the grocery cards could draw the attention of investigators again if something goes wrong.

“The OIG reserves the right to reconsider the questions and issues raised in this advisory opinion and, where the public interest requires, to rescind, modify or terminate this opinion,” investigators warned.

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