Incentivizing patients to attend preventative care appointments: What the OIG says

On Dec. 23, 2020, the Department of Health and Human Services Office of the Inspector General (OIG) issued Advisory Opinion 20-08 approving an arrangement proposed by a federally qualified health center (FQHC) to offer gift cards to incentivize pediatric patients to attend rescheduled preventative and early intervention care appointments.

While gift cards themselves have been a topic of several advisory opinions in the past, this opinion offers insight as to how the OIG may distinguish acceptable inducements to support care from more problematic programs that offer beneficiary inducements merely as an incentive for patients to obtain federally reimbursable items and services.

Related: Financial incentives work to boost health initiatives

FQHCs are community-based health care providers that receive funds from the Health Resources and Services Administration (HRSA) health center program to provide primary care services and qualified preventive health services in underserved areas. FQHCs must meet a stringent set of requirements, including providing care on a sliding fee scale based on ability to pay and operating under a governing board that includes patients.

Proposed arrangement

Under the proposed arrangement, the requestor, a FQHC that serves predominately low-income individuals (requestor), sought to incentivize pediatric patients (under the age of 19 years old) who have missed two or more previously scheduled preventative or early intervention care appointments with the Requestor in the previous six months (eligible patients).

More specifically, the requestor would contact the eligible patients (or their parents or guardians) by phone and notify them of the opportunity to receive a one-time $20 gift card upon rescheduling and attending a care appointment, and furnish the gift card at checkout following the rescheduled appointment. During the appointment, in addition to receiving necessary services, the requestor planned to educate eligible patients on the importance of primary care and inform them of their options to facilitate attendance at future appointments.

The gift card would be offered to an eligible patient irrespective of his health insurance status or ability to pay for services. Each eligible patient would choose one $20 gift card from four select retailers, one of which is a “big-box” store, i.e., one that sells a wide variety of items.

The stated goal of the incentive program is to “improve the attendance rate for eligible patients,” based on internal data analyzed by the requestor indicating that approximately 30% of its pediatric patients miss one or more care appointments. The requestor indicated that it would reevaluate the program on an annual basis to determine whether it is effective in improving the attendance rate for eligible patients. If the success rate of the program were to fall below 50%, the requestor would consider modifying or discontinuing the program.

OIG analysis

The OIG concluded that although the proposed incentive program could potentially generate prohibited remuneration under the civil monetary penalties (CMP) law and the federal anti-kickback statute (AKS), the OIG would not impose administrative sanctions in connection with the arrangement.

The AKS criminalizes knowingly and willfully offering or paying any remuneration to induce a referral of services reimbursable by a federal health care program. The CMP law prohibits offering or transferring remuneration to any Medicare or Medicaid beneficiary that is likely to influence the beneficiary’s selection of a provider or supplier of a federally reimbursable item or service.

According to OIG, the gift card incentive program proposed by the requestor would implicate the AKS because the $20 gift card would constitute remuneration intended to influence eligible patients, at least some of whom would likely be federal health care program beneficiaries, to select the FQHC for future items or services (specifically, attending their rescheduled care appointments or seeking other federally reimbursable items or services from the FQHC in the future).

Despite the implication of the AKS and the CMP law, the OIG determined that the gift card incentive program would present a low risk of fraud and abuse under both laws based on the presence of the following safeguards:

• The pool of eligible patients is narrowly defined to include only those who had an established relationship with the FQHC and who had previously scheduled and missed two appointments in the last six months;
• The proposed arrangement is unlikely to increase federal healthcare program costs or lead to overutilization because the services were medically necessary and the arrangement targeted chronic underutilization of preventative and early intervention services;
• The proposed arrangement was unlikely to harm competition because the remuneration— the $20 gift card—was of “modest value” and could only be furnished one time, even if the Eligible patient continued to miss appointments; and
• The proposed arrangement was narrowly tailored to accomplish the FQHCs goal of improving attendance rates of pediatric appointments. Furthermore, the one-time $20 gift card is paired with patient education, an eligibility verification process, documentation requirements, and an annual effectiveness review.

As with all advisory opinions, only the party that requested the advisory opinion may rely on it as a source of binding legal authority.

Prior OIG decisions

In the past, the OIG took the position that an item was a “cash equivalent” if it was “convertible to cash,” like a check. Based on this statement, most providers shied away from offering gift cards to patients. However, in 2016, the OIG refined this definition, stating, “OIG considers ‘cash equivalents’ to be items convertible to cash (such as a check) or that can be used like cash (such as a general-purpose debit card, but not a gift card that can be redeemed only at certain stores or for a certain purpose, like a gasoline gift card).”

In December 2020, the OIG published regulations amending certain existing safe harbors and implementing new safe harbors to the AKS. In promulgating the new “Arrangements for Patient Engagement and Support to Improve Quality, Health Outcomes, and Efficiency Safe Harbor” (safe harbor), the OIG included additional guidance regarding the treatment of gift cards under the AKS. In the commentary for the applicable Safe Harbor (limited to in-kind remuneration), the OIG opined that “some gift cards would be considered in-kind remuneration eligible for safe harbor protection.”

The OIG proceeded to specify that “gift cards that can be redeemed only for certain categories of items (such as fuel-only gift cards redeemable at gas stations) could meet the in-kind requirement under this safe harbor. Gift cards satisfy the in-kind requirement only if their potential use is limited to certain categories of items or services that meet the conditions of the safe harbor.” See, 85 Fed Reg. 77684, 77790 (2020). The OIG also provided the example of a gift card for a service that delivers ingredients necessary for a healthy meal, which would meet the in-kind requirement and would be protected if the other safe harbor conditions are satisfied. Conversely, the OIG clarified that it considers gift cards offered by large retailers or online vendors that sell a wide variety of items (such as big-box stores) to be cash equivalents and therefore not eligible for protection under this safe harbor, as they “could easily be diverted from their intended purpose or converted to cash.”

Practical takeaways

The OIG’s decision in Advisory Opinion 20-08 seems to be consistent with the new guidance under the new AKS safe harbor, primarily because the OIG believes that “big box” gift cards can be diverted from their intended use or converted to cash.

Providers considering the best way to incentivize necessary patient care should think critically about the structure of any incentive programs and the types of incentives they provide, including offering lower-risk alternatives such as items or services that directly promote access to care and which may be protected by an exception. We suggest any provider seeking to implement or modify an incentive program seek guidance in developing the appropriate structure.

Vasilios J. (Bill) Kalogredis has been advising physicians, dentists, and other health care professionals and their businesses as to contractual, regulatory and transactional matters for over 45 years. He is chairman of Lamb McErlane’s health law department. Contact him at bkalogredis@lambmcerlane.com or 610-701-4402.

Rachel E. (Lusk) Klebanoff, is a senior associate at the firm who focuses on health law and health care litigation. She represents physicians, dentists, medical group practices, and other health-related entities in transactional, regulatory, and compliance matters. Contact her at rlusk@lambmcerlane.com or 610-701-4416.