On June 29, 2022, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued Advisory Opinion No. 22-14 regarding an ophthalmology practice’s proposed options to fund continuing education (CE) programs for local referring optometrists, including free or subsidized CE programs. The advisory opinion is significant because, while OIG concludes that CE programs can be structured under certain facts and circumstances to pose sufficiently low risk under the federal Anti-Kickback Statute, where optometrists are paying anything less than fair market value, such offering presents more than a minimal risk of fraud and abuse that could lead to administrative sanctions.
As with all OIG advisory opinions, the conclusions apply only to the proposed arrangement. However, as provider- and life sciences-funded CE programs grow more common in the industry, this opinion can provide a narrow path forward for providers considering offering similar programs.
Background
The requestor, an ophthalmology practice, proposed offering CE programs for local optometrists along with four funding options for the CE programs. Under each funding option, the CE programs would be open to all local optometrists in the requestor’s service area, which would include local optometrists in a position to refer surgical procedures to the requestor as well as optometrists participating in co-management arrangements with the requestor for post-operative care. OIG did not express an opinion about the requestor’s co-management arrangements, which generally allow, under Medicare billing, a post-cataract patient to return to the optometrist for post-surgical care. The CE programs would be educational in nature, meeting state and accrediting body requirements for CE credit, and would address new technology and pharmacological practice treatment protocols relevant to treating patients who require ophthalmic surgeries, including the requestor’s patients.
OIG engaged in a facts-and-circumstances analysis of the four proposed financing options for the CE program attendees. The four proposed options and the OIG’s findings with respect to each option are addressed below.
OIG Approved: Attendees Pay Fair Market Value Registration Fees
Under proposed arrangement A, the requestor would charge attendees a registration fee consistent with fair market value for such CE programs. There would be no industry sponsors or sources of funding other than the registration fees and, in certain circumstances, the requestor’s contribution to cover remaining expenses. In this scenario, and in combination with the low-risk aspects of the CE programs discussed below, OIG concluded that this arrangement would be sufficiently low risk under the federal Anti-Kickback Statute and would not impose administrative sanctions.
OIG Disapproved: Attendees Pay Less Than Fair Market Value
Under proposed arrangements B and C, no registration fee would be charged to attendees. The CE programs would be free to all local optometrists — funded entirely by the requestor in the case of proposed arrangement B; or funded entirely by industry sponsors, or funded in part by industry sponsors (e.g., medical device and pharmaceutical companies) and in part by the requestor, in the case of proposed arrangement C.
OIG reiterated its longstanding concern about the provision of free goods or services to existing or potential referral sources and concluded that the independent value associated with the free CE programs could induce referral sources to refer surgical patients in violation of the federal Anti-Kickback Statute. For proposed arrangement C, in which the CE programs would receive funding from medical device manufactures and pharmaceutical companies but attendees would not be charged a registration fee, OIG concluded that there is heightened risk that this remuneration could induce the requestor, external faculty and the optometrist attendees to prescribe or order a sponsoring company’s products.
Finally, under proposed arrangement D, the requestor would charge a registration fee to attendees, and would solicit and receive funding from sponsoring medical device and pharmaceutical companies for the CE programs. Although OIG recognized that CE programs are often fully or partially subsidized by commercial sponsors that provide educational grants or other funding to CE program organizers, OIG distinguished such subsidies from the proposed arrangement. The OIG expressed concern that by paying sponsorships to the requestor to fund its CE programs, the medical device manufacturers and drug companies would pay expenses that the requestor otherwise would incur, which could serve as a potential inducement for prescribing and ordering a sponsor’s products; i.e., OIG was concerned with the aggregate relationship whereby such sponsorship could impact the requestor and also provide CE remuneration to optometrists. Accordingly, OIG could not conclude that proposed arrangement D would pose a sufficiently low risk of fraud and abuse under the federal Anti-Kickback Statute such that it would not potentially seek to impose administrative sanctions.
Special Fraud Alert: Speaker Programs
OIG referred to its 2020 Special Fraud Alert: Speaker Programs, which highlights the risks associated with speaker programs organized and paid for by pharmaceutical and medical device companies for healthcare professionals, and added a caution that programs should be reviewed and assessed for the suspect characteristics identified in the special fraud alert.
Although OIG acknowledged how this special fraud alert was distinguishable from the facts in the requestor’s proposed arrangements, the OIG referenced the special fraud alert’s suspect characteristics under the federal Anti-Kickback Statute whereby: (1) a company sponsors a speaker program where little or no substantive information is actually presented; (2) alcohol is available or a meal exceeding modest value is provided to attendees; (3) the program is held at a location not conducive to the exchange of educational information; (4) selection of provider speakers or attendees is based on past or expected revenue that these individuals have or will generate by prescribing or ordering the company’s products; and (5) a company pays provider speakers more than fair market value for the speaking service or pays compensation that takes into account the volume or value of past business generated or potential future business generated by the providers.
OIG acknowledged the requestor proposed facts that may mitigate and distinguish these criteria, but as stated above, it still had concerns with the funding options where optometrists did not pay fair market value for CE.
Key Takeaways
- The provision of free or reduced-cost goods or services to existing or potential referral sources can implicate the federal Anti-Kickback Statute. Furthermore, even in the context of educational events that are common in the industry, covering costs that a recipient would otherwise have to pay also confers a benefit that can implicate the federal Anti-Kickback Statute.
- Proposed arrangements should be analyzed in view of the suspect characteristics the OIG has traditionally perceived as problematic and highlighted in the special fraud alert discussed above.
- Analysis is fact-specific, depending on the streams of remuneration and the parties involved. Notably, in the fact patterns for the proposed arrangements, there were various positive facts, but these did not sway the OIG. Specifically, OIG highlighted certain facts distinguishing the proposal from the suspect characteristics in the special fraud alert, including that: (a) the food and beverages proposed to be provided at the CE programs were basic and modest; (b) no entertainment was offered at the CE programs; (c) the invitation was open to all optometrists, not just referral sources, and faculty would not be selected based on past or future referrals; and (d) honorarium fees paid to faculty would be set at fair market value.
- Third-party sponsors that have financial interests, such as drug manufacturers, could be viewed as providing separate prohibited remuneration by sponsoring such programs implicating the federal Anti-Kickback Statute.
- Existing continuing education programs ideally should be tailored to fit within this OIG guidance to reduce risk.
While the advisory opinion is binding only on the requestor, its conclusions and analysis are informative for the wider industry. While there could be other factors on a case-by-case basis that would allow such programs, OIG’s guidance in this advisory opinion reaffirms the fraud and risks associated with the potential exchange of remuneration and referrals in connection with the sponsored CE programs. Accordingly, it is important to exercise caution and careful thought with such programs.
Please contact one of the authors or any member of McGuireWoods’ Healthcare Department for additional information on this advisory opinion or other related compliance concerns.
The authors thank McGuireWoods summer associate Renee C. Kumon for assistance preparing this legal alert. She is not licensed to practice law.