In a March 11 advisory opinion, the Office of Inspector General (“OIG”) of the Department of Health and Human Services authorized a medical device manufacturer to pay Medicare out-of-pocket costs for subjects enrolled in a trial clinic sponsored by the manufacturer and involving the therapy of the manufacturer. .
The OIG has indicated that it will not impose administrative penalties, despite the fact that the proposed arrangement would generate compensation prohibited by the federal Anti-Kickback Act (“AKS”) and prohibition on Beneficiary Inducement CMP.
Arrangement addresses socio-economic barriers for potential participants while maintaining study integrity
The therapy, which involves the injection of the subject’s bone marrow cells into the subject’s heart as a potential treatment for heart failure, is currently available for clinical use in the United States under an Investigational Device Exemption FDA Approved Class B (“IDE”).
Studies involving an IDE device are eligible for Medicare coverage of the device and routine care services and items as long as the study is specifically approved by the Centers for Medicare and Medicaid Services (“CMS”). The study at issue here was approved for Medicare coverage and had to meet a number of approval criteria, including a determination that:
- The main objective of the study is to test whether the device improves the health outcomes of appropriately selected patients;
- The rationale for the study is well supported by available scientific and medical information, or is intended to clarify or establish the health outcomes of interventions already commonly used in the clinic; and
- The results of the study should not unduly duplicate existing knowledge.
Under the proposed arrangement, the manufacturer would pay directly to an institution for the costs of the Medicare-reimbursable device and the costs of routine care services and items that Medicare beneficiaries participating in the study would otherwise owe. These costs per Medicare beneficiary (estimated at over $1,300) were considered prohibitive for many subjects due to their socioeconomic status. As such, the proposed arrangement would ensure that Medicare beneficiaries participating in the study would not incur any additional out-of-pocket costs other than unmet deductibles under Medicare Part B.
Additionally, the manufacturer stated that information regarding this proposed arrangement would not be shared with subjects until they receive the informed consent documents. This would preserve the study’s blinding procedures and ensure that subjects did not know if they were in the study’s control group. This latter aspect resulted from the manufacturer’s desire not to require providers to collect cost-sharing amounts from control group recipients, as control group subjects do not have the potential to receive therapeutic benefit over the course of the study.
The arrangement is considered compensation under the AKS and inducement of the CMP recipient
The OIG noted that the proposed arrangement involved compensation that would directly involve the Federal AKS and the recipients’ incentive CMP.
The AKS defines compensation as “the transfer of any item of value, directly or indirectly, overtly or covertly, in cash or in kind.” Similarly, the CMP on Beneficiary Incentives defines compensation as “the transfer of items or services free of charge or for a value other than fair market value”. However, the Beneficiary Incentive CMP contains an exception to the term “compensation” for waivers of coinsurance and amounts deductible by a person if: (i) the waiver is not offered in the context of advertising or a solicitation; (ii) the person does not systematically waive coinsurance or deductible amounts; and (iii) the person waives coinsurance and deductible amounts after determining in good faith that they are in financial need or fails to collect coinsurance or deductible amounts after making reasonable efforts to collect.
Here, the OIG determined that the proposed arrangement involved the AKS because the compensation offered could incentivize Medicare beneficiaries to participate in the study to receive reimbursable benefits, and those benefits could come from a practitioner, a particular service provider or supplier. In addition, the Beneficiary Incentives CMP was involved because the proposed arrangement involved the ability for investigators and sites to bill Medicare for study-related items and services and offered guaranteed cost-share payment. with beneficiaries, which in some circumstances a surveyor or site may not be able to collect in full.
The OIG determined that the proposed arrangement was reasonable and posed minimal risk of fraud and abuse
OIG analysis determined that the proposed arrangement would present a sufficiently low risk of fraud and abuse and was unlikely to result in overuse of services and increased costs to the federal care program health for the following reasons:
- The proposed arrangement seemed like a reasonable way to promote enrollment, particularly when a portion of participating beneficiaries would not have the potential to receive therapeutic benefit during the study. The cost-sharing grants offered would help facilitate sufficient study enrollment that would otherwise be impeded due to a participant’s financial constraints. Cost-sharing grants would also encourage completion of the entire course of the study because required follow-up clinical visits, in the absence of a grant, would require recipients to pay. By removing this financial barrier, the study was able to achieve accurate results and reduced the likelihood that recipients would not complete the study in its entirety.
- The proposed arrangement would present a low risk of overuse or inappropriate use of items and services paid for by Medicare. The proposed arrangement included various guardrails that mitigate the risk of inappropriate use or inappropriate cost increases, and the manufacturer has certified that it will not advertise the availability of cost-sharing subsidies. These safeguards included that recipients had to meet the enrollment criteria set out in the study and execute an informed consent agreement, investigators had to follow the study protocol, and were subject to IRB oversight. and study enrollment was capped at 260 subjects. In addition, CMS approval of the study meant that the study met criteria to ensure appropriate patient protection and that the study design was appropriate to answer questions important to the Medicare program and its beneficiaries.
- The proposed arrangement stood out from problematic bootstrapping arrangements, such as those in which manufacturers initially offer subsidies to lock in future use of a reimbursable item or service. Although beneficiaries participating in the study may continue to receive therapy-related follow-up services, the manufacturer is unable to financially benefit from these follow-up services. The manufacturer has indicated that the therapy is intended to be a one-time treatment and that it does not anticipate future use of the therapy or its other products by study participants.
Health Industry Washington Watch previously covered an advisory opinion issued by the OIG on February 4, 2022 involving the approval of a similar agreement involving a bequest to a nonprofit hospital to reduce costs for pediatric patients. Although the OIG has authorized this proposed arrangement, there can be no assurance that similarly structured cost grants would be immune from administrative penalties. Nonetheless, the analysis of the arrangement described in this latest advisory opinion sheds some light on how similar future arrangements are likely to be reviewed and analyzed by the OIG.