OIG Weighs In on CE Program Funding in Advisory Opinion
In June 2022, the Office of Inspector General (“OIG”) of the Department of Health and Human Services (“HHS”) issued an advisory opinion regarding the provision of CE programs by a healthcare provider (“HCP”) sponsor. Advisory Opinion 22-14 examines whether four proposed scenarios implicate and further violate the Federal Anti-Kickback Statute (“AKS”). The AKS is a criminal statute that makes it a crime to knowingly and willfully offer, pay, solicit, or receive any remuneration in any form, either directly or indirectly, to induce or reward another party for referrals of items or services paid by or reimbursable under a Federal healthcare program.
While Advisory Opinions are expressly limited to the facts and circumstances and applicably only to the requesting entity, healthcare providers and manufacturers looking to host or sponsor CE educational programs should be aware of the concepts contained in Advisory Opinion 22-14 as same represents OIG’s current thinking on the topic. Such entities should also consider the implications of such programs and whether the risk factors articulated are instructive to their contemplated practices.
In Advisory Opinion 22-14, OIG specifically assessed certain CE programs proposed by the coined “Requestor,” an ophthalmology practice specializing in cataract and refractive surgery. One ophthalmologist performs surgical procedures and three optometrists providing eye care in support of those surgeries. Roughly 50% of the surficial procedures Requestor performs are referred by local optometrists outside of the practice and 30% of those patients return to the referring optometrist for post-operative care that is co-managed by Requestor’s ophthalmologist.
Under each of the Proposed Arrangements, Requestor would offer annually two CE programs that would address new technology and pharmacological treatment protocols relevant to treating patients who require ophthalmic surgeries – with one program option consisting of a full-day, 6-hour CE credit and the other consisting of a shorter, evening 2-hour CE credit in accordance with local state accrediting requirements. Attendance would be open to all local optometrists in the Requestor’s area and would not be limited to only those optometrists that refer Requestor or otherwise consider past or expected prescribing or ordering of any industry sponsor products or services payable by the Federal health care programs. Further, attendees would not be required to refer Requestor as a condition of attendance. Expenses for the two program options would include a local venue rental; audio-visual support; modest, light food; and non-alcoholic refreshments. Additionally, the Requestor specified that the local venue would select an appropriately sized conference space conducive to educational programs (i.e., without any recreational or sporting activities taking place in tandem with the CE courses) convenient to the Requestor’s service area. Faculty for both the full-day and evening programs would include Requestor’s own ophthalmologist and optometrist with additional faculty selected from professional schools based upon first-hand professional experience in the CE course material. External faculty would be paid FMV honorarium and expenses incurred, which amount would not take into consideration the value of referrals or past or expected business generated for any industry-sponsored products or the Requestor.
Requestor proposed the following financing scenarios:
- Proposed Arrangement A: Requestor would cover all CE program costs and charge attendees a fair market value (FMV) registration fee. The FMV registration fee would be determined based upon the number of attendees and estimated expenses such that any revenue shortages or overages would not be substantial. If any shortfalls were to occur, the Requestor would pay for such expenses. Requestor would also donate any excess revenue to a local charity that neither bills nor provides health care services payable by the Federal health care programs (Local Charity).
- Proposed Arrangement B: Requestor would cover all CE program costs with no registration fee and would cover all costs without any outside funding. Essentially, the entire financial burden of the CE program would be borne by Requestor.
- Proposed Arrangement C: Requestor would not charge any registration fee to attendees but would seek funding from industry sponsors (e.g., medical device and pharmaceutical manufacturers). Requestor would pay for any expense shortfalls or alternatively donate any excess revenue received to a Local Charity.
- Proposed Arrangement D: Requestor would charge a registration fee to attendees that would be subsidized by the funding received from industry sponsorships for the programs. As with Proposed Arrangement C, Requestor would pay for any expense shortfalls or alternatively donate any excess to a Local Charity.
Under the Requestor’s proposed facts and circumstances, OIG concluded that each of the Proposed Arrangements implicate the AKS in that they could generate prohibited “streams of remuneration” if the prohibited intent were present. That said, OIG determined that in an exercise of its discretion, it would not impose administrative sanctions under Proposed Arrangement A given the “sufficiently low risk of fraud and abuse” under the AKS. However, OIG would have reason to impose administrative sanctions in its discretion under Proposed Arrangements B, C, and D on the grounds that those scenarios would pose “more than a minimal risk of fraud and abuse” under the AKS. OIG analyzed each of the four Proposed Arrangements separately as follows:
- Proposed Arrangement A: OIG concluded that this arrangement was sufficiently low risk because Requestor certified that the registration amounts Requestor proposes to charge and the anticipated number of attendees comport with the estimated amount of expenses, such that any revenue shortfall or overage would not be substantial. Additionally, there would be no industry sponsors or other sources of funding, other than the registration fees and in certain circumstances Requestor’s contribution to cover remaining expenses.
- Proposed Arrangements B and C: OIG concluded that Proposed Arrangements B and C posed more than minimal risk because such Arrangements were entirely funded by either Requestor (Proposed Arrangement B) or by industry sponsors or by industry sponsors in part and by Requestor in part (Proposed Arrangement C). As a result, the programs would be entirely free to attendees. OIG focused on this fact, stating that it has a “longstanding concern about the provision of free goods or services that have independent value to the recipient.” In this case, OIG noted that industry sponsorship of the attendance fees presented “heightened risk this remuneration could induce . . . prescrib[ing] or order[ing] a sponsoring company’s products . . . which could result in inappropriate patient steering or inappropriately increased costs to Federal health care programs.” Equally, Requestor’s coverage of such expenses presented the same risk that attendees and external faculty refer patients to Requestor resulting in inappropriate patient steering.
- Proposed Arrangement D: OIG concluded that Proposed Arrangement D posed more than minimal risk because the sponsorships Requestor received from industry to fund its CE programs covered costs Requestor would otherwise incur. In other words, the industry sponsorship funds discharged Requestor of such expenses, providing Requestor with impermissible remuneration. Additionally, OIG concluded that Requestor’s ability to use any excess funds to donate to a Local Charity likewise constituted impermissible remuneration.
Risk Factors in “OIG Special Fraud Alert: Speaker Programs” Instructive
Advisory Opinion 22-14 reiterates the well-established position of OIG that the provision of free goods or services to existing or potential referral goods or services payable under the Federal health care programs implicates the AKS. Notably, however; OIG diverges from traditional analysis and application of a fact-pattern scenario against the requirements of a relevant AKS safe harbor provision. Instead, OIG leads its analysis with a discussion of the OIG Special Fraud Alert: Speaker Programs (the “SFA”), discussed here. Specifically, OIG stated that while it recognizes the “overarching difference in scope” of the Proposed Arrangements compared to the speaker programs organized and paid for by industry as described in the SFA, it nonetheless found certain “suspect characteristics” identified in the SFA to be informative to its analysis of the Proposed Arrangements examined in Advisory Opinion 22-14.
OIG’s deduction is striking given that the Requestor itself is neither a pharmaceutical nor medical device manufacturer and half of the Proposed Arrangements do not contain sponsorship funding from such manufacturers. Remarkably, OIG does not state its rationale for drawing the direct correlation between such CE programs and what, in its view, are fundamentally problematic speaker programs. Rather, it states that educational CE programs “may constitute a vehicle to provide remuneration to referral sources in violation of [the AKS] in some circumstances.” OIG then introduces the SFA “suspect characteristics” by stating that both itself and the Department of Justice (“DOJ”) have investigated and resolved numerous fraud cases “involving allegations that remuneration offered and paid in connection with speaker programs” violated the AKS. OIG went on to note that the SFA itself “highlights the risks associated with speaker programs organized and paid for by pharmaceutical and medical device companies for health care professionals (“HCPs”).” (emphasis added).
Namely, OIG highlighted the following “suspect characteristics” from the SFA:
- A company sponsors a speaker program where little or no substantive information is actually presented.
- Alcohol is available or a meal exceeding modest value is provided to attendees.
- The program is held at a location not conducive to the exchange of educational information.
- Selection of HCP 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.
- A company pays HCP speakers more than FMV 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 HCPs.
OIG went on to conclude that the Proposed Arrangements did not present the “suspect characteristics” highlighted in the SFA. In fact, OIG took care to examine in detail the factors present in the Proposed Arrangements that, in its view, distinguished the scenarios from the SFA “suspect characteristics.” Explicitly, OIG identified the following:
- The content of the CE programs would address new technology and pharmacological practice treatment protocols relevant to treating patients who require ophthalmic surgeries (including Requestor’s patients).
- Faculty would possess first-hand professional experience that enables them to provide particular experience input on the course program topics.
- Each of the CE programs would be approved for CE credit by the appropriate CE certification board.
- Only modest food (i.e., bagels, coffee, pizza, and non-alcoholic refreshments) would be provided.
- The venue would be Requestor’s offices or another appropriately sized conference space conducive to educational presentations convenient to Requestor’s service area.
- The CE programs would not be held in conjunction with sporting or other recreational events.
- The CE programs would be open to all local optometrists; attendance would not be limited to optometrists who refer to Requestor.
- There would be no requirement that attendees refer patients to Requestor as a condition of attendance.
- Neither the selection of attendees nor the selection of external faculty would be based on referrals to Requestor or past or expected prescribing or ordering of any industry sponsor’s items or services payable by Federal health care programs.
- External faculty would be paid an honorarium plus expenses at FMV that would not take into account the volume or value of past or expected business for Requestor or any industry sponsor.
Notwithstanding the foregoing differentiating factors present across all Proposed Arrangements, OIG nonetheless concluded that only Proposed Arrangement A provided sufficiently minimal risk to warrant abstaining from imposing administrative sanctions. This seems to suggest that the mere absence of such “suspect characteristics” alone is insufficient to minimize the level of risk to a sufficiently low limit. Consistent with its position in the SFA, the presence of one or more of “suspect characteristics,” however; appears to be viewed by OIG as clearly indicative of conduct rising to a significant risk of fraud and abuse.
Companies looking to conduct CE programs should ensure that, at a minimum, such programs are absent from any of the “suspect characteristics” to ensure that they are appropriately structured and minimize any potential “red flags” of fraud and abuse risk. This includes a review of all CE program materials (e.g., slide deck presentations, training materials, brochures, and other marketing materials, etc.). Additionally, companies should take due diligence measures to appropriately accredit the CE program in accordance with applicable state credit criteria and confirm the credentials of CE program personnel. Likewise, the CE program should focus on current, novel information that is presented by personnel who have the requisite knowledge and experience to provide first-hand experience on such topics. Moreover, the CE programs should be provided at venues that are conducive to educational discussion and absent from any recreational or entertainment. Also, companies should limit meals and refreshments to those that are modest in nature and prohibit the provision of alcoholic beverages. Finally, CE program personnel and attendees should not be selected (or compensated in the case of program personnel) in a manner that considers past or future generation of business and any compensation provided to CE program personnel must be consistent with FMV. In doing so, companies should also establish policies and procedures that create clear, objectionable criteria to determine whether such payments comport with FMV.
For those companies in a position of referral, it is further recommended additional steps are taken to address other areas of concern identified by OIG, discussed below.
Requestor’s Status as a Direct Referral Source Fundamental Factor
OIG’s analysis of Proposed Arrangement D diverges from the prior assessments under Advisory Opinion 22-14 in that it places great emphasis on the role of entities and persons in a position to generate business reimbursable by the Federal health care programs in rendering the scenario impermissible. More specifically, OIG highlights that as an ophthalmology practice, Requestor serves as a “potential direct referral source for sponsoring medical device and pharmaceutical companies.” In drawing this conclusion, OIG points to the Requestor’s role in providing direct patient care as the pertinent factor, noting that other CE program organizers who commonly receive full or partial program subsidies from industry sponsorship are independent entities outside of a position to refer.
While OIG does not state so explicitly, the agency seems to imply that other third-party agencies abstention from patient involvement (and referral) mitigates the risk of potential inducement. This position aligns with OIG’s historic view on the topic that grants to independent, accredited third-party education providers, medical societies, and the like raise “sufficiently low risk of fraud and abuse” so long as such CE programs comply with the principles articulated in the 2003 OIG Compliance Program Guidance for Pharmaceutical Manufacturers. On the other hand, Advisory Opinion 22-14 conversely appears to submit that a CE program hosted by a referral recipient of medical device or pharmaceutical manufacturer sponsorship and attended by referral sources (either of industry products or services payable by the Federal health care programs) is problematic considering the AKS. Consequently, the Requestor’s status as a “direct referral source” in its role as an HCP seems to be central to OIG’s conclusion that Proposed Arrangement D presents “more than minimal risk” warranting administrative sanctions. Curiously too, OIG is silent on the issue of the FMV registration fee charged by Requestor to attendees under the Proposed Arrangement D analysis despite discussion of same under Proposed Arrangement A. The omission in Proposed Arrangement D may indicate further support for the proposition that Requestor’s referral position is central to OIG’s analysis.
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