In an Advisory Opinion posted on June 4, 2015, the Office of Inspector General for the Department of Health and Human Services advised that a proposed arrangement involving financial assistance to individuals with chronic diseases would not constitute grounds for sanctions under either the provisions prohibiting inducements to beneficiaries or the Anti-Kickback statute. Advisory Opinion No. 15-06 builds on two previous Special Advisory Bulletins issued by OIG, in which the agency clarified that (1) bona fide, independent charities can provide cost-sharing subsidies to patients, even if the charities receive contributions from donors whose products are supported by the subsidies, and (2) a disease fund can serve only federal health care program beneficiaries without increasing fraud and abuse risks to those programs. [1]

Under the proposed arrangement, the charitable entity would offer financial assistance to individuals with their health insurance premiums, cost-sharing obligations for prescription drugs or devices, and incidental expenses associated with the treatment of various chronic diseases, including cancer. The charity would establish multiple “disease funds” and assess a patient’s eligibility for financial assistance under a specific disease fund based on the federal poverty guidelines. Funds would be provided to eligible applicants on a first-come, first-served basis, and eligibility determinations would not be based on the interests of donors to the program.

To fund the subsidies, the charity would solicit donations from a variety of sources, including pharmaceutical and device companies, individuals, and corporations. Donors would be free to change their donations at any time and may earmark contributions for specific disease funds. However, the charity would be governed by an independent Board of Directors whose members (or their immediate family members) could not be affiliated with (or have an ongoing relationship with) a donor. The charity would also provide donors only with limited information related to the aggregate number of applicants for assistance, the amount of assistance distributed, and projections for additional needed funds for the relevant disease funds.

Although OIG advised that two aspects of the proposed arrangement required scrutiny—(1) the donor contributions to the charity and (2) the charity’s assistance to patients—the agency ultimately advised that the arrangement would not constitute grounds for administrative action for the following reasons.

(1)       The donors’ payments to the charity were permissible contributions to the health care safety net for financially needy patients and entailed minimal risk of influencing referrals by the charity. In particular, OIG stressed the following factors:

  • The independence of the charity’s board;
  • The limitation that the charity can provide only limited aggregate data to its donors;
  • The requirement that a patient must select her health care provider, practitioner, or supplier, and have a treatment regimen in place before even applying for assistance; and
  • Limitations on donors’ earmarks such as requiring disease states to be broadly defined without reference to narrowing factors—such as the type of drug or disease treatment or the stage of the particular disease—and offering copayment assistance for all drugs that are covered by the patient’s primary insurer for treatment of the disease that is the subject of the fund.

(2)       The charity’s assistance to federal health care program beneficiaries presents a low risk of fraud and abuse and is not likely to influence any beneficiary’s selection of a particular provider or treatment. OIG emphasized that the charity determines a patient’s eligibility solely based on an objective measure of financial need and without consideration of the identity of the patients’ providers or relationship with any of the charity’s donors.

Advisory Opinion No. 15-06 provides detailed guidance that should be consulted by entities considering arrangements that offer financial assistance to patients.

[1] OIG, November 2005 Special Advisory Bulletin on Patient Assistance Programs for Medicare Part D Enrollees (70 Fed. Reg. 70623; November 22, 2005); OIG, May 2014 Supplemental Special Advisory Bulletin regarding Independent Charity Patient Assistance Programs (79 Fed. Reg. 31120; May 30, 2014).