Insights & Resources

The U.S. Department of Health and Human Services, Office of Inspector General (OIG) posted a favorable Advisory Opinion (23-11) that allows a medical device manufacturer (Manufacturer) to subsidize Medicare cost-sharing obligations as part of a U.S. Food & Drug Administration (FDA)-approved clinical study involving a Category B Investigational Device Exemption.  OIG concluded that the subsidy would pose a sufficiently low risk of fraud and abuse under the Anti-Kickback Statute (AKS) and would not result in the imposition of sanctions under the Beneficiary Inducements provision of the Civil Monetary Penalty Law (CMPL).
 
Manufacturer’s medical device-based therapy (the “System”) is designed to modulate the strength of cardiac muscle contraction in patients with heart failure.[1]  Under the proposed arrangement, the Manufacturer would pay the cost-sharing amounts that Medicare beneficiaries otherwise would owe for reimbursable items and services provided during the study.  The subsidy would be limited to a maximum of $2,000 per study participant, and it would be paid directly to the study site and study investigator.  Medicare beneficiaries would not incur any expenses related to their participation in the study, unless their cost-sharing obligations exceeded $2,000. The subsidy would not be publicly advertised for enrollment purposes, but potential participants would be advised of the subsidy as part of the informed consent process.
 
OIG determined that the subsidy would implicate the AKS and the Beneficiary Inducements CMP, and that no safe harbor or exception applied.  Nevertheless, OIG would not impose sanctions because:
 

• this subsidy appeared to be a reasonable way to promote enrollment, prevent attrition, and facilitate the socioeconomic diversity of the study population by reducing potential financial barriers to their participation;

 

• this subsidy posed a low risk of overutilization or inappropriate utilization of items and services payable by a Federal health care program because this subsidy would not be publicly advertised and was capped at 1,500 participants who met certain eligibility criteria to participate;

 

• as a CMS-approved study, appropriate safeguards and patient protections were included, such as compliance with study protocols, and oversight and monitoring by an Institutional Review Board; and

 

• this subsidy was different from other problematic subsidies because this subsidy was related only to the Medicare reimbursable items and services furnished as part of the study, the System was intended as a one-time treatment, and the Manufacturer did not anticipate that the System’s use would prompt study participants to use any other products it manufactured or had under development in the future.

 
A complete copy of Advisory Opinion 23-11 is available at: https://oig.hhs.gov/compliance/advisory-opinions/23-11/
 
Should you have any questions regarding the above, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com.