OIG Approves Association to Present Free DME Samples


On Could 7, 2018, the Division of Well being and Human Providers Workplace of Inspector Common (“OIG”) printed Advisory Opinion 18-02, which authorized an association permitting a sturdy medical gear (“DME”) distributor to supply sufferers with product samples for free of charge to the affected person. OIG acknowledged that it will not impose sanctions in opposition to the events for violations of the Anti-Kickback Statute (“AKS”) as a result of the association accommodates applicable safeguards or the Civil Financial Penalties regulation (“CMP”) as a result of the requesting entity is just not a “supplier, practitioner, or provider” for functions of the CMP.


Requesting Celebration

The requesting social gathering (“Requestor”) is a distributor and vendor of sure DME merchandise, together with ostomy merchandise (“Merchandise”). Nonetheless, Requestor doesn’t personal or function entities that invoice Medicare or any state well being care applications for Merchandise. Requestor licensed that sufferers might buy Merchandise from DME suppliers and that the Merchandise are sometimes reimbursed by Medicare, Medicaid or business insurance coverage applications. Requestor additionally licensed that sufferers are free to change amongst Product producers and/or suppliers.

Proposed Association

Sufferers and/or their well being care supplier might request a Product pattern on the affected person’s behalf. Below the proposed association, Requestor will present Product samples to sufferers, which can embrace Medicare and Medicaid beneficiaries, at no cost to the affected person. The sufferers usually are not dedicated to any future purchases in change for receipt of the Product pattern. Sufferers might solely obtain one pattern per Product configuration and dimension. A Product pattern is meant to final the affected person two to 3 days. When a affected person receives a Product pattern, the pattern package deal consists of the next:

  • A listing of all DME suppliers of the Product;
  • A Product brochure;
  • A discover stating that the Merchandise are offered to the affected person at no cost and can’t be resold or billed to 3rd events;
  • Directions to be used of the Product pattern; and
  • A brochure in regards to the Product producer. The retail worth of the Product pattern package deal ranges from $6-$22 relying upon the particular Product offered.

Requestor makes use of a 3rd social gathering service supplier to course of Product pattern requests and to manage consumer satisfaction surveys to sufferers who obtain Product samples. This third social gathering doesn’t promote, distribute or provide Merchandise. The third social gathering is paid honest market worth for providers offered to Requestor and such compensation is just not primarily based upon the quantity or worth of Product gross sales.

Pursuant to the proposed association, to ensure that sufferers to obtain Product samples, the next should happen:

  1. Affected person (or the affected person’s well being care supplier) submits a Product pattern request type to Requestor.
  2. Affected person info is communicated on to the third social gathering service supplier.
  3. The third social gathering service supplier has carried out protocols to make sure that sufferers don’t obtain a couple of Product pattern of the identical Product dimension and configuration.
  4. The third social gathering service supplier then submits the knowledge to an unaffiliated success middle that contracts with the Requestor to ship the Product samples. The Requestor compensates the success middle through a payment of $5 per fulfilled pattern request plus transport prices. The success middle additionally receives a flat payment of $200 monthly whatever the variety of Product samples that it fills every month. The success middle doesn’t promote or distribute Merchandise outdoors of the pattern requests.
  5. The third social gathering service supplier then conducts affected person satisfaction surveys over the following ten weeks. Requestor has licensed that sufferers usually are not provided any extra Product samples, suggestions for future Merchandise or different objects of worth as part of this course of or in change for his or her participation within the affected person satisfaction surveys.

Additional, Requestor has the correct to audit each the third social gathering service supplier and the success middle to substantiate that sufferers didn’t obtain a couple of Product pattern and that the samples shipped are these requested by the Sufferers.

OIG Evaluation

Civil Financial Penalties Regulation

The CMP prohibits the provide or switch of things or providers at no cost or lower than honest market worth to Medicare and/or Medicaid beneficiaries that the offeror is aware of or ought to know is prone to affect the beneficiary’s number of a specific supplier, practitioner or provider for objects or providers which are reimbursable by federal well being care applications.

OIG decided that the samples offered by Requestor wouldn’t affect a beneficiary to make future purchases from any specific supplier, practitioner or provider. Additional, Requestor licensed that it doesn’t personal or function any entities that submit claims to Medicare or Medicaid; due to this fact, it’s not a “supplier, practitioner, or provider” for functions of this evaluation. As such, the CMP doesn’t apply to the proposed association. Nonetheless, as a result of the Product samples might affect a affected person to self-refer to the Merchandise sooner or later, the proposed association might implicate the AKS.

Anti-Kickback Statute

The AKS makes it a prison offense to knowingly and willfully provide or obtain remuneration to induce or reward referrals of things or providers reimbursable by federal well being care applications. If simply one function of an association is to induce or reward referrals, the association violates the AKS.

As a result of safeguards carried out by Requestor pursuant to the proposed association and absence of any look of improper intent, OIG concluded that the proposed association offered a low danger of fraud and abuse underneath the AKS.


In making its determinations concerning the proposed association, OIG enumerated a number of safeguards that the Requestor carried out with a purpose to scale back the danger of the association. The next safeguards had been relied upon by OIG and must be carried out the place potential in any related preparations:

  • The proposed association didn’t improve prices to sufferers or federal well being care applications corresponding to Medicare or Medicaid.
  • Sufferers retain the power to make future purchases of Merchandise primarily based on private desire and affected person selection. This reduces the danger of steering sufferers in the direction of specific Merchandise. OIG famous that this was in distinction to “seeding” applications that incentivize sufferers to decide on dearer merchandise in order that the affected person will search out the dearer merchandise when receiving reimbursable objects sooner or later.
  • The Product samples are low in worth and supply just a few days’ value of use.
  • As a result of the Merchandise are very related in value to rivals’ merchandise, a affected person’s resolution to decide on the Merchandise has a nominal monetary influence on federal well being care applications.
  • Sufferers are required to buy their very own provides after using the Product pattern for just a few days, which makes the proposed association unlikely to result in extra utilization.
  • The third social gathering service supplier that conducts the affected person surveys doesn’t promote the Merchandise and isn’t compensated in a way that takes under consideration present or future Product gross sales.
  • The third social gathering service supplier doesn’t advocate Merchandise or some other objects offered by Requestor to sufferers throughout the survey course of.
  • Requestor solely receives de-identified mixture survey knowledge from the third social gathering service supplier, which minimizes Requestor’s means to have interaction in focused advertising efforts to sufferers.

Sensible Takeaways

The availability of things or providers to sufferers at no cost or lower than honest market worth ought to solely be thought of after an intensive evaluation of the info and circumstances of this system at challenge. Though the Requestor in Advisory Opinion 18-02 was not a “supplier, practitioner, or provider” for functions of OIG’s CMP evaluation, many well being care organizations trying to implement such applications could be topic to those laws and such preparations might warrant extra scrutiny.

Additional, the scope of entities topic to the AKS concerns mentioned above are a lot broader than the scope of entities topic to the CMP laws. As such, well being care organizations ought to make sure that any applications providing free samples or different objects and providers to sufferers are structured in a way to restrict danger through the implementation of as lots of the above safeguards as potential.

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