Kusserow on Compliance: OIG issues favorable opinion related to patient assistance charitable foundation

The HHS Office of Inspector General (OIG) released Advisory Opinion 15-16 addressing a 501(c)(3) charitable foundation (the “Requestor”) that would seek donations from third parties (including drug manufacturers) and provide financial assistance to out-of-pocket patient expenses for outpatient prescription drugs. The Requestor would maintain two disease funds, one of which would provide assistance to patients with various types of cancer, and the other of which would provide assistance to patients with chronic kidney disease or iron deficiency anemia. The donors could earmark their donations for either fund but would have no control over the specific types of diseases each fund would apply to them.

The OIG concluded that the proposed arrangement would not violate the federal prohibition against inducements to patients with regard to the Civil Money Penalties (CMP) law or the Anti-Kickback Statute (AKS). The OIG cited the following characteristics of the arrangement that led it to its conclusions:

  • No donor, affiliate of any donor, physician, or health care provider would exert direct or indirect control over the Requestor or its program.
  • The Requestor is a nonprofit, tax-exempt charitable organization that operates with absolute, independent, and autonomous discretion as to the use of donor contributions.
  • The Requestor has no financial relationship with any physician or other health care provider that treats patients eligible to receive assistance from the Requestor.
  • Before applying for assistance, each patient already would have selected his or her health care providers, practitioners, or suppliers, and already would have a treatment regimen in place so that the existence of the program would not influence the selection of a provider.
  • The Requestor would not refer patients to, recommend, or arrange for the use of any particular practitioner, provider, supplier, drug, or insurance plan.
  • Donors would not receive any data that would facilitate a donor in correlating the amount or frequency of its donations with the amount or frequency of the use of its drugs or services.
  • No donor or affiliate of any donor would directly or indirectly influence the identification or delineation of the diseases covered by its two disease funds.
  • The determination of a patient’s qualification for assistance would be based solely on financial need, without considering the identity of the health care providers, practitioners, suppliers, drugs, or insurance plans; the identity of any referring party; or the identity of any donor.
  • The Requestor would assist all eligible, financially needy patients on a first-come, first-served basis to the extent funding is available.
  • The Requestor will permit donors to earmark donations for both of the disease funds, which generally should not significantly raise the risk of abuse.
  • Diseases covered by its disease funds: (i) would be defined in accordance with widely recognized clinical standards and in a manner that covers a broad spectrum of available drugs; and (ii) would not be defined by reference to specific symptoms, severity of symptoms, the method of administration of drugs, stages of a particular disease, type of drug treatment, or any other way of narrowing the definition of widely recognized disease states.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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