Kusserow on Compliance: OIG Advisory Opinion 18-14

The OIG’s continued interest and concerns about arrangements that could implicate the Anti-Kickback Statute was reaffirmed recently by another advisory opinion on the subject. A drug company (Requestor) that markets an injectable drug to treat a specific and rare form of epilepsy (the Syndrome) raised the concern with the OIG. The Requestor sought an advisory opinion as to whether the arrangement would be susceptible to sanctions related to the federal Anti-Kickback Statute (AKS). The proposed arrangement would have the Requestor providing a drug to hospitals on a consignment basis, at no cost to the hospitals or any payors, to treat inpatients diagnosed with the Syndrome.  In addition, the company would provide additional free vials to patients that are uninsured after they are discharged. The OIG found that the proposed arrangement implicates the AKS, in that free provision of the drug would constitute remuneration to hospitals that serve as a referral source for the drug. Specifically, hospitals would serve as a direct referral source when their employed physicians prescribe the drug to inpatients or outpatients.  Hospitals could also serve as an indirect referral source for the Drug through inclusion of the Drug in the hospitals’ drug formulary, thereby keeping it stocked and readily available to prescribing physicians. In this manner, the arrangement could induce hospitals to arrange for or recommend additional future purchases of the drug. The OIG highlighted the arrangement’s risks with respect to over-utilization, increased costs to federal health care programs, corruption of medical decision-making, patient steering, and unfair competition.


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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