OIG Views Favorably a Proposal to Operate Website Containing Coupons and Advertising

Posted by

By Adrienne Dresevic, Esq., Carey F. Kalmowitz, Esq., and Stephanie P. Ottenwess, Esq.

April 2012—On March 27, 2012, the Office of Inspector General (OIG) posted a favorable, but narrowly defined, Advisory Opinion (No. 12-02) pertaining to Requestor’s proposal to operate a website that would display coupons and advertising from healthcare providers, suppliers, and other entities (the “Proposed Arrangement”). The Opinion touches upon a topic hotly debated recently in the healthcare industry – whether providers can legally and ethically offer discounts or coupons on “social coupon” websites. Although Opinion 12-02 is favorable, it does not translate into a green light for healthcare providers to use social coupon sites.

Under the Proposed Arrangement, Requestor, a corporation with two members, one being a practicing physician, would contract with physicians and other health care providers and suppliers (the “Providers”), who wish to post coupons for healthcare items or services. The coupons could include discounts on items or services that are reimbursable by federal healthcare programs, provided that such discounts comply with the applicable federal healthcare program rules and regulations. Providers would be required to give the same discount to any third party payor that the Provider offers a patient. Requestor would also offer banner and pop-up advertising on the website.

Requestor also certified that it would not be in a position to make any referrals to Providers using the site. Moreover, the practicing physician member’s name would not appear on the website, he would not post any coupons for his own services, and he would not have any financial interest in the Provider. Five membership levels would be offered, one of which is a free “basic” membership; the rest would require a monthly fee which would be set in advance, for fair market value, and would not take into account the volume or value of any referrals or business otherwise generated between the parties.

The potential customers (healthcare consumers) would pay no fees to access the website and would simply print or download a coupon without pre-paying for the discount. Instead, the discount would be applied only if the customer receives the service. Importantly, the website would advise patients who submit their own claims of their obligation to report any discounts to the payor.

The OIG determined that the Proposed Arrangement involved two advertising activities which implicate the federal anti-kickback statute (“AKS”):  the selling of advertising space and the posting of Providers’ coupons. In evaluating advertising, the OIG considers a number of factors, including the identity of the party engaged in the marketing activity and the party’s relationship with its target audience; the nature of the marketing activity; the item or service being marketed; the target population; and any safeguards to prevent fraud and abuse. The OIG found that the Proposed Arrangement is sufficiently low risk under the anti-kickback statute for the following reasons:

  • Requestor is not a healthcare provider or supplier and would simply operate a website hosting advertising and coupons;
  • payments from Providers do not depend on the coupons being used by customers to obtain services, the fee is set in advance and does not take into account the volume or value of any referrals;
  • advertising on the website would not be directed at the customer visiting the site and was akin to print media; and
  • the structure of the coupons decreases risk under the AKS because a customer does not pre-pay for the coupon. This fact, according to the OIG, significantly lowered the risk that a Provider’s medical judgment would be improperly influenced to render medically unnecessary or inappropriate services based upon the fact that the customer purchased a coupon.

The OIG also indicated additional risk existed due to the content of the coupons, which may offer discounts on items or services that are reimbursable by federal healthcare programs. However, the OIG concluded that the Proposed Arrangement included sufficient safeguards to mitigate the risks including:

  • Any discount would result in reduced costs benefiting patients as well as payors, including federal healthcare programs, as the discount would apply to the entire item or service, not only to the patient’s cost-sharing obligations; and
  •  the website’s Terms of Use require the Providers to comply with the discount safe harbor, which requires that buyers and sellers report any discounts to ensure the discounts are shared with federal healthcare programs; the coupons themselves would explain that the discount must apply to the entire item or service and not just a customer’s cost-sharing obligation.

Notably, the OIG (without making specific references) differentiates the Proposed Arrangement from a health care provider’s relationship with a “social coupon” website where the customer pre-pays for the discounted service and the fee is generally split between the provider and host of the website. The OIG noted that by not paying up front for the coupon, there is less risk that a Provider would feel pressured to render a non-medically necessary service.

The OIG ultimately concluded that the payments from the Providers for Requestor’s services would pose an acceptably low risk of fraud and abuse under the AKS and that Requestor’s role in posting the coupons, operating essentially as a conduit to transmit advertising, did not rise to the level of a person or entity transferring remuneration to a beneficiary to improperly influence their choice of provider or supplier. However, the OIG does identify two areas of potential concern for which it expressed no opinion (1) Stark law issues in relation to the physician member and a person or entity with whom the Requestor would contract under the Proposed Arrangement; and (2) False Claims Act liability of Requestor if Requestor knows or should know that the Providers are not providing federal healthcare programs with their share of the coupon discounts.

Thus, although this ultimately was a favorable opinion, it was narrowly focused, it contrasted the Proposed Arrangement from a “social coupon” website situation, and it identified potential other areas of concern/liability which fell outside the scope of the OIG’s authority. As such, these types of coupon/advertising arrangements must be carefully considered before a healthcare provider decides to participate.

Adrienne Dresevic, Esq. graduated Magna Cum Laude from Wayne State University Law School. Practicing healthcare law, she concentrates in Stark and fraud/abuse, representing various diagnostic imaging providers, eg, IDTFs, mobile leasing entities, and radiology and multi-specialty group practices.

Carey F. Kalmowitz, Esq. graduated from NYU Law School. Practicing healthcare law, he concentrates on corporate and financial aspects, eg, structuring physician group practice transactions; diagnostic imaging and ancillary services, IDTFs, provider acquisitions, CON, compliance, and Stark and fraud/abuse.

Stephanie P. Ottenwess, Esq. graduated from Wayne State University Law School.  Practicing healthcare law, she concentrates in fraud/abuse, compliance and risk management.

The authors are members of The Health Law Partners, P.C. and may be reached at (248) 996-8510 or (212) 734-0128, or at www.thehlp.com.

Post a Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s