TLDR: If you want to incentivize patient adherence to a medication adherence or substance use disorder (“SUD”) treatment program without running afoul of the Anti-kickback Statute (“AKS”) or Civil Monetary Penalties law (“CMP”), a recent advisory opinion indicates that evidence-based, clinically relevant incentives may be the key.

Now let’s get to the details.

OIG Approves Smart Debit Card Incentive Program for Patient Adherence

One of the most common questions our attorneys get from digital health clients is:

“How can I help my healthcare provider customers improve patient adherence?”

If you already work with us, you may know that our answer usually involves a “hard no” to providing most cash or cash equivalent-based rewards. But that may be changing. 

On March 2, 2022, the Department of Health and Human Services Office of Inspector General (“OIG”) published OIG Advisory Opinion No. 22-04 (“AO 22-04”), giving the go-ahead for a digital health company (the “Company”) to offer cash-equivalent monetary incentives to patients participating in a substance use disorder treatment program to improve their program adherence.

Specifically, the Company proposed to offer patients cash rewards for adhering to SUD treatment plans (the “Program”).

OIG opined that although the Program likely implicates AKS and CMP, it would likely be permissible under both because:

1. The Program involves an evidence-based, well-defined incentive structure to encourage patients to engage in healthy behaviors;

2. The incentives are of a “reasonably low value” and not directly tied to billing federal healthcare programs (“FHCP”);

3. Even though some of the services incentivized as part of the Program are federally reimbursable, the Company charges customers a fixed fee for administering the Program; and

4. The Program incentives are narrowly tailored to mitigate the overutilization of FHCP.

The Program

The Program, as described in AO 22-04, involves the Company contracting with health plans, addiction treatment providers, employee assistance programs, research institutions, and other treatment providers (“Customers”) to provide qualified individuals with incentives to participate in certain treatment activities.

These activities include completing self-assessments, taking medication in accordance with a prescribed treatment plan, attending treatment sessions, and achieving consistent substance use test results (e.g., a negative drug test).

Patients receive a “smart debit card” (think debit cards with the electronic chip) that allows them to purchase items valued at up to $200.00 per month and $599.00 per year.

To ensure the incentives do not contribute to negative patient outcomes or patient misuse, the smart debit cards cannot be used at bars, liquor stores, restaurants, or casinos, and cannot be converted to cash at an ATM or gas station.

The Company monitors patients’ use of the debit cards to further ensure appropriate use, and verifies patient eligibility monthly. The Company also manages the administration of the patient’s treatment program according to the patient’s prescribed treatment.

In exchange, Customers pay either (i) a fair market value flat per-patient-per-month fee, or (ii) a fair market value performance-based fee that is dependent on patient success. 

AKS and CMP

In AO 22-04, OIG analyzed the proposed arrangement under the federal Anti-Kickback Statute (“AKS”) and the Civil Monetary Penalties (“CMP”) Law – two areas of law that generally prevent healthcare companies and healthcare providers from providing cash or cash-equivalent incentives to patients. In this context, the AKS and CMP laws aim to prevent patients from getting too much care or getting the wrong care, both of which could negatively impact patient health.

AKS imposes criminal penalties on anyone who knowingly and willingly offers, pays, solicits, or receives remuneration to induce or reward referrals of items or services paid for by a Federal healthcare program (“FHCP”) like Medicare or Medicaid. 

The Beneficiary Inducements section of CMP imposes civil monetary penalties on any individual who offers any form of remuneration to a FHCP beneficiary to influence the beneficiary’s selection of a provider of items or services payable under the FHCP. 

Typically, providing anything of value, particularly cash or cash equivalent, would constitute improper remuneration under both doctrines. 

What AO 22-04 Can Teach Digital Health Companies About Structuring Patient Incentive Programs

Patient incentive programs involving cash or cash equivalents are still risky.

Even if a company modeled its program after the Program in AO 22-04, there is no guarantee that it would be similarly approved by OIG. Companies must be very careful when designing any model that involves the provision of any remuneration (cash or otherwise) to FHCP beneficiaries. That said, the OIG’s analysis reveals 4 key insights for companies considering such arrangements.

1. Incentive programs should be evidence-based

The Program relies on fifty (50) years of evidence-based research funded by the National Institute of Health (“NIH”) concerning substance abuse. Additionally, the Company received research grants from NIH and the National Institute on Alcohol Abuse and Alcoholism (“NIDA”) to fund its research and the Company’s platform has been used by 18 university-based research groups. These research studies form the foundation of the Program’s structure and its goal to triggering the patient’s brain reward system with cash rewards for achieving SUD treatment goals. 

KEY TAKEAWAY: Digital health companies looking to build an incentive program for patients should ensure there is substantial evidence-based research supporting their model and that incentives are well-defined under applicable treatment protocol. 

2. Incentives should be of a reasonably low value

The Program capped patient incentives at $200.00 per month per patient, with a yearly cap of $599.00 per patient. Furthermore, individual activities, such as clean substance tests, only entitle patients to an award of $5.00 per successful test. Notably, the monthly and annual cap established in the Program are greater than the “nominal value” thresholds of $15 per item and $75 in the annual aggregate that OIG previously defined in its December 7, 2016, Policy Statement regarding gifts or rewards provided to patients. Despite this, OIG found that the remuneration was reasonably low. It’s possible that this would have been less compelling for OIG if the Company was enrolled in and billing FHCP—but in this case, the agency determined that the low value coupled with the fact that Company is not participating in FHCP significantly reduces the potential for the incentives to encourage overbilling. 

KEY TAKEAWAY: Keep the maximum value of individual incentives below $200/month or $599/year. If you don’t bill FHCP, this may be considered “reasonably low”. 

3. Incentive programs should avoid inducing services reimbursable by FHCP

The Company’s relationship with Customers that bill FHCPs make the Program riskier because those Customers pay the Company, and the Company refers patients to the Customers. This arrangement, if structured incorrectly, could trigger an AKS violation. However, because the fees that the Customers pay to Company for administering the program are tied solely to the services purchased from Customer and the intensity of the patient’s therapeutic program, without considering the volume or value of any federally reimbursable services provided to patients, the OIG approved these arrangements.

KEY TAKEAWAY: Digital health companies may be able to minimize risk under AKS and CMP by charging fixed fees for administering incentive programs, which fees are not influenced by the value or volume of FHCP reimbursement or referrals.

4. Incentive programs should involve protocols aimed at safeguarding against fraud and abuse

Even though the Program offers patients cash incentives through a smart debit card system, there are additional program protocols in place to prevent incentivizing unhealthy or negative behaviors that could further harm the patient. Specifically, the smart debit cannot be used to withdraw cash, nor can it be used at certain blocked locations (bars, liquor stores, casinos, etc.). Additionally, if a patient attempts to use the smart debit card at a blocked location, the Program alerts the patient’s health coach to intervene and hopefully prevent any relapse. 

KEY TAKEAWAY: Rewards should be narrowly tailored to support relevant program goals and the program should implement protocols meant to avoid patient harm or impact patient choice.

Disclaimer: AO 22-04 is Not A Stamp of Approval For All Programs

Digital health companies considering offering incentives on behalf of healthcare provider customers like those offered in the Program should proceed with caution.

OIG analyzes arrangements on a case-by-case basis and AO 22-04 does not guarantee that a particular arrangement would be viewed similarly by OIG.  Statements by OIG in its advisory opinions about whether they will or will not take action against the company requesting the opinion apply to that company only. They are not law or legal precedent, but they do provide insight into how the agency might evaluate similar arrangements.

We believe AO 22-04 demonstrates OIG’s willingness to consider creative solutions aimed at reducing access barriers to proven care solutions. 

NGL regularly works with healthcare innovators improving patient outcomes and adherence through remote patient monitoring, virtual care management, telehealth, and other various forms of technology-driven care. If you are interested in creating or implementing a cash-based patient incentive program and want to better understand the risks associated with doing so, contact us to learn more!