In a rare move, the OIG rescinds a 2006 Advisory Opinion

Category: OIG, Advisory Opinion

In a rare move, the OIG rescinds a 2006 Advisory Opinion


Earlier this week, the Office of Inspector General (OIG) announced that it was rescinding an advisory opinion from 2006 which held that a patient assistance program (PAP) did not violate the anti-kickback statute. The rescission of an eleven-year-old advisory opinion underscores the importance of maintaining ongoing compliance of financial arrangements that have received OIG approval.

Under the PAP proposed in 2006, Medicare patients receiving treatment for two specific chronic diseases could receive financial assistance to cover the costs of premiums and cost-sharing obligations. To receive this financial assistance, the patient had to complete an application and meet certain objective criteria, such as poverty level. The OIG held that the proposed arrangement would not violate the anti-kickback statute because the staff operating the charitable corporation (the Charity) would not refer or recommend patients to providers or suppliers, and no donor or affiliate could exert influence over the Charity. In addition, the OIG’s decision rested heavily on the fact that donors would receive no data which would enable them to correlate the amount or frequency of their donation to the number or frequency of subsidized prescriptions or services or the number of subsidies for each medical condition.

Eight years later, in 2014, the OIG released a Supplemental Bulletin stating that it had become concerned that some PAPs were adopting policies which could lead to potential violations of the anti-kickback statute. For example, some PAPs were narrowly defining diseases which covered only a limited amount of drugs and services – likely drugs and services that were produced or supplied by donors. The OIG stated that PAPs should not establish disease funds based upon a particular stage of a disease or based upon reference to particular symptoms, nor should the PAP limit assistance to a subset of available products.

Based upon this Bulletin, the OIG required the Charity from the 2006 advisory opinion to make modifications to its proposed arrangement in order for the advisory opinion’s holding to remain effective. The Charity agreed that:

  • it would not define its disease funds by reference to particular symptoms, stages, or type of drug treatment;
  • it would not maintain a disease fund that provides assistance for only one drug or therapeutic device; and
  • it would not limit assistance to high-cost or specialty drugs.

With these modifications, the OIG determined that its 2006 advisory opinion would remain in full force and effect.

The OIG took no further action in relation to the Charity until, on November 28, the OIG notified the Charity that it was rescinding its previous advisory opinion because the Charity failed to completely and accurately disclose all relevant and material facts. Of particular concern to the OIG was the fact that donors were provided with patient-specific data which enabled them to determine the amount and frequency of subsidized prescriptions and orders for the donors’ products. Further, the Charity allowed donors to directly or indirectly influence the identification and creation of disease categories for which a Medicare beneficiary could receive financial assistance. This led the OIG to find that “the public interest requires rescission” of the 2006 advisory opinion. 

Yesterday’s action is one of the first instances, if not the first, where the OIG has exercised its power to rescind an opinion. Other advisory opinions have been previously terminated by the OIG, but those terminations were usually the result of changing circumstances that caused the proposed arrangement to no longer provide sufficient protections against the possibility of fraud. The OIG’s rescission of the PAP opinion provides several important lessons:

  • First, when an entity or individual is submitting a request for an advisory opinion to the OIG – or to any government entity – it must fully and completely describe the proposed arrangement, and, if the arrangement is found to be in compliance with the law, the requestor should be exceedingly cautious about modifying that arrangement in the future.
  • Second, it must be noted that an advisory opinion applies only to the individual or entity that submitted the request. This means that, even if another individual or entity structured an arrangement exactly like that approved in an advisory opinion, there is no guarantee that the arrangement would not be subject to scrutiny by the OIG.
  • Lastly, if an arrangement is structured based upon a proposal authorized in an advisory opinion, the individual or entity implementing the arrangement must carefully monitor the arrangement moving forward.

In other words, the individual or entity should monitor publications from the OIG, such as new advisory opinions, rescissions or terminations of existing opinions, special bulletins, etc. in order to determine if changes to the OIG’s interpretations or views could lead to enforcement against the arrangement.

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