Posted by: Robert Markette
March 28, 2006

I have had a number of conversations recently with providers about offering free assessments to patients.  This has come up in a number of contexts, including providers asking if there was a problem with not charging Medicare beneficiaries for initial assessments.  I have always said that it is a problem under fraud and abuse, because the free visit could be considered remuneration under the rules.

Well, the Department of Health and Human Services Office of Inspector General (“OIG”) issued an advisory opinion yesterday on a very similar subject.  A provider requested an advisory opinion regarding its practice of providing free pre-surgical “home safety assessments”.  A home safety assessment involves an agency physical therapist traveling to a pre-operative patient’s home to determine whether the patient’s home is appropriate for post-operative recovery.  The agency stated in its request for an opinion that some insurance companies will reimburse this assessment at $85 - $100.  The agency also offered a "telphonic" assessment that cost the Agency $10 in employee time.

Each patient that receives a home safety assessment is referred by the patient’s surgeon prior to the surgery. 

OIG offered the opinion that this arrangement potentially violated the civil monetary penalties statue and might also generate prohibited remuneration under the Anti-kickback statute.

OIG’s explanation of its opinion provides some insight into how OIG might view other arrangements where a Medicare beneficiary receives free services.  OIG noted that the beneficiary receives something of sufficient value to constitute remuneration under the CMP and Anti-kickback statutes.  This was in part due to the amount an insurance company would reimburse for the service.  However, in regard to a telephonic safety assessment, OIG noted that the proper focus was on the beneficiary, not on the cost to the agency to provide the telephonic assessment.

OIG stated that because the patient’s physician recommended the assessment and the assessment is conducted by a licensed physical therapist, the beneficiary would reasonably believe they were receiving something of value.  This perception led OIG to conclude that the telephonic safety assessments were not of “nominal value.”  This meant that either the in-home or telephonic assessment constituted potential remuneration.

OIG also evaluated whether this potential remuneration was likely to induce the beneficiary to select the agency as a provider of postoperative items and services covered by Medicare.  In this discussion, OIG focused on the fact that the free pre-operative assessment allowed the agency to establish a relationship with the prospective patient. OIG noted that the agency is referred by the patient’s surgeon and the agency therapist has the opportunity to initiate a relationship with the patient.  OIG stated that the patient was likely to assume the referral for the pre-operative assessment was also a recommendation to use the agency for post-operative care.  The fact that the assessment was free, served to increase the likelihood that that patient will schedule the assessment, which “maximizes” the opportunity for the agency. 

OIG went on to explain that these facts also indicated it was probably that the Requestor knows or should know this free assessment is likely to generate reimbursable business for the Requestor. 

The key point from this is that OIG will take a very close look at any arrangement under which a beneficiary receives free services.  Many businesses will provide a free service up front, for example many lawyers provide a free initial consultation.  They do this, because it entices in a potential customer and allows you to establish a relationship.  Unfortunately, in the world of Medicare fraud and abuse, a good business practice has become a crime.

One final point, in issuing this letter, OIG specifically stated that the letter offered no opinion as to whether offering a free service to a beneficiary was a violation of the anti-kickback statutes in regard to the referring physician.  However, given the logic of this opinion, it is likely that any such arrangement would be considered to violate the anti-kickback laws.  As I said at the beginning, whenever you are giving away services to referral sources or Medicare/Medicaid beneficiaries, you should pause and consider the anti-kickback implications.

Attachments:
FreeSafetyAssessments.pdf

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