CCRC Marketing Gets “Thumbs Up” under Anti-Kickback Law

June 4, 2010

The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently issued an advisory opinion regarding a proposed reward program that would provide financial incentives to residents and employees of a continuing care retirement community (CCRC) for referring prospective residents to the CCRC. In its review, the OIG concluded that the reward program would not implicate 42 U.S.C. §1320a-7B(b), also known as “the Federal Anti-Kickback Statute.” This is welcome news for CCRCs and other senior care communities looking for effective, but compliant means of boosting occupancy rates in independent living residences.

Legal Issue

The Federal Anti-Kickback Statute prohibits the knowing and willful solicitation, receipt, offer or payment of any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind in return for or to induce the referral, arrangement, or recommendation of Medicare or Medicaid business. The OIG has frequently scrutinized payments made to marketers for making referrals for or recommending healthcare-related items or services paid for by Medicare or Medicaid, especially where the marketers are in a position of trust, such as a physician or other healthcare professional. However, in this instance, the OIG did not express the same concerns that it has with these problematic payments due to a number of factors present in the proposed arrangement.

The Reward Program

The CCRC proposed to give current residents and employees a gift card any time they submit contact information for a prospective resident that is eligible to enter a continuing care contract and that, within 90 days after being contacted by the CCRC, takes a tour of the community. In addition to the gift card, if the same prospective resident moves into an independent living residence at the CCRC within 12 months after the tour, the resident making the referral would receive a one-time credit toward his or her monthly fee. Where the referral is made by an employee, the employee would receive a bonus payment as part of his or her employment compensation.


The OIG considered whether the reward program could violate the Federal Anti-Kickback Statute and ultimately concluded that the law would not be implicated. The OIG relied upon some key facts in coming to this conclusion:

No payments would be made under the reward program for residents who move into either the assisted living or skilled nursing components of the CCRC. Payments would only be made for referrals to independent living. The flip-side of this is that payments for referrals to assisted living or skilled nursing or other healthcare items or services provided by the CCRC that are reimbursable by Medicare or Medicaid could be problematic. The OIG acknowledged that independent living residents may at some point in the future need assisted living or skilled nursing services, but that it could be years in the future and the need is substantially speculative and outside the control of the current resident or employee.

Recommendations about the CCRC are recommendations about an overall lifestyle decision, not a decision about receiving specific healthcare-related items or services. The OIG recognized that the availability of assisted living and skilled nursing services may be a factor in the decision to become a resident, but that there are numerous other aspects that play into the decision such as residential accommodations; dining, social, cultural, and recreational programs; geographic location; the presence of companionship and friends already in the community; and the cost of non-healthcare services.

Residents and employees are typically friends and acquaintances of prospective residents. The OIG reasoned that these are not individuals in an exceptional position of trust able to exert undue influence when recommending healthcare-related items or services, such as a physician or other healthcare professional. Accordingly, the reward program would not influence any healthcare professional’s decision to order a healthcare item or service or to refer a patient to a particular healthcare provider.


The advisory opinion is welcome news for CCRCs and other senior care communities looking for effective ways to market independent living residences. However, you should proceed with caution. The favorable opinion is limited to the CCRC that requested it and it is based upon the specific facts presented. Differences in some of these facts, such as the ratio of independent living residents to nursing unit residents and the portion of residents at the skilled nursing component that are admitted from outside the CCRC, could change the outcome. The outcome could also be different where the CCRC or an affiliate or subsidiary provides physician services, therapy services, hospice, medical equipment, or other Medicare or Medicaid-reimbursable items or services to independent living residents. There may also be some state insurance or other laws that affect the ability of senior care communities to provide certain rewards or financial incentives of this nature.

If you have any questions about structuring reward programs or other marketing initiatives, the advisory opinion, or how the Federal Anti-Kickback statute could be implicated in your operations, please contact the authors.