Medical Coupons – OIG Issues Favorable Advisory Opinion

May 7, 2012

Last month the U.S. Department of Health and Human Services, Office of Inspector General (OIG) issued Advisory Opinion No. 12-02, which favorably analyzed an arrangement whereby healthcare providers offer discount coupons for their medical services and products to patients by posting them on a website. If an arrangement is structured with certain safeguards described in the Advisory Opinion, the OIG concluded that healthcare providers and suppliers may offer online coupons for their services and products without risking prosecution.

The party requesting the OIG opinion (the “Requestor”) desired to create a website that offers coupons for a variety of medical services and products from third-party providers and suppliers. The Requestor would also sell space on the website for advertising by the providers and suppliers. The corporation itself was not a healthcare provider, and while one of the members of the corporation was a physician, the physician would not be permitted to post coupons for his services nor would those providers/suppliers to which the physician made referrals be able to post coupons. The contracting providers and suppliers would pay the Requestor a flat monthly fee, consistent with fair market value, which would be set and paid prior to the actual posting of the coupons on the Requestor’s website. The website would be open to a variety of providers and suppliers, including physicians, dentists, physical therapists, optometrists, psychologists, pharmacies, hospitals and insurance companies. The coupons would only offer a reduction in price (either in the form of a predetermined reduced price or a percentage reduction). Free services or products would be prohibited.

Generally, federal law (including the Anti-Kickback Statute) prohibits the offering, solicitation, payment or receipt of any form of remuneration in return for referring an individual for any item or service reimbursable under Medicare or Medicaid.

In the situation provided in the Advisory Opinion, the OIG concluded the risk of improper patient inducement and payment for referrals was low due to the following key facts:

  1. Coupon Site is Not a Provider. The party posting the coupons would not be a healthcare provider or supplier, and was in no other position of being able to refer persons to any provider/supplier. Thus, the fee paid by the providers and suppliers was not in exchange for any referrals, mitigating the risk of abuse under the Anti-Kickback Statute.
  2. Discount, Not Free. Importantly, a reduction in price, as opposed to free services or products, was viewed favorably by the OIG and not likely to influence patients to use a particular provider/supplier.
  3. Flat Fee. The payment made by the providers/suppliers to the Requestor would be a flat fee, consistent with fair market value, and would be set and paid in advance.
  4. No Personal Information. No personal information would be provided by persons visiting the website beyond an email address, which would not be shared with the providers or suppliers.
  5. No Payment for Coupons. The persons using the website would not have to pay for the coupons, eliminating the risk that providers would feel pressured to provide the particular service or product covered by the coupon in the event it was not appropriate or necessary for the particular patient. Thus, professional medical judgment would not be compromised.
  6. Discount Safe Harbor. The website would require the contracting providers and suppliers to comply with the discount safe harbor of the Anti-Kickback Statute. Even though the website operator is not a “provider,” it would provide all of the required disclosures to satisfy the discounts safe harbor as if it were a provider.
  7. Payors Share in Discounts. The discount obtained with the coupons would be shared by both the payors (both private and federal) and the patients and would not just apply to the patient’s cost obligation.
  8. Monitoring. The Requestor would monitor the coupon postings for compliance with these safeguards.

As a result, due to the presence of these safeguards, the OIG concluded that the Requestor’s proposed arrangement would not result in the imposition of civil monetary penalties or administrative sanctions. Note that the conclusions in Advisory Opinion 12-02 are limited to the specific facts surrounding the Requestor’s proposed website. In addition, healthcare providers may need to navigate state laws, like the restrictions on discounts and waivers of copays and deductibles, and state physician referral laws.