OIG Raises ‘Nominal Value’ for Gifts to Medicare and Medicaid Beneficiaries

December 16, 2016

On Dec. 7, 2016, just in time for the holiday season, the Office of Inspector General (OIG) released a policy statement regarding the nominal value of gifts that healthcare providers may give to Medicare and Medicaid beneficiaries. In short, the OIG now allows gifts of “nominal value,” no more than $15 per item or $75 in aggregate per patient on an annual basis, which marks an increase from the limits set in 2000 of $10 per item or $50 in aggregate per patient annually.

Under section 1128A(a)(5) of the Social Security Act, enacted as part of the Health Insurance Portability and Accountability Act of 1996, a person who offers or transfers to a Medicare or Medicaid beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of Medicare or Medicaid payable items or services may be liable for civil monetary penalties of up to $10,000 for each wrongful act. Remuneration includes waivers of copayments and deductible amount and transfers of items or services for free or other than fair market value.

However, upon enacting Section 1128A(a)(5) of the Social Security Act, Congress expressed its intent that inexpensive gifts of nominal value be permitted. Thus, the OIG interpreted “inexpensive” or “nominal value” in 2000 to be the aforementioned $10 individual gift and $50 yearly aggregate amounts. The OIG recently decided these 16-year-old figures should be adjusted and increased the “nominal value” amount to $15 per item and $75 per patient annually. The OIG reiterates that these items may not be cash or cash equivalents.

Accordingly, healthcare providers should only offer gifts to government beneficiaries that are nominal in value, and in no event greater than $15 per individual gift. Annually, while a provider may present multiple gifts to a single patient, it should not give a single patient gifts that exceed $75 in total aggregate value, and the amount of the gifts should be tracked to ensure this threshold is not crossed.

If the provider elects to utilize large group mailings that include gifts, it should be sure to comply with the nominal value amounts set by OIG, as it would be very difficult to screen federal healthcare beneficiaries from such mailings. Finally, while a provider may elect to exclude federal healthcare program beneficiaries from receiving gifts (and would also need to note this exclusion in its advertising), there is some risk that the provision of gifts to only non-governmental insured patients could be deemed discriminatory under Medicare regulations, and thus it may be preferable to treat all patients in a similar manner. It is also important to note that the OIG’s interpretation of “nominal value” applies to patient gift-giving and does not explicitly extend to referral sources. Any gift-giving practices with regard to referral sources should be closely scrutinized.

We are always available to answer any questions, and we will keep you apprised of any further updates to patient gifting rules.