OIG Issues Favorable Advisory Opinion for Consultants' Use of Gift Cards to Incentivize Customer Recommendations

In January 2024, the Department of Health and Human Services (“HHS”) Office of the Inspector General (OIG) posted Advisory Opinion No. 23-15 (“AO”) in response to a request for guidance about the use of gift cards to incentivize the Requestor’s existing customers’ recommendation of their healthcare consulting services to prospective customers. The Requestor provides consulting services to physician practices, including optimization of workflow, data analytics, compliance monitoring, health record consulting, bi-annual Medicare Merit-Based Incentive Payment System (“MIPS”) eligibility checks, and annual MIPS-related training, among others. Based on the relevant facts certified by the Requestor, the OIG concluded that the proposed arrangement would not generate prohibited remuneration under the Federal Anti-Kickback Statute (“AKS”) and issued a favorable opinion.

Proposed Arrangement

Under the proposed arrangement, the Requestor would give its current customers a $25 gift card for recommending their consulting services to prospective physician practice customers. Upon a successful recommendation, the Requestor would give the recommending customer a $50 gift card.

Further Details

The Requestor certified that it would not provide any services — inside or outside of the proposed arrangement — that would in any part be paid for by a Federal health care program, nor does it recommend to any customer the purchasing, leasing, or ordering of any item or service for which payment can be made in any part by a Federal health care program. Furthermore, the Requestor certified that it does not have an ownership or investment interest in any other entity that provides any items or services that are paid for in any part directly or indirectly by a Federal health care program.

The Requestor sought guidance to avoid violating the Federal Anti-Kickback Statute (“AKS”) by “paying” physicians illegal remuneration in the form of gift cards. The AO spells out that AKS “makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce, or in return for, the referral of an individual to a person for the furnishing of, or arranging for the furnishing of, any item or service reimbursable under a Federal health care program,” and, “for the purposes of [AKS] ‘remuneration’ includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.” It’s important to note that AKS extends to remuneration to induce, reward, or recommend purchases, leases, or orders of any goods, facilities, services, or items reimbursable by a Federal health care program.

The AO defined three potential streams of remuneration in the proposed arrangement:

1. The gift cards given to physician practice customers who recommend the Requestor to potential practice customers,

2. Physician practice customers who would pay the Requestor for consulting services, and

3. Physician practice customers potentially would receive an opportunity to earn a fee as a result of the consulting services in the form of higher MIPS reimbursements from Medicare.

The favorable opinion rested on the fact that none of the three income streams would be in return for referrals for the purchase of, or arranging for or recommending the purchase of, any item or service for which payment may be made in any part under a Federal health care program and, therefore, would not implicate AKS.

Valuation Takeaway

The scope of the AO is limited to the Requestor’s proposed arrangement, but it offers an interesting viewpoint into the OIG’s approach to analyzing the nuances at play among the many possible types of remuneration in the healthcare industry.

BFMV is experienced in the valuation of professional healthcare service arrangements, including those involving healthcare consultants. Contact us for more information or assistance.