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Legally speaking 

07-19-2018 18:35

Legal considerations for patient-centered care

By Diane Millman  Summer 2018

In light of the rise of patient-centered care as the new mantra for health care regulators, physicians and other providers might be tempted to believe that providing Medicare and Medicaid patients free preventive screenings, help with health care–related transportation, lodging and similar expenses, reductions in co-pays, and financial assistance in obtaining other supportive items and services that are needed to improve health outcomes would be universally viewed positively by regulators.

Unfortunately, it isn’t necessarily so: While some of the rules related to “beneficiary inducements” appear to be relaxing as the result of new exceptions created by the Affordable Care Act (ACA), care is still needed to avoid legal pitfalls.

Legal risks

The legal risks that arise in this area stem from two statutory provisions. The first is the antikickback provision, which, among other things, precludes the payment of any remuneration to a patient covered by Medicare, Medicaid or certain other governmental health programs to obtain covered services.

The second is the beneficiary inducement prohibition of the Civil Monetary Penalties (CMP) law, which provides that a person who offers or provides any remuneration to a Medicare or Medicaid beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner or supplier may be liable for civil money penalties, subject to a limited number of exceptions.

Because these two provisions are separate and distinct, a financial benefit to a beneficiary that is eligible for an exception under one of them could still violate the other (at least theoretically). For example, one or both of these prohibitions may be triggered by wellness programs/health fairs/health promotion; patient assistance programs; transportation/lodging assistance; and incentives that promote adherence to treatment regimens.

“Safe harbor” regulations

There are specific safe harbors regulations for certain free or discounted benefits provided to beneficiaries, such as co-insurance waivers. There is also a new safe harbor for free or discounted transportation that meets certain requirements. Remuneration that meets the requirements in these regulations are not subject to potential liability under the antikickback prohibition. But there are no safe harbors for patient benefits such as free screening, participation in health fairs, or health promotion.

Patient assistance programs that, for example, shield Medicare beneficiaries from reductions or waiver of co-insurance need to be carefully circumscribed to avoid scrutiny under the antikickback laws. (Just ask Pfizer, which recently paid $24 million to settle a case involving a co-pay assistance program for an atrial fibrillation drug).

The safe harbors leave in limbo many types of free and discounted services that have the potential to improve the quality or reduce the cost of health care. That is, arrangements that do not meet safe harbor requirements are not necessarily illegal under the antikickback law but rather fall into a grey area where legality is based on the individual facts and circumstances involved.


The beneficiary inducement provisions of the CMP law exclude from the definition of prohibited beneficiary remuneration a number of beneficiary benefits that may be of interest to IRs and other physicians. For example, the beneficiary inducement statute and regulations allow the provision of incentives to promote the delivery of those preventive care services that are covered by Medicare or Medicaid, so long as the payment is not cash and is not disproportionate to the value of the preventive health service itself or the future health care costs reasonably expected to be avoided as a result of the preventive care.

Other types of health screenings and other patient assistance programs may fall within the protection afforded by two of the new beneficiary inducement prohibition exceptions that were added by the ACA and implemented in final regulations that became effective on Jan. 6, 2017.

One exception that may prove useful protects “remuneration that promotes access to care and poses a low risk of harm.” Under this exception, an arrangement “promotes access to care” only if it “improves a particular beneficiary’s ability to obtain” care by, for example, removing barriers to access (but not rewarding a patient for obtaining care or rewarding patient adherence). Remuneration “poses a low risk of harm” if the items or services are unlikely to interfere with, or skew, clinical decision-making; are unlikely to increase costs to federal health care programs or beneficiaries through overutilization or inappropriate utilization; and do not raise patient safety or quality of care concerns.

Another new and potentially useful exception to the beneficiary inducement prohibition is available for certain items and services provided to those in “financial need” (which must be determined on the basis of external evidence on an individualized basis but is otherwise undefined). To be eligible for this exception, there must be a “reasonable connection” between the items and services provided to the patient and his or her medical care; the arrangement may not be advertised; and the offer or transfer may not be tied to the provision of Medicare or Medicaid-covered services.


Such exceptions require providers (and their attorneys) to make fine distinctions that are not necessarily intuitive. For example, what about providing free educational materials to patients or prospective patients? Can notepads, tote bags and similar items be provided at an educational program? What if the event is a health fair that provides a Medicare-covered preventive health screening? Can patients be provided free parking? Under what conditions? Automobile child seats? Strollers? Health care apps? Coupons to purchase health care apps? If you want to provide free lodging and transportation to patients who have a financial hardship while they are receiving care, which exceptions might apply to what?

The distinctions are not intuitive or easy for providers—or for their attorneys. That’s the bad news. The good news is that those distinctions may be equally difficult for government regulators seeking to impose penalties for beneficiary inducement. In every case, then, adequate care must be taken to ensure that the patient-centered care you provide avoids the potential legal risks associated with it.


Disclaimer: This article is for informational purposes only and should not be construed as legal advice or a substitute for specific legal counseling.


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