On March 16, 2022, the Office of Inspector General (OIG) released Advisory Opinion 22-05 (advisory opinion) in which it declined to impose penalties on a medical device manufacturer (plaintiff) that proposes to pay certain cost-sharing obligations of clinical trial participants, including Medicare beneficiaries. The OIG concluded that while the proposed arrangement (described below) would constitute prohibited compensation under the Federal Anti-Kickback Act (AKS) and the Civil Law Beneficiary Inducement Prohibitions on monetary penalties (CMP), the low-risk nature of the proposed arrangement did not warrant the imposition of penalties.
Applicant manufactures a device that uses a patient’s cells for the treatment of ischemic systolic heart failure (therapy). Therapy is a one-time treatment, although patients may receive Medicare-reimbursable items and follow-up services. Applicant states that these follow-on items and services would not apply to products manufactured by Applicant. The therapy is available in the United States for use only in a clinical trial, through an FDA-approved Class B Investigational Device Exemption (IDE). The Applicant intends to conduct such a clinical trial (study) at approximately 40 different sites. The study will be subject to the oversight of an Institutional Review Board (IRB), and each study site and researcher must meet certain objective criteria to be eligible to conduct the study. The Centers for Medicare and Medicaid Services (CMS) has approved the study as a Category B IDE study, which means that Medicare will reimburse therapy and routine care items and services provided during the study.
Under the proposed arrangement, the applicant would pay the study site or investigator the Medicare cost-sharing amounts that study subjects would otherwise owe for Medicare reimbursable items and services provided during the study. . The applicant would provide the same grant to study participants who are commercially insured and those covered by Medicaid or other federal health care programs. The plaintiff estimates that Medicare cost-sharing amounts could exceed $1,300 per beneficiary over the two years of the study. According to the Applicant, the grant would have three objectives: (1) to reduce financial barriers for subjects participating and remaining in the Study; (2) attract a population of socio-economically diverse study subjects; and (3) maintain blinding of study subjects. With respect to the latter objective, study subjects in the “control” group will not be charged any cost-sharing amount as they will not receive a therapeutic benefit because they do not receive the therapy. Thus, the absence of billing would signal to study subjects that they are in the control group, potentially affecting the outcome of the study. With the grant, no study subject will be charged cost-sharing amounts, preserving subject blinding.
According to the OIG, the offer and payment of the grant would involve the AKS because the grant could incentivize Medicare beneficiaries to participate in the study and receive Medicare reimbursable items and services. In addition, the applicant would provide compensation directly to study sites and/or investigators in the form of an opportunity to bill Medicare for study-related items and services, as well as guaranteed payment of beneficiary cost sharing. The proposed arrangement also involves the CMP, according to the OIG, because the grant would likely influence a beneficiary’s decision to receive Medicare-reimbursable items and services from a particular provider. However, the OIG concluded that although it generated prohibited compensation, the proposed arrangement presented a low risk of fraud and abuse.
The OIG highlighted several key features of the proposed arrangement in reaching its conclusion:
Payment of the grant is a reasonable way for the applicant to enroll study subjects, attract a diverse pool of subjects, and incentivize subjects to complete the study. This is particularly true when, according to the Applicant, 40% of the subjects would be in the control group and would receive no therapeutic benefit.
There is a low risk of overuse or misuse of items or services reimbursable by a federal healthcare program. The OIG acknowledged that usage could increase as a result of the study, but there was no indication that this increase would be inappropriate. The OIG highlighted several safeguards:
The applicant would not advertise the grant;
All study subjects must meet the enrollment criteria to participate in the study and receive the grant;
Sites and investigators are bound by the study protocol and subject to oversight by an institutional review board; and
There will be a maximum of 260 study subjects.
CMS approved the study as a Category B IDE study and determined that it included appropriate patient safeguards.
Although study subjects may receive Medicare reimbursable follow-up items and services, the applicant would not benefit financially from these items and services.
This favorable advisory opinion from the OIG provides additional guidance to device manufacturers and other stakeholders on safeguards that can be incorporated into unique clinical trial designs that may reduce the risk of review under fraud laws and abuse.
As the OIG has pointed out, its advisory opinions are issued only to the requesters of the opinion, and do not apply to any person or entity, and cannot be relied upon by any person or entity, and cannot be presented in evidence by anyone other than the plaintiffs. to prove that the person or entity has not violated the anti-bribery law or any other law.
Copyright © 2022 Robinson & Cole LLP. All rights reserved.National Law Review, Volume XII, Number 76