This favorable OIG opinion concludes that although the proposed arrangement (“Proposed Arrangement”) to subsidize Medicare cost-sharing obligations for Medicare patients in a cardiac clinical trial (“Study”) would constitute grounds for imposing sanctions under the federal Anti-Kickback Statute (AKS”) and Beneficiary Inducements Civil Monetary Penalties (“CMP”), OIG will not impose administrative sanctions under the Beneficiary Inducement CMP.

A high-level summary of the Proposed Arrangement (more specific details appear in the Opinion):

(i) Requestor manufactures the “System,” which is a medical device-based therapy used to modulate muscle contraction in patients experiencing heart failure.

  • the System is approved by the FDA for use in heart-failure patients who meet certain criteria,
  • Requestor is the sponsor of a clinical trial designed to determine the safety and efficacy of the System in a different population,
  • for the different population, the System’s use is approved by the FDA for a Category B Investigation Device Exemption (IDE), which allows a device to be used in a clinical trial for an investigational indication.

(ii) Although patients, including Medicare and other federal health care program beneficiaries, may continue to receive reimbursable follow-up services related to the System, the System itself is intended as a one-time treatment.

  • Requestor does not anticipate that use of the system would prompt future utilization by Study participants of any other products manufactured or developed by Requestor for Study participants.

(iii) Overview of the Study: Requestor intends to enroll up to 1,500 participants in the Study with a 2:1 ratio of treatment group patients to control group patients.

  • all Study participants will have the System implanted via a surgical procedure in an operating room or cardiac cath lab. Treatment group patients will have the System activated immediately and the control group patients will not have the System activated for the initial 18-month Study period.
  • Study investigators and their staff are responsible for recruiting and enrolling Study participants,
  • all Study participants must satisfy the enrollment criteria set forth in the Study protocol and execute an informed consent document,
  • once enrolled, Study participants are expected to remain in the Study through its completion and any follow-up (every six months until the FDA makes a decision regarding the Study) unless participants withdraw consent or the Requestor terminates the Study,
  • after 18 months, the control group will be informed of their control group status and the System will be activated for them,
  • the availability of cost-sharing subsidies would not be generally advertised, but disclosed to Study participants as part of the informed consent process,
  • the Study will be conducted in accordance with federal regulations concerning the protection of human subjects, including oversight by an Institutional Review Board.

(iv) Medicare’s payment is conditioned on a number of criteria (set out in the Opinion), including Medicare approval of any Category B IDE devices and routine care items and services.

(v) Overview of the Proposed Arrangement: Requestor proposes to pay cost-sharing obligations that Medicare beneficiaries participating in the Study otherwise would owe for Study-related Medicare-reimbursable items and services, up to a maximum of $2,000 per Study participant (Study participants will be responsible for out-of-pocket amounts that exceed $2,000). The Requestor indicates the purpose of the Proposed Arrangement is to:

  • reduce financial barriers to enrollment and prevent attrition from the Study due to financial reasons,
  • facilitate socioeconomic diversity of the Study population, and
  • preserve blinding of participants (control group would not have expenses that the Study participants would have).

The full text of Advisory Opinion 23-11 includes a statement of the facts considered by the Office of Inspector General.

It is our view that OIG’s conclusion is based upon the existence of all the factors in the Proposed Arrangement. We expect that a different conclusion may be reached by OIG if one or more of those factors did not exist.

The following summarizes OIG’s legal analysis:

The Proposed Arrangement would implicate the federal AKS and the Beneficiary Inducement CMP. The Proposed Arrangement does not fall squarely within any exception to the definition of “remuneration” or any safe harbor. However, OIG concludes the risk of fraud and abuse presented by the Proposed Arrangement is sufficiently low under the federal AKS to issue a favorable advisory opinion, and in an exercise of OIG’s discretion, OIG will not impose sanctions under the Beneficiary Inducements CMP as outlined in their analysis:

  1. the Proposed Arrangement appears to be a reasonable means of promoting enrollment in the Study, particularly for those in the control group with no therapeutic benefit. Additionally, the cost-sharing subsidy may be essential to enrolling a sufficient number of participants and may be a reasonable means to facilitate enrollment of a socioeconomic diverse set of participants.
  2. the Proposed Arrangement poses a low risk of overutilization or inappropriate utilization of items and services payable under a federal health care program. Although overall utilization may increase, OIG concludes there is nothing to indicate the increase would be inappropriate. Study participants and investigators and sites must comply with Study enrollment criteria and protocols. Overutilization is not likely, due to the cap in Study participants to 1,500. Additionally, the Study will be subject to FDA Category B IDE requirements also likely to limit overutilization.
  3. the Proposed Arrangement is distinguishable from problematic “seeding arrangements” and Requestor would provide cost-sharing subsidies relating only to items and services furnished as part of the Study, which is intended as a one-time treatment, making prompt future utilization by Study participants not expected.

Note: OIG Advisory Opinions are very fact specific and, by their terms, limited to the facts presented by the specific Requestors, and are subject to specific limitations set out in the Advisory Opinions. The above is a high-level summary and consultation with counsel is recommended for a fuller review and discussion of the Advisory Opinion.

Should you need anything else on this topic or if you have a matter that you wish to pursue with the Department of Health and Human Services’ Office of Inspector General for an Advisory Opinion, please feel free to reach out to Matthew Babcock at to discuss an engagement.

This alert is not a substitute for advice of counsel on specific legal issues.

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