The Office of Inspector General (“OIG”) recently issued OIG Advisory Opinion 25-12 (the “Opinion”) addressing a home care agency’s (“Agency’s”) plan to offer and advertise sign-on bonuses to prospective in-home caregivers (“Attendants”) in a Medicaid-funded in-home services program (“Program”). Under the Program, eligible participants (“Clients”) would have the right to select their own Attendant(s) to provide in-home care, and many were expected to choose their own family members. The Requestor certified that, in such cases, they expected Attendants would be the decision-makers selecting an agency on behalf of their family members.
According to the OIG, the Agency’s plan to offer sign-on bonuses to prospective Attendants who would (i) be family members of Clients, and (ii) act as decision-makers by selecting the Agency to provide Program services to Clients, created an inextricable link between the Agency’s offer and payment of the bonus and the Attendant’s decision to accept employment and refer the Client for items and services reimbursable by a Federal health care program. Moreover, the OIG determined that the sign-on bonus would not qualify for the employment exception to the federal Anti-Kickback Statute (“AKS”) or the employees safe harbor. Given the potential for the bonus to inappropriately steer prospective Attendants to select one agency over others – not just for employment of the Attendant, but for the provision of Program services to the Client (i.e., based on the most compelling bonus offer) - the OIG determined that the risk of fraud and abuse was not sufficiently low to issue a favorable advisory opinion.
In addition, the OIG determined that the proposed arrangement would result in a prohibited offer of remuneration under the civil monetary penalty provision prohibiting inducements to beneficiaries (the “Beneficiary Inducements CMP”), because the prospective Attendant would be in a position to select the agency for his or her family member, and the bonus would be likely to influence the Attendant to choose Requestor’s Agency for the provision of items and services that are reimbursable by Medicaid.
How the Arrangement Implicated the Anti-Kickback Statute:
The federal Anti-Kickback Statute[1] makes it a felony to knowingly and willfully offer, pay, solicit, or receive, remuneration to induce or reward (i) the referral of an individual to a person for the furnishing of, or arranging for the furnishing of, items or services reimbursable under a Federal health care program, or (ii) the purchasing, leasing, or ordering of, or arranging for or recommending the purchasing, leasing, or ordering of, any good, facility, item or service reimbursable, in whole or in part, under a Federal health care program.
The statute has been interpreted to cover any arrangement where even “one purpose” of the remuneration is to induce referrals for items or services reimbursable by a Federal health care program, even if other legitimate purposes exist. Violation of the statute constitutes a felony punishable by a maximum fine of $100,000, imprisonment up to 10 years, or both. Conviction will also lead to exclusion from Federal health care programs, including Medicare and Medicaid.
Congress has developed statutory exceptions to the AKS, and the U.S. Department of Health and Human Services has also promulgated safe harbor regulations that specify certain practices that are not treated as offenses under the AKS and do not serve as the basis for an exclusion. The OIG notes that safe harbor protection is afforded only to those arrangements that precisely meet all the conditions set forth in the safe harbor. Compliance with a safe harbor is voluntary, and arrangements that do not comply with a safe harbor are evaluated by the OIG on a case-by-case basis.
As reflected in OIG’s discussion, the key elements of the statutory employment exception and employees safe harbor regulation[2] generally require that the remuneration be: (i) paid by an employer to an employee, (ii) where the employee has a bona fide employment relationship with the employer, and (iii) paid for employment in the furnishing of items or services for which payment may be made under a Federal health care program. The exception/safe harbor can be used to protect many ordinary employment relationships, but it does not provide blanket protection for anything labeled “compensation.”
The OIG’s Analysis
As described in the Opinion, Medicaid covers in-home support services furnished by Attendants. The OIG noted that Program Attendants are often family members of Medicaid Clients, and the requestors certified their expectation that, in many cases, those family-member Attendants would (1) be the decision-makers selecting the Agency, and (2) be hired to deliver Program services (including personal, homemaker, and health maintenance assistance) to their qualifying relatives. The Agency proposed to recruit Attendants through print and digital advertising (including social media) and intended to advertise the sign-on bonus only as an unspecified amount. Importantly, the Requestor also certified that the purpose of the sign-on bonus was to entice prospective Attendants to choose the Requestor’s Agency over competing agencies and thereby remain competitive in the market.
Although the Requestor certified that the Attendants would be bona fide employees upon hire, OIG concluded that the proposed sign-on bonus arrangement still did not fall within the employee exception/safe harbor under the facts and circumstances presented. The OIG’s primary concern was the “inextricable link” between (a) employing the Attendant, and (b) the referral/steering of the Client to the Agency, because the Requestor expected most Attendants would be related to the Client and also be the decision-makers selecting the Agency to provide services for the Client. Also, the OIG believed the advertisement and offer of the sign-on bonus functioned as a solicitation for an all-but-guaranteed referral before employment would commence, rather than an amount paid “for employment in the furnishing” of reimbursable services with the hope – but not the virtual guarantee – of a referral.
The OIG also raised concerns about the way the bonus would be advertised only as a dollar amount, which prospective Attendants could reasonably interpret as an upfront payment upon signing, prior to performing work, which – under this particular structure - created a heightened risk that the payment would inappropriately steer provider selection not based on legitimate criteria (e.g., quality, training, back-up coverage, or program integrity), but on whichever agency offered the most attractive cash incentive. Unlike standard healthcare employment situations, where an employee receives a sign-on bonus without any link to guaranteed referrals, the proposed arrangement would target individuals whose employment was directly tied to the care of their family member/Client. The OIG viewed recruitment advertising as essentially soliciting referrals from new clients (i.e., the Client-family members of the prospective Attendants), rather than simply filling employment needs.
Beneficiary Inducement Risks in Family Caregiver Employment Models
In addition to its AKS analysis, OIG concluded that the arrangement would implicate the Beneficiary Inducements CMP,[3] which provides for the imposition of civil monetary penalties against any person who offers or transfers 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 for the order or receipt of any item or service for which payment may be made, in whole or in part, by Medicare or Medicaid. Offering remuneration to individuals in a position to select a Medicaid provider for a family member is likely to influence the selection of a particular provider, and in this case, no exception to the Beneficiary Inducement CMP was available to protect the arrangement.
Practical Takeaways
This unfavorable opinion signals that the OIG will continue to closely scrutinize recruitment strategies that link inappropriate financial incentives to referrals, pose the potential for unfair competition, and raise quality-of-care concerns. Given the rise of in-home care and the increasing use of family members as caregivers, providers should exercise caution to ensure their compensation arrangements are appropriately structured and, ideally, in compliance with a safe harbor or statutory exception.
FOOTNOTES
[1] 42 U.S.C. § 1320a-7b(b).
[2] 42 U.S.C. § 1320a-7b(b)(3)(B) and 42 C.F.R. § 1001.952(i).
[3] 42 U.S.C. § 1320a-7a.