Legal Intelligencer article by Lamb McErlane PC Health Law Attorneys Vasilios J. Kalogredis, Esq. and Sonal Parekh, Esq.

The HHS Office of Inspector General (“OIG”) issued Advisory Opinion No. 26-12 (“Opinion”) on May 22, 2026 regarding a proposed warranty program, offered by an orthopedic surgery provider (“Requestor”), whereby Requestor would refund certain concierge-program fees to a patient who required revision surgery within two years of the initial surgery (the “Proposed Arrangement”). Specifically, Requestor inquired whether the Proposed Arrangement would constitute grounds for sanctions under Sections 1128A(a)(7), 1128(b)(7) or 1128A(a)(5) of the Social Security Act (“SSA”) as those sections relate to the Federal Anti-Kickback Statute[1] (“AKS”), as well as the Beneficiary Inducements Civil Monetary Penalty[2] (“CMP”) provisions.

Due to the specific facts and safeguards presented, the OIG issued a favorable opinion, concluding that the Proposed Arrangement would not generate prohibited remuneration under either law.

Factual Background

Requestor is an orthopedic surgery provider that offers patients a voluntary concierge program (the “Concierge Program”) pursuant to which patients pay a concierge fee to access items and services intended to support recovery and post-surgical outcomes for one year following a surgical procedure. Examples include personalized coaching and education from a wellness coach, peri-operative nutritional supplements, a wellness application membership that includes health-data monitoring, and other products such as a leg elevator and compression garments. Requestor certified that none of the Concierge Program items or services are covered by insurance, including Federal health care programs, although the underlying surgery may be reimbursable by such programs. Requestor further certified that the concierge fees are consistent with the fair market value of the items and services furnished and are not determined in a manner that takes into account the volume or value of referrals or other Federal health care program business generated between the parties.

Concierge Program participation is elective. Prior to any surgery, a patient choosing the Concierge Program would execute a Membership Agreement relative thereto. A separate Membership Agreement and Concierge Program would be entered into with respect to each subsequent surgery, as applicable.

For a patient electing the Concierge Program in connection with an initial surgery, the Membership Agreement would contain Requestor’s warranty (the “Warranty”) that substantial compliance with the Concierge Program would result in the patient not requiring revision surgery within two years of the initial procedure, otherwise the Requestor would refund to the patient the concierge fees paid for the Program. The refund would be limited solely to those fees. The Warranty would not be conditioned on a patient’s exclusive use of Requestor or on any minimum purchase of Requestor’s items or services (including as it relates to performing the revision surgery). Requestor would fully and accurately report a Warranty refund on an invoice or statement provided to the patient. The Membership Agreement would also obligate the patient to provide information regarding the refund if requested by the Secretary of HHS or a State agency.

The Law

The AKS[3] 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… any item or service reimbursable under a Federal health care program.” The prohibition extends to remuneration to induce, or in return for, the purchasing, leasing, or ordering of, or arranging for or recommending the purchasing, leasing, or ordering of, any good, facility, service, or item reimbursable by a Federal health care program. Here, remuneration includes the transfer of anything of value. The statute applies to any arrangement where at least one purpose of the remuneration is to induce referrals for items or services reimbursable by a Federal health care program. Violations of the AKS constitute a felony punishable by a maximum fine of $100,000 and/or up to 10 years of jail time, as well as exclusion from Federal health care programs and potential imposition of fines by the OIG.

While statutory exceptions and regulatory safe harbors exist, protection is only available where all elements of a safe harbor are strictly satisfied. Arrangements that fall outside of safe harbor protection are subject to a fact-intensive, case-by-case analysis. Here, the OIG found that the “Warranties Safe Harbor” could potentially apply to the Proposed Arrangement, which, among other requirements, contains reporting and documentation obligations, limitations on certain payments for beneficiary medical expenses, rules applicable to bundled warranties, and a prohibition on conditioning the warranty on exclusive use or minimum purchases.[4]

Separately, the Beneficiary Inducements CMP imposes prohibits offering remuneration to Medicare or Medicaid beneficiaries that the offeror knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier for reimbursable services. For purposes of the Beneficiary Inducements CMP, “remuneration” expressly includes free items or services or items/services offered below fair market value.

Legal Analysis and Conclusion

The OIG acknowledged that the Proposed Arrangement implicated the AKS, highlighting that the offer of the refund under the Warranty could induce patients to choose Requestor for their surgery, which could be paid for in whole or in part by a Federal health care program. OIG nevertheless concluded that the arrangement would fall squarely within the Warranties Safe Harbor.

The OIG then confirmed that Requestor’s Warranty met the regulatory definition of a warranty, finding that the Membership Agreement containing the Warranty was a written undertaking for Requestor to take remedial action with respect to a bundle of items and related services, which therefore formed part of the basis of the bargain between Requestor and the patient and applied to the bundle of Concierge Program items and related services.

OIG next examined which warranty safe-harbor conditions actually applied, recognizing that (i) none of the Concierge Program items or services were covered by insurance, including Federal health care programs; (ii) the Warranty remedy was not payment for medical, surgical, or hospital expenses other than the cost of the items and services subject to the Warranty; and (iii) the Warranty remedy would be paid only to patients. On those facts, OIG explained that only certain safe-harbor elements were relevant.

For the applicable conditions, the OIG found that Requestor’s certifications were sufficient. Specifically, (i) Requestor would fully and accurately report the amount of any refund on the patient’s invoice or statement and would tell patients, through the Membership Agreement, about their obligation to provide relevant information to HHS or a State agency upon request; (ii) Federal health care program beneficiaries would agree in the Membership Agreement to provide the required information if requested; and (iii) Requestor certified that the Warranty would not be conditioned on exclusive use of, or a minimum purchase of, Requestor’s items or services.

The OIG concluded that the Proposed Arrangement, if undertaken, was protected under the AKS Warranties Safe Harbor and, therefore, would not constitute remuneration under the Beneficiary Inducements CMP nor be subject to administrative sanctions.

Importantly, the OIG expressly distinguished the Concierge Program, requiring patients to pay prior to undergoing surgery, from the provision of free concierge items or services in connection with surgery. OIG reiterated its longstanding concern that free items or services furnished by physicians or other providers can influence patients to obtain federally reimbursable care. Accordingly, this favorable conclusion should not be read as a general endorsement of complimentary post-surgical benefits.

This Opinion provides several practical compliance principles for health care providers considering warranties, service guarantees, or patient refund arrangements and offers a meaningful example of how an outcome-based patient refund can be structured as a bona fide warranty rather than an inducement, particularly where the program is optional, separately paid, documented in advance, not tied to exclusivity, and limited to a refund of the amount paid for the warranted package.

Limitations

As with all OIG advisory opinions, this Opinion is binding only with respect to the Requestor and the specific arrangement presented, and it may not be relied upon by other persons as legal protection for different arrangements. OIG also expressed no opinion regarding other Federal, State, or local laws that might apply. Nevertheless, the Opinion provides useful compliance guidance for providers and counsel evaluating patient-facing warranties and reinforces the importance of structuring the remedy, disclosures, documentation, and purchasing conditions to track the safe harbor closely.

If you have any questions or if we may be of further assistance regarding compliance under the AKS or other health law matters, please feel free to contact Bill Kalogredis, Esq. or Sonal Parekh, Esq.

Read the article in the Legal Intelligencer / Law.com here.

Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, veterinarians, and other health care professionals and their businesses as to contractual, regulatory and transactional matters for over 50 years. He is Chairman of Lamb McErlane PC’s Health Law Department. Bill can be reached by email at bkalogredis@lambmcerlane.com or by phone at 610-701-4402.

Sonal Parekh, Esq., is an associate at Lamb McErlane PC who focuses on health care transactional matters and a broad range of health care regulatory-related issues on behalf of health care systems, physicians, dentists, behavioral health providers, and other health care providers, and is a pharmacist by education and training. Sonal can be reached by email at sparekh@lambmcerlane.com or by phone at 610-701-4416.

*This article is for educational purposes only and is not intended to be legal advice. Should you require legal advice on this topic, any health care matter, or have any questions or concerns, please contact Vasilios J. (Bill) Kalogredis, Esq. or Sonal Parekh, Esq.

[1] See Section 1128B(b) of the SSA.

[2] See Section 1128A(a)(5) of the SSA.

[3] 42 U.S.C. § 1320a-7b(b).

[4] 42 C.F.R. § 1001.952(g).