April 22, 2025 Legal Intelligencer article by Lamb McErlane Health Law Attorneys Vasilios J. Kalogredis, Esq. and Sonal Parekh, Esq.

The HHS Office of Inspector General (“OIG”) issued Advisory Opinion No. 25-02 (“Opinion”) on April 4, 2025 regarding an arrangement whereby “Requestor,” a community health center (“CHC”), proposes, during the provision of certain social services to individuals to: (1) identify individuals in need of primary care services; (2) inform them of the availability of such services; and (3) schedule an appointment for them to receive primary care services from Requestor or refer them to a local primary care provider (the “Proposed Arrangement”). Specifically, Requestor inquired as to whether the Proposed Arrangement, as discussed below, would warrant sanctions under Section 1128A(a)(7) of the Social Security Act (“SSA”) as it relates to the federal Anti-Kickback Statute[1] (“AKS”); Section 1128A(a)(5) as it relates to inducements to beneficiaries (“Beneficiary Inducements CMP”); or the exclusion authority in Section 1128(b)(7) as it relates to the AKS and the Beneficiary Inducements CMP.

The Opinion concludes that although the Proposed Arrangement, if undertaken, would generate prohibited remuneration under the AKS (if the requisite intent were present) and the Beneficiary Inducements CMP, the OIG would not impose administrative sanctions under the Beneficiary Inducements CMP or Sections 1128A(a)(7) or 1128(b)(7) of the SSA.

Factual Background

In addition to medical services, Requestor provides certain non-medical, social and educational services that enable individuals to access health care and improve health outcomes (e.g., child care, food banks and meals, employment and education counseling, and legal services) (“Additional Services”). CHCs provide primary health care services to underserved populations regardless of their ability to pay. CHCs are required to provide certain health care and other services to community members[2] and may provide supplemental health services to promote and facilitate optimal use of primary health services.[3]

The Health Resources and Services Administration (“HRSA”) previously approved the Additional Services furnished by Requestor within Requestor’s scope of project (e.g., a program that assists victims of crimes with replacing locks to address safety concerns and a program that provides diapers, books, toys, and baby gear for children ages 0-5). Requestor maintains that while individuals in the community served by Requestor frequently access Requestor’s Additional Services, they do not seek health care services from Requestor due to financial concerns and awareness.

The Proposed Arrangement

Requestor proposes to ask each individual, at the time such individual receives Additional Services, whether he or she has seen a primary care provider within the last year. If the answer is no, Requestor would provide the individual with a list of primary care providers in alphabetical order, which would include Requestor (with no additional emphasis placed to identify Requestor). Requestor would implement an “any willing provider” standard, such that any request from a community provider to be included on the list would be honored at all times. Requestor further certified that individuals could continue to receive Additional Services from Requestor without electing to receive primary care services from Requestor.

Individuals who elect to receive primary care services from Requestor would have an appointment scheduled by Requestor accordingly. If an individual selects a provider other than Requestor, Requestor would make an electronic referral to the requested provider, including the prospective patient’s contact information and reason for referral, which would enable the requested provider to contact the individual and schedule an appointment accordingly.

The Law

Federal Anti-Kickback Statute.

The AKS[4] 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.

Beneficiary Inducements CMP.

The Beneficiary Inducements CMP imposes civil monetary penalties (“CMPs”) against any person who offers or transfers remuneration (i.e., items or services for free or less than fair market value) to a Medicare or State health care program 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 by such health care programs. The OIG may also initiate administrative proceedings to exclude such person from Federal health care programs.

Legal Analysis

The OIG noted that the Proposed Arrangement would implicate the AKS because it would involve remuneration in the form of Additional Services from Requestor to individuals that could induce them to self-refer to Requestor to obtain health care services, especially if such provision of Additional Services was combined with an offer to schedule an appointment for those individuals to receive primary care services from Requestor.  Nevertheless, the OIG stated that the risk of fraud and abuse presented by the Proposed Arrangement is sufficiently low under AKS for the OIG to issue a favorable advisory opinion for the following reasons.

First, the Proposed Arrangement includes a variety of safeguards that reduce the risk of patient steering, as set forth below.

1. 1. Individuals in need of primary care services would be identified using objective criterion which does not promote Requestor.
   2. The list of primary care providers would be organized in alphabetical order without additional emphasis promoting or drawing attention to Requestor’s name.
   3. Requestor would include several providers on the list distributed to patients and would implement an “any willing provider” standard, such that any request from a community provider to be included on the list would be honored at all times.
   4. Requestor certified that individuals could continue to receive Additional Services from Requestor without electing to receive primary care services from Requestor, and that Requestor would provide complete contact information to the individual and requested provider sufficient to effectuate the referral.

Second, as a CHC, Requestor strives to provide primary care services to underserved populations, regardless of their ability to pay. The Proposed Arrangement may increase access to health care services and aligns with Requestor’s designation as a CHC, pursuant to Section 330 of the Public Health Services Act (“PHS Act”). Under the Proposed Arrangement, Requestor would be offering HRSA-approved Additional Services and concurrently confirming that a patient has access to primary care services or offering to facilitate such access, all of which would be consistent with the statutory requirements imposed on Requestor as a CHC.

The OIG also concluded that the Proposed Arrangement could influence beneficiaries to select Requestor for the receipt of primary care services that could be reimbursable by a Federal health care program and thus implicate the Beneficiary Inducements CMP. However, in an exercise of its enforcement discretion, the OIG stated it would not impose sanctions under the Beneficiary Inducements CMP due to the aforementioned reasons.

Conclusion and Limitations

The OIG concluded that although the Proposed Arrangement, if undertaken, would generate prohibited remuneration under the AKS (if the requisite intent were present) and the Beneficiary Inducements CMP, the OIG would not impose sanctions under Sections 1128A(a)(7), 1128(b)(7), or the Beneficiary Inducements CMP of the SSA.

It is important to note that the Opinion is limited in scope to the specific Arrangement and is not to be relied upon by any person other than the Requestor. The opinion is also subject to any additional limitations set forth at 42 C.F.R. Part 1008. While the Opinion may not be specifically relied upon for other arrangements, the reasoning stated therein is useful to keep in mind when considering different avenues in which to provide products, services, and incentives.

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

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

[2] See 42 C.F.R. § 51c.102.

[3] See 42 C.F.R. § 51c.102(c)(1)(ii).

[4] 42 U.S.C. § 1320a-7b(b).

Vasilios J. (Bill) Kalogredis, Esq. has been advising physicians, dentists, and other healthcare professionals and their businesses as to contractual, regulatory and transactional matters for 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 healthcare transactional matters and a broad range of healthcare regulatory-related issues on behalf of healthcare systems, physicians, dentists, and other healthcare 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.

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