97-2: Payment of Insurance Premiums for End-stage Renal Disease Beneficiaries

The OIG issued Advisory Opinion No. 97-2 on July 28, 1997. The advisory opinion addressed a state-funded program that pays for insurance premiums for financially needy Medicare beneficiaries with end-stage renal disease (ESRD). As in the first advisory opinion, this activity was reviewed under section 231(h) of HIPAA.

Section 231(h) prohibits the payment of any remuneration to a beneficiary of a federal health care program where the party paying the remuneration knows or should know that the remuneration is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part, [by a federal health care program].

The advisory opinion addressed a state-funded program administered by a university. The program receives an annual appropriation from the state to fund a variety of programs that assist financially needy state residents to obtain treatment for end-stage renal disease, including dialysis and kidney transplant services. According to the factual background in the advisory opinion, the program is intended as a last resort intended to be used when no other sources of funding for treatment are available. The funds appropriated to the program can be used only for medical expenses relating to end-stage renal disease.

One aspect of the program is to provide funds for the payment of Medicare Part B, Medigap, and Major Medical Insurance premiums on behalf of indigent ESRD patients. The funds are made available to all contract facilities and the payment may be made on behalf of a qualifying patient without regard to where the patient receives treatment. Funding may not always be available for qualifying patients because of the limited amount of money which is budgeted to each facility.

To qualify for benefits under the program, patients must meet residency, citizenship, medical condition and financial eligibility tests.

The OIG concluded that the activity does not violate section 231(h). Specifically, the finding is based upon a determination that the funds for the premium payments are provided by the state and are made available to all chronic dialysis facilities in the state and to all eligible patients. Specifically, the OIG found that the state-financed premium payments are not likely to influence individual patients in their selection of particular providers.

The OIG included the same limitations as with its first advisory opinion, which are discussed below.

This advisory opinion, as did the first, addressed an activity which probably would not have been viewed as a violation of the law under any circumstances. However, as we have previously noted, perhaps the greatest benefit which will be realized by the health care industry from advisory opinions is an insight into the OIG's analysis of arrangements which implicate the federal antikickback and other related statutes. The OIG's analysis in this situation, i.e., whether the remuneration is likely to influence the judgment of the beneficiary, may be equally applicable to other fact patterns.