The Office of Inspector General for the Department of Health and Human Services (OIG) released a new Advisory Opinion today (OIG Advisory Op. 12-05) analyzing a Loyalty Card rewards program of a supermarket operator under which consumers could earn gasoline discounts on amount of purchases in the operator’s retail grocery stores and pharmacies, including on co-payments for prescriptions covered under Federal health care programs. The OIG determined that while the program implicates the civil monetary penalty provision prohibiting beneficiary inducements (CMP), Section 1128A(a)(5) of the Social Security Act, the program would be permitted as it meets a new exception to the CMP definition of “remuneration” enacted by the Patient Protection and Affordable Care Act (PPACA). This opinion is the first guidance related to the new CMP exception. Additionally, the OIG found the program raises only a low risk of fraud and abuse under the anti-kickback statute, Section 1128B(b) of the Social Security Act. The OIG’s analysis appears consistent with previous guidance suggesting that rewards as part of a card or membership program for purchases generally made, including purchases of items reimbursable by Federal health care programs, do not present a high risk of abuse.
Specifically, the OIG found that under the beneficiary inducement CMP, the program satisfies all three requirements of the retailer rewards exception. Under PPACA, retailer awards are not “remuneration” within the meaning of the CMP if the rewards: 1) consist of coupons, rebates or other rewards from retails; 2) are offered or transferred on terms equal to those available to the general public regardless of health insurance status; and 3) are not tied to the provision of other items or services reimbursable under Federal health care programs. See Section 1128A(i)(6)(G) of the Social Security Act. The OIG found that the Loyalty Card program would satisfy all three elements as the rewards were offered by a supermarket operator to all of its customers; the awards are offered on equal terms for all customers; and the customers redeem the rewards for gasoline, an item not reimbursable under Federal health care programs, and earn the discounts on all purchases without any disparate treatment of or additional reward for prescription purchases.
The OIG further found a minimal risk of fraud and abuse under the anti-kickback statute as the rewards program would not pose a risk of steering beneficiaries to the supermarket operator’s stores and pharmacy because prescription fills are not required or rewarded differently under the program, and there was a low risk of overutilization or increased costs to Federal health care programs because the rewards would be earned on already prescribed drugs without any reduction in the beneficiary’s cost-sharing amounts.