Illegal Medicare Inducements

Offering gifts and other inducements to Medicare beneficiaries is not permitted.

A provider who offers or transfers to a Medicare beneficiary any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider of Medicare payable items or services may be liable for civil money penalties of up to $10,000 for each wrongful act.

It is considered fraudulent to offer, pay, solicit, or receive bribes, kickbacks, or rebates, directly or indirectly, in cash or in services, in order to induce referrals of patients for the purchase of goods or services that may be paid for by the Medicare program. This includes waivers of copayments and deductible amounts (or any part thereof) and transfers of items or services for free or for other than fair market value.

Recently it cost a chiropractor nearly $100k when he was found guilty of ‘enticing’ patients by performing free intersegmental traction sessions for all of their patients free of charge. Yet Medicare found it to be an enticement because it could cause a covered Medicare individual to chose that office over another that did not offer the service for free!

Offering valuable gifts to beneficiaries to influence their choice of a Medicare provider raises quality and cost concerns. Providers may have an economic incentive to offset the additional costs attributable to the giveaway by providing unnecessary services or by substituting cheaper or lower quality services. The use of giveaways to attract business also favors large providers with greater financial resources for such activities, disadvantaging smaller providers and businesses.

Therefore, new patient specials, cash discounts and family plans cannot legally be offered to Medicare eligible patients.

A provider may offer inexpensive gifts or free services to beneficiaries but they should not exceed $10 per item and $50 per year. The statute and implementing regulations contain a limited number of exceptions. (See section 1128A(i)(6) of the Act; 42 CFR 1003.101.)

In addition, valuable services or other remuneration can be furnished to financially needy beneficiaries by an independent entity, such as a patient advocacy group, even if the benefits are funded by providers, so long as the independent entity makes an independent determination of need and the beneficiary’s receipt of the remuneration does not depend, directly or indirectly, on the beneficiary’s use of any particular provider. An example of such an arrangement is the American Kidney Fund’s program to assist needy patients with end stage renal disease with funds donated by dialysis providers, including paying for their supplemental medical insurance premiums. (See, e.g.. OIG Advisory Opinion No. 97-1 and No. 02-1.)

It is not sufficient to have the patient sign an affidavit stating
that they can’t afford your services!

The bottom line is this. Don’t offer free or reduced prices to Medicare eligible patients. They are already getting a reduced price on your adjustment anyway. And if you are advertising a new patient special or any other reduced price scheme, you should have a disclaimer stating that Medicare patients are not eligible for the discount.


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