Would it surprise you to know that practices that offer “free” screenings may be seriously breaking the rules of compliance?

But everyone does it, so it must be okay, right? Don’t be so sure!

The Office of Inspector General (OIG) for the Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) enforce federal rules that strictly prohibit Medicare and Medicaid providers from giving beneficiaries of any sort of goods or services that might be interpreted as “prohibited inducements.”

HHS has reported it will interpret the prohibition to apply to any gift offered or provided to program beneficiaries that has a retail value of more than $10 individually or a cumulative value of more than $50 in a calendar year.

The OIG and HHS urge doctors to use extreme caution in this area because of the severe penalties possible under this rule. Practice-promotion incentives that include any discount on examinations, x-rays, or any other item of value that exceeds $10 become a source of potential enforcement action.

Likewise, the waiving of co-payments and other fee adjustments may involve a similar liability. All DCs must be made aware and/or reminded of this important federal rule in order to avoid increasingly aggressive enforcement actions coming out of CMS.

A Special Advisory Bulletin published in August 2002 provides bright-line guidance that will protect the Medicare and Medicaid programs, encourage compliance, and level the playing field among providers.1

The highest risk

Practices that rely heavily on marketing — where free or discounted services are offered — are at the highest risk. Although the bulletin references remuneration to Medicare or Medicaid beneficiaries, it’s widely known that “as Medicare goes, so goes the nation.”

Therefore, this guidance should be applied to all patients and potential incentives you wish to offer.

Section 1128A(a)(5) of the Social Security Act bars the offering of remuneration to Medicare or Medicaid beneficiaries where the person offering the remuneration knows or should know the remuneration is likely to influence the beneficiary to order or receive items or services from a particular provider.

The “should know” standard is met if a provider acts with deliberate ignorance or reckless disregard.

The bulletin further explains that providers may also 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.

The “inducement” element of the offense is met by any offer of valuable goods and services as part of a marketing or promotional activity, regardless of whether it’s active or passive.

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