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Publication

July 23, 2008Client Alert

OIG Opens Door to Gift Cards for Disappointed Patients

On June 27, 2008, the Department of Health and Human Services Office of Inspector General ("OIG") issued Advisory Opinion No. 08-07. The Advisory Opinion reviewed a healthcare system's proposed gift card program to determine whether it violated the Anti-Kickback Statute, 42 U.S.C. ยง 1320a-7b(b), which prohibits the payment of any remuneration with the intent to induce referrals for items or services which are reimbursed by a Federal health care program.

Gift Card Program

The Advisory Opinion was solicited by a large health system consisting of three hospitals, 22 clinics, and various other facilities, which was considering issuing gift cards to patients who experienced service short falls including: excessive wait times, cancelled appointments, delayed meals, excess noise, equipment problems, or the loss of a personal item. According to the health system, the cards would not be redeemable for services, pharmacy items or durable medical goods. Instead, the gift cards could only be used at local vendors not housed within the health system. The health system also proposed utilizing a gift card tracking system, such that it would be able to limit the total to no more than fifty dollars per patient per year. In addition, the health system would not advertise the gift card system. The health system intended to use the gift cards and the tracking system to improve patient service and satisfaction, and identify poor service.

Legal Analysis

While the gift card program implicates a number of federal laws, the OIG concluded that it would only implicate gifts of a nominal value. The OIG cited four specific reasons that were instrumental in their analysis:

  • The gift cards will have a value not exceeding $10.
  • The gift cards will be redeemable at specific vendors that do not sell items or services paid for by Federal health care programs.
  • The gift cards will not be redeemable for cash or for items or services provided by the health system.
  • The health system will implement a system for tracking the issuance of the cards, for the purpose of ensuring that individual beneficiaries do not receive multiple cards having an aggregate value in excess of $50 in one year.

Conclusion

While the gift card program could potentially violate the Anti-Kickback Statute, the OIG decided, based on the safeguards instituted by the health system, that it would not subject the gift card program to sanctions. Thus, it is possible for hospitals to provide gift cards to patients who experienced service short falls, as long as specific safeguards are put in place. While this may be good news to hospitals looking for creative ways to remedy service shortfalls, it should be noted that the OIG is limited to the particular arrangement proposed in the Advisory Opinion and does not have the force of law.

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