Evans & Dixon’s Denise Bloch authored the below article that was recently published by the St. Louis Metropolitan Medicine in its December 2020/January 2021 issue.
Federal alert indicates increased focus on speaker programs and their
potential to violate the anti-kickback statute
On November 16, 2020, the U.S. Office of Inspector General (OIG) issued a Special Fraud Alert 1 focusing on the fraud and abuse risks related to payment, solicitation or receipt of remuneration from speaker programs conducted by pharmaceutical and medical device companies. This special alert provides notice to health care providers and companies that the OIG will be focusing more attention to speaker programs and their potential to violate the anti-kickback statute. The OIG raises specific concerns related to the speeches and presentations given by physicians and health care professionals (HCPs) on behalf of pharmaceutical and medical device companies.
These companies generally pay HCPs to participate in company-sponsored speaker programs on the premise that the speakers help educate and inform other health care professionals about benefits, risks and appropriate uses of the company’s medicines or devices. The OIG raises questions about the educational value of such programs, and often contends the programs provide financial benefits for the HCPs and the drug and device companies instead of focusing on patients’ best interests. Investigation of speaker programs and the related remuneration received by the HCPs for their participation is not new. However, the special alert highlights the additional attention HCPs and the companies can expect from the OIG and Department of Justice (DOJ) as they focus on these programs. HCPs participating in speaker programs need to be aware that any compensation received for their participation could result in a violation of the anti-kickback statute. 2 Although these in-person events have slowed during the COVID-19 emergency, once the emergency ends it is extremely likely these speaker programs and the participating HCPs and companies will receive increased scrutiny by the OIG. The anti-kickback statute prohibits the knowing and willful offering, paying, soliciting or receiving anything of value to induce or reward referrals or generation of business involving drugs or medical devices payable by federal health care programs. HCPs and the companies engaging HCP services for these speaker programs need to be mindful of the manner the events are organized and payments are made. Non-compliance with the anti-kickback statute can result in both civil as well as criminal cases being brought against both HCPs and pharmaceutical and device companies.
The OIG often contends the programs provide financial benefits for the HCPs and the companies instead of focusing on patients’ best interests.
Examples of cases where the federal government has pursued civil and criminal cases against drug and device companies as well as HCPs, included some of the following scenarios:
-Seeking high-prescribing HCPs to speak at programs, and rewarding them with high-paying speaker fees, with some HCPs receiving hundreds of thousands of dollars for speaking;
-Requiring speakers to hit sales targets to receive compensation, i.e., the HCPs would need to prescribe or order a minimum number of prescriptions or devices to receive the speaker honorarium;
-Holding speaker programs at venues for recreation or entertainment, which was not conducive for educational purposes, i.e., wineries, sports stadiums, fishing trips, golf clubs and adult entertainment facilities;
-Holding programs at expensive restaurants, serving lavish meals and alcohol; and
-Inviting audiences consisting of individuals who previously heard the same program or friends, spouses/partners of speakers, or other family members with no legitimate business reason to attend the program.
Based on the special alert, HCPs and such companies need to be especially conscious of the fraud and abuse risks if they offer or receive payment, solicitation or any remuneration related to company-sponsored speaker programs. The OIG has made it clear that it intends to focus on speaker programs where HCPs receive what the OIG regards as substantial remuneration from the companies.
Background: Anti-Kickback Statute (AKS)
To understand the issues raised in the OIG Special Alert, a basic understanding of the anti-kickback statute is needed. The AKS was enacted, in part, to protect patients from HCPs who may be influenced by inappropriate financial incentives to provide referrals or recommendations. Those referrals or recommendations may not be in the patients’ best interests and instead favor the HCPs’ and companies’ financial interests. The following discusses basic AKS background:
What is the AKS? A criminal law that prohibits the knowing and willful payment of “remuneration” to induce or reward patient referrals or the generation of business involving any item or service payable by the federal health care programs (e.g., drugs, supplies or health care services for Medicare or Medicaid patients). 3
What is meant by “remuneration” under the AKS? “Remuneration” includes anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies. These same types of payments may be totally acceptable in other industries, but when it comes to health care providers, payment for referrals is a crime. HCPs as well as pharmaceutical and medical device companies need to use caution in entering arrangements for speaker programs to avoid committing a crime.
What criminal penalties and civil administrative sanctions may be taken against HCPs or pharmaceutical or medical device companies if the AKS is violated? The AKS applies criminal liability to all parties to an impermissible “kickback” transaction. Both the party offering and paying the remuneration as well as the party soliciting or receiving prohibited remuneration are subject to the AKS prohibitions; this may include both the companies and the HCPs. When the receipt, offer or payment of remuneration is paid purposefully to induce or reward referrals, or orders of items or services payable by a federal health care program, the AKS is violated. 4 Violation of the AKS is a felony and is punishable by a maximum fine of $100,000, imprisonment up to 10 years, or both. If a party is convicted of violating the AKS, the criminal convictions may result in mandatory exclusion from federal health care programs including Medicare and Medicaid. 5 OIG initiation of administrative proceedings may also result in exclusion of persons from the federal health care programs and may also impose civil money penalties for engaging in conduct prohibited by the AKS. 6
The anti-kickback statute prohibits the knowing and willful offering, paying, soliciting or receiving anything of value to induce or reward referrals or generation of business involving drugs or medical devices payable by federal health care programs.
Fraud and Abuse Risks for AKS Violation Posed by Speaker Programs
Past OIG investigations reveal that HCPs often receive generous compensation for speaking in which the circumstances are not necessarily conducive to learning, such as at fancy restaurants, sporting events or resort locations. In addition, often those individuals in attendance at these programs are individuals with no legitimate reason to attend, i.e., spouses, friends, employees of the speaker or the speaker’s practice, or other individuals with no use for the information being discussed. As a result, the OIG remains skeptical about the educational value of such programs, since one purpose of the remuneration to the HCP speaker and attendees may be to induce or reward referrals to prescribe or order the company’s drugs or medical devices. Provision of honorariums to speakers, and meals, entertainment, recreation, travel or other benefits in connection with information or marketing presentations may raise issues of AKS violations. 7
Prior OIG educational materials have warned physicians to be aware of consultant or speaking arrangements with drug or device companies. These arrangements could improperly induce HCPs to prescribe or order products due to loyalty to the company or a desire to obtain more money or other inducements from the company. These inducements could influence the HCPs to prescribe a drug or medical device, make an improper referral or generate business to the company. 8 HCPs should be careful in accepting any compensation to avoid a violation of fraud and abuse laws. 9
What Speaker Program Arrangements Should Be Avoided or Entered with Caution?
Whether the OIG recognizes an arrangement involving remuneration as lawful depends on the specific facts and circumstances and intent of the parties. Liability under the AKS requires intent that the HCPs “knowingly and willfully” solicited or received remuneration in connection with a speaker program in return for prescribing or ordering drugs or medical devices reimbursable by a federal health care program.
Intent can be demonstrated by the speaker program’s characteristics as the well as the parties’ actual conduct. As previously addressed above, there are particular situations which demonstrate greater potential for AKS issues. The special alert provides several examples of suspect characteristics, which is not exhaustive, but lists arrangements to consider when deciding whether or not to participate in a speaker program, such as:
-Little or no substantive information is actually presented;
-Alcohol is available or an expensive meal is provided to the program attendees, especially if the alcohol is free;
-Holding a program at a location not conducive to exchanging educational information, i.e., restaurants or entertainment or sports venues;
-The company sponsors a number of programs on the same or substantially same topic or product though there have been no substantive changes to the relevant information;
-No new medical or scientific information or new FDA approved
or cleared indication for the product has been released for a significant period of time;
-HCPs attend programs on the same or substantially same topic more than once, i.e., either repeatedly attend same program or attend a program after speaking on the same or substantially same topic;
-Attendees include individuals with no use for the information, i.e., friends, spouses/partners or family members of the speaker or attendee, employees of the speaker’s own medical practice, or staff of facilities where the speaker is the medical director;
-The company’s sales or marketing business units influence who the company selects to speak or attend programs based on past or expected revenue the speaker or attendees have or will generate by prescribing or ordering the company’s drugs or medical devices;
-Payment to speakers exceeds fair market value for the speaking service or takes into account the volume or value of past or potential future business generated by the HCPs.
Expect more OIG investigations into AKS compliance in regard to speaker programs. The OIG has made its concerns clear regarding remuneration to HCPs engaged in speaker programs. When remuneration is offered or paid to induce the prescribing, ordering or use of the company’s drugs or medical devices paid for by federal health care programs— and the intent of the parties is present—both the company and the HCPs may be subject to criminal, civil and administrative enforcement actions.
Nonetheless, the OIG does not want to discourage HCPs receiving training and education to properly utilize company products. When deciding whether or not to enter an arrangement for a speaker program, physicians should consider the various factors set forth by the OIG in the special alert. However, physicians should continue to obtain all educational information necessary to provide the most medically necessary and reasonable care for their patients.
When in doubt about the propriety of any speaker program arrangement, legal counsel may assist physicians to obtain answers to their questions. Finally, the OIG Advisory Opinion process is available to submit a request for guidance concerning specific factual situations.
- 42 USC § 1320a-7b(b)
- 42 U.S.C. § 1320a-7b(b).
- See section 1128B(b)(1)-(2) of the Social Security Act; 42 U.S.C. § 1320a-7b(b)(1)-(2).
- See 42 U.S.C. § 1320a-7a.
- See 42 U.S.C. § 1320a-7(b)(7); § 1320a-7a-7a(a)(7).
- OIG Compliance Program Guidance for Pharmaceutical Manufacturers, 68 Fed.
Reg. 23731, at 23738 (May 5, 2003), available at https://oig.hhs.gov/authorities/
docs/03/050503FRCPGPharmac.pdf. The guidance is not limited to pharmaceutical
manufacturers and may also apply to manufacturers of other products reimbursed by
federal health care programs, such as medical device manufacturers. Id. At 23742, n.5.
- See A Roadmap for New Physicians, Avoiding Medicare and Medicaid Fraud and
Abuse, HHS-OIG, 22 (Nov. 2010), available at https://oig.hhs.gov/compliance/
physician-education/roadmap_web_version.pdf; OIG Compliance Program for
Individual and Small Group Physician Practices, 65 Fed. Reg. 59434 (Oct. 5, 2000),
available at https://oig.hhs.gov/authorities/docs/physician.pdf.
- Id. At 23.