On June 27, 2008, the U.S. Department of Health & Human Services, Office of Inspector General (“OIG”) issued an advisory opinion regarding a proposal to provide $10 gift cards to patients whose service expectations are not met (“Advisory Opinion No. 08-07”).  The entity which requested the opinion is an integrated health delivery system that provides health care services through a nursing facility, health plan, and several hospitals and medical clinics (“Requestor”).

In describing its proposed gift certificate arrangement to the OIG (“Proposed Arrangement”), the Requestor explained that gift cards would be offered as a component of a new program to manage and resolve patient complaints at its facilities regarding service shortfalls.  Examples of situations targeted by the program include excessive wait times, cancelled appointments, delayed meals, excessive noise, housekeeping or dietary concerns, equipment problems (e.g., a television set not working), or loss of personal items.  (For instance, a gift card might be offered to a patient who has experienced at least a 30 minute delay in services.) 

In implementing the program, the Requestor also advised that it would impose the following restrictions and limitations on the proposed gift certificate service:

• Gift cards will be offered for certain local vendors, such as restaurant and theater chains, with specific vendors identified by the gift certificate service.

• Gift cards will not be redeemable for cash or for items or services provided by the Requestor.

• Gift cards will not be redeemable at vendors of health care items and services, such as pharmacies or durable medical equipment suppliers.

• The Requestor will put in place a system to track the issuance of gift cards to patients, for the purpose of ensuring that multiple cards aggregating in excess of $50 in value are not issued to the same patient in one year.  (The tracking system would also enable managers to know when, where, and how often service shortfalls leading to the issuance of gift cards occur, thus allowing the managers to address the underlying cause of the shortfalls.)

• The gift card program will not be advertised.

In analyzing the Proposed Arrangement, the OIG noted that the provision of $10 gift cards to patients who experience service shortfalls has the potential to implicate the prohibition on inducements to beneficiaries contained in the Federal civil monetary penalties statute (“CMP”) and the anti-kickback statute.  (The CMP provides for the imposition of civil monetary penalties against any person who gives something of value to a Medicare or Medicaid beneficiary that is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or Medicaid.  The anti-kickback statute makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a Federal health care program, including Medicare and Medicaid.)  After further consideration, however, the OIG determined that it would not impose sanctions in connection with the Proposed Arrangement given that the gift cards would be nominal in value and would not constitute cash or cash equivalents.  (For enforcement purposes, the OIG has interpreted “nominal value” to be no more than $10 per item, or $50 in the aggregate on an annual basis.  See August 2002 OIG Special Advisory Bulletin:  Offering Gifts and Other Inducements to Beneficiaries.)  In so doing, the OIG relied upon the Requestor’s attestations that:

• The individual gift cards will have a value not exceeding $10;

• The cards will be redeemable at specific vendors that do not sell items or services paid for by Federal health care programs;

• The cards cannot be redeemed for cash or for items or services provided by the Requestor; and

• The Requestor 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.

To access a copy of Advisory Opinion No. 08-07, go to the OIG Advisory Opinions web page at:  http://oig.hhs.gov/fraud/advisoryopinions/opinions.html.


Jennifer L. Griffin is a member of the Burr & Forman LLP Health Care Practice Group.


August 2008