OIG Gives Okay to Cost-Sharing Subsidy in Clinical Trial

A company that makes a medical device that uses a patient’s cells to treat ischemic systolic heart failure – a life-threatening cardiac condition – would not face sanctions if it paid Medicare participants’ cost-sharing obligations they would otherwise owe for reimbursable items and services provided during the 2-year study.

That was the finding of a recent Advisory Opinion by the Office of Inspector General for the Department of Health and Human Services (OIG).

The OIG noted that even though such an arrangement might be considered prohibited remuneration under the federal anti-kickback statute (AKS) and the beneficiary inducement prohibitions of the Civil Monetary Penalties Law (CMP), the low-risk nature of the proposed arrangement did not warrant the imposition of sanctions under the requestor’s scenario.

The unnamed requestor told OIG it plans to enroll patients into a study during which the device it manufactures would be used to process bone marrow cells in preparation for treatment. Study investigators and staff will be responsible for finding and enrolling the study subjects. The study will be conducted at 40 sites that are selected based on numerous factors including past clinical trial experience, conflicts of interest, and staff availability to support the study.

Compensation paid to those sites and investigators will be fair market value. If certain criteria are met Medicare pays for Category B Investigational Device Exemption (IDE) devices and routine care items and services provided in a clinical trial that involves FDA-approved devices. However, there are out-of-pocket expenses that Medicare beneficiaries are expected to pay, which could total more than $1,300, according to the requestor.

Although it is a one-time procedure, there are six follow-up visits during the 12 months after the procedure and a two-year follow-up visit.

The requestor notes that the cost-sharing subsidy is an important part of enrolling and retaining enough subjects to complete the study. In addition, it noted that the out-of-pocket expenses might prevent it from enrolling a socioeconomically diverse population. Both those receiving the treatment, as well as those in the control group (even if they are not benefitting from the therapy) would have their out-of-pocket expenses paid. The reason being that failing to charge cost sharing to one group and not another might alert the control group that they are not receiving the treatment, which would unblind the study.

There would be no advertisement that the out-of-pocket expenses would be paid. Those who agree to undergo treatment would only learn of it when signing the informed consent documents.

The OIG approved the arrangement citing several reasons:

First, it would allow those who otherwise could not afford to participate the ability to do so because their share of the costs would be paid for by the requestor. This will allow for a more diversified population to participate in the study and encourage them to complete the entire study.

Second, the proposed arrangement would pose a low risk of overutilization or inappropriate utilization of items and services payable by a federal healthcare program. The proposed arrangement would include “various guardrails that mitigate the risk of inappropriate utilization or improper increased costs to federal healthcare programs,” the OIG reasoned. Among them that the cost-sharing would not be advertised, patients must satisfy the enrollment criteria and comply with the study protocol, and the investigators are subject to oversight and monitoring.

Third, the study’s enrollment is capped at 260 patients further reducing the risk that the proposed arrangement would result in overutilization or an inappropriate increase in costs to federal healthcare programs.

Finally, because it’s a one-time treatment, there is no anticipation that there would be a need of future use of the therapy or any of the products manufactured by the requestor.

As always, the opinion is limited to the facts in this case and every arrangement is different. The Health Law Offices can assist clients in requesting an Advisory Opinion and to ensure that all proposed arrangements fall within legal parameters. For more information contact us at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.

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The Health Law Offices of Anthony C. Vitale