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OIG Advisory Opinion Approves Free Audiometric Testing

The Office of Inspector General has issued a new Advisory Opinion regarding free tests that are provided by a hearing aid supplier. OIG Advisory Opinion 12-13 was requested by a hearing aid supply and service chain which provided a free hearing exam as part of an effort to promote its sales of hearing aids. Free exams encompassed certain portions of tests that were precursors to Medicare reimbursable services. However, the patient was not charge for the pre-initial testing.

The OIG found that the provision of the free test would be unlikely to influence a beneficiary’s decision to select the provider and did not violate the Medicare Anti-kickback Statute. In many cases, the provision of free services can be considered to be remuneration that is intended at least partially to influence referrals for Medicare reimbursable services. Free services can violate the federal Anti-kickback statute which imposes civil monetary penalties and in some cases even criminal penalties when remuneration is intended to induce referrals.

The OIG considered a number of factors in reading the conclusion that the performance of pretesting did not violate the Anti-kickback statute:

1. Free hearing exams were offered to customers without regard to their form of payment or whether the customers agreed to purchase any goods or services from the company.

2. Free tests were not billed to the Medicare program and the free exam did not automatically qualify a patient for Medicare coverages.

3. The provider did not recommend that customers receiving the free hearing exam also undergo Medicare reimbursable audiometric testing.

4. The provider did not attempt to obtain a prescription or order for Medicare reimbursable audiometric testing on behalf of the customer.

No physicians or other employee or other providers were employed to prescribe or order items or services for which a governmental healthcare program could be billed.

The advisory opinion did not go into an in-depth analysis under the Anti-kickback statute but merely focused on whether the arrangement could lead to the imposition of civil monetary penalties. This opinion is an example of a case where free services are offered to Medicare beneficiaries but the arrangement is properly structured and approved by the office of Inspector General. Unfortunately, the advisory opinion process limits enforceability to only the party requests the opinion. It is not binding to protect any other party. However, the Advisory Opinion does provide insight to how the OIG may analyze similar scenarios and is useful in assessing the risk to other providers who may be contemplating similar arrangements.

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John H. Fisher

Health Care Counsel
Ruder Ware, L.L.S.C.
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