Healthcare providers’ offering patients a discount may be permissible under certain situations. However, in the current legal climate, providers must be extremely careful when doing so, because offering such discounts can implicate numerous federal and state laws. These laws include the federal and state antikickback statutes, the travel act, healthcare fraud and other state or federal statutes. Therefore, a provider who routinely discounts or waives a patient’s responsibility, including copayment, deductibles, out of network responsibility or other obligations may be violating the law according to the government. Below are some recent cases in which the government took this position.
For example, according to a government press release, the Department of Justice reached a settlement with three pharmaceutical companies – Jazz Pharmaceuticals plc (Jazz), Lundbeck LLC (Lundbeck), and Alexion Pharmaceuticals Inc. (Alexion), who agreed to pay a total of $122.6 million to resolve allegations that they each violated the False Claims Act by paying the Medicare or Civilian Health and Medical Program (ChampVA) copays for their own products, through foundations that the companies used.
What is particularly interesting about these cases is that it involves the pharmacies’ use of a copay reduction program. These programs are common and many large, retain pharmacies offer such programs using a co-pay card. The full press release is located at https://www.justice.gov/opa/pr/three-pharmaceutical-companies-agree-pay-total-over-122-million-resolve-allegations-they-paid.
Jazz sold Xyrem and Prialt, and the government alleged that Jazz asked a foundation to create a fund that would pay the copays of these medications. The foundation did create such a fund to which Jazz became the sole donor. The government further alleged that, in conjunction with establishing this fund, Jazz made Medicare patients ineligible for Jazz’s free drug program and instead referred Xyrem Medicare patients to the foundation, enabling Jazz to generate revenue from Medicare and induce purchases of the drug.
The government alleged similar conduct regarding Lundbeck and Alexion who also were donors to foundations who paid patient copays for medication. It also alleged that these defendants referred government pay patients to the foundations which resulted in submitting claims to the government for millions of dollars.
In a criminal case, United States v. Beachamp, 3:16-cr-00516, the government also alleged that reduction of patient responsibility was an inducement offered by healthcare providers in order to steer patients to a certain hospital, Forest Park Medical Center. While this issue was not central to the allegations in this case, the government presented extensive evidence on this topic. The allegations in this case involved violations of the anti-kickback statute and the travel act.
Consequently, a healthcare provider must exercise caution when offering any patient discount. They should consult with counsel knowledgeable in these issues before entering into such an arrangement to ensure that they are not violating the law. Complete assurance regarding the same may be difficult, however, based upon the government’s novel positions and aggressive stance on these issues.
The Wirskye Law Firm represented one of the defendants in United States v. Beauchamp.