OIG Advisory Opinion Approves Credit Card Rewards Program

05 April 2007 Publication
Authors: Laura J. Gage Gary D. Koch Nathaniel M. Lacktman Judith A. Waltz J. Mark Waxman

Legal News Alert: Health Care

On April 3, 2007, the Office of the Inspector General ("OIG") posted an Advisory Opinion (No. 07-03) regarding the use of rewards from credit card issuers for the benefit of a residential health care facility and its employees. The requestor proposed the use of credit cards, issued in the facility's name, in order that it could purchase goods and services for its use, and use the credit card issuers’ rewards (e.g., airline mileage, cash rebates, points for purchases, etc.) to benefit the facility by: (1) purchasing additional goods and services for the facility or (2) providing the rewards to its employees as performance-based compensation.

The OIG concluded that the arrangement proposed by the facility would not generate any prohibited remuneration in violation of the anti-kickback statute.

In rendering its opinion, the OIG relied on the facility's certification that the employees’ incentives would not be based on referrals or the generation of any business payable by any federal health care program. The facility also certified that only bona fide employees would be eligible to receive the rewards, and then only for furnishing items or services for which payment was made in whole or in part by the Medicare, Medicaid or other federal health programs as performance-based compensation for fulfilling their job duties and responsibilities. The OIG determined that these assurances brought the rewards program within the statutory exception and regulatory safe harbor for employee compensation.

The OIG noted that the use of the rewards to obtain Medicare and Medicaid-covered items and services might raise issues regarding proper reporting of such items and services for reimbursement purposes. In response to those concerns, the facility certified that it would account for all benefits it obtained through the rewards program by reflecting the items and services on the cost reports and claims it submits to federal health programs. For tax purposes, the facility certified that the rewards would be characterized as part of an employee's compensation.

If you have any questions about the foregoing, or need additional information, please contact any of the attorneys listed to the right or the lawyer in the firm who generally handles your legal matters.

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