Advertising assistance poses risks, OIG warns

Thursday, November 30, 2006

WASHINGTON - The OIG sent a shiver through the industry in October when it issued an advisory opinion that questioned the legality of the advertising assistance that some manufacturers offer providers. The opinion also irked a number of industry watchers who criticized the OIG for sticking its nose where it doesn't belong--in the free market.
"The purpose of sales is to get sales, to induce people to buy your stuff," said healthcare attorney Ann Berriman. "They are saying that any activity in health care is offensive to them and potentially illegal because it induces people to purchase one product over another. How can they say that?"
The OIG gives an advisory opinion when asked a specific question about the legality of a particular action. The OIG keeps the names of the company or provider asking the questions confidential.
In this case, the arrangement, if implemented, could be subject to penalties, the OIG stated in the advisory opinion:"(It) poses all the usual risks associated with kickbacks."
"There is a substantial risk of driving overutilization and increasing program costs," the opinion reads.
In the proposed arrangement, the manufacturer would provide suppliers with free TV, Internet and print ads featuring its products. The ads would direct consumers to suppliers or to a call center financed and operated by the manufacturer. The manufacturer would select suppliers based on demographics, historical market data and projected market potential.
"To say that co-op advertising can't happen is wrong," said Jeff Baird, a healthcare attorney with Brown & Fortunato in Amarillo, Texas. "The anti-kickback statute does not go that far."
Because the ruling is so broad, attorneys said they must evaluate advertising arrangements between providers and manufacturers on a case-by-case bases.
"This is another example of when you are wearing a healthcare hat, you can't always act like a smart businessman," said attorney Neil Caesar, president of the Health Law Center in Greenville, S.C. "Government rules thwart opportunities that otherwise would be commonplace."