Proposed manufacturer-provider relationship poses 'substantial risk'

Sunday, October 15, 2006

WASHINGTON - The Office of Inspector General has advised a wheelchair manufacturer that providing advertising assistance and reimbursement consulting services to certain suppliers might not be such a good idea.

The arrangement, if implemented, could be subject to penalties, the OIG stated in a recent advisory opinion. "(It) poses all the usual risks associated with kickbacks," the opinion reads. "There is a substantial risk of driving overutilization and increasing program costs."

Per 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.

The manufacturer would also provide certain suppliers with reimbursement consulting services by helping them to code products and obtain payment for products sold to particular patients. The manufacturer would also help suppliers review and assess claims, as well as appeal denied claims.

Providing ads and consulting services to certain suppliers might trigger the anti-kickback statute for the following reasons, the OIG stated:

- The availability and value of the advertising assistance would be determined in a manner that takes into account the volume or value of a supplier's past or expected future purchases.
- The reimbursement consulting services could cause beneficiaries to receive greater quantities of--or more expensive--equipment than they actually require.
- The arrangement would give suppliers an incentive to steer patients to the manufacturer's products, even if the products from other manufacturers were less expensive or more appropriate.
- The arrangement would also pose a substantial risk of unfair competition by encouraging suppliers to purchase DME from the manufacturer to the potential detriment of a competing manufacturer.

"There is a substantial risk that the proposed arrangement would be a disguised kickback scheme having as one of it purposes the generation of business payable by a federal healthcare care program for the manufacturer," the OIG stated.

The manufacturer requested the OIG's opinion.