In Advisory Opinion 17-05, posted by the U.S. Department of Health and Human Services Office of Inspector General (OIG) on September 7, 2017, the OIG approved a pharmacy’s customer loyalty/discount program (Benefit Program). Under the arrangement, members of the Benefit Program pay a fixed annual fee for access to the following benefits:
- Discounts on generic drugs, other prescription drugs listed on the Benefit Program’s formulary, pet prescriptions, nebulizer devices and related supplies, blood glucose testing meters and related supplies, and immunizations paid for by members entirely out-of-pocket (i.e., products for which no insurer, including any federal healthcare program, would be billed).
- A 10 percent discount on any in-store clinic service when the member pays for the service entirely out-of-pocket (e.g., physicals, immunizations, and health screenings and testing, such as lipid panel testing).
- A 10 percent credit toward future eligible retail purchases of certain pharmacy-branded products, including over-the-counter medications that may be reimbursed by certain Medicare Advantage plans and in-store photo-finishing. Members cannot, however, redeem earned credits to purchase prescriptions, immunizations, clinic services, alcohol, gift cards, postage stamps, prepaid cards, milk products, or tobacco products, nor can they redeem earned credits for retail pharmacy or clinic cost-sharing amounts.
The OIG analyzed the Benefit Program under the Civil Monetary Penalties Law (CMPL), SSA §1128A(i)(6)(G) and 42 C.F.R. §1003.110, and the Anti-Kickback Statute. The arrangement, according to the OIG, would implicate both the Anti-Kickback Statute and the CMPL, because the discounted items and services and earned credits could induce a beneficiary to select the pharmacy for federally reimbursable items or services (e.g., pull-through). Continue Reading