New Flexibilities Available to Healthcare and Life Sciences Companies Under Loosened HHS-OIG Advisory Opinion Procedures

On January 11, 2022, the U.S. Department of Health and Human Services (HHS) Office of the Inspector General (OIG) published a final rule, effective February 10, 2022, implementing an important change to procedures for OIG advisory opinions regarding the application of the Antikickback Statute (AKS) and Beneficiary Inducements Civil Monetary Penalty Law (CMPL) to the existing or proposed business arrangements of requesting parties. This development may be helpful to companies that would seek guidance from OIG on topics that historically would be out of scope for an advisory opinion and provides potential new strategy options for parties considering arrangements similar to those under investigation, as well as those under investigation for alleged fraud and abuse misconduct.

New Final Rule

Currently, OIG’s regulations prohibit it from issuing an advisory opinion where the conduct involved is the same or substantially the same as conduct that either (1) is under investigation or (2) is or has been the subject of a proceeding involving HHS or another governmental agency. Under the final rule, OIG will no longer be barred from issuing an advisory opinion if the conduct that is the subject of the advisory opinion is “the same or substantially the same” as conduct under investigation or is or has been the subject of a proceeding by HHS or any other government entity, such as the Department of Justice.  

This change is somewhat more expansive than a similar one implemented by the Centers for Medicare & Medicaid Services in the calendar year 2020 Physician Fee Schedule final rule to procedures for advisory opinions under the Physician Self-Referral Law, commonly known as the Stark Law.  

Taken together, the updates authorize HHS to exercise additional flexibility when deciding whether to issue an advisory opinion relating to the AKS, Beneficiary Inducements CMPL or the Stark Law, although companies seeking to submit an advisory opinion related to conduct under investigation, particularly by an entity outside of HHS, should be strategic about availing themselves of the new flexibility. 

In conjunction with its final rule, OIG has published an enforcement policy statement explaining that while this overlap is no longer an absolute bar to OIG’s issuing an advisory opinion, any “active government investigation or other proceeding involving a Federal Government entity … could, in many circumstances, indicate that the conduct in question is suspect” under the AKS or Beneficiary Inducements CMPL, “which would typically weigh against the issuance of a favorable advisory opinion.”  

Rationale

OIG provided two explanations for the change. First, removing the prohibition gives OIG increased flexibility in responding to requests for advisory opinions. Second, removing the prohibition may provide industry stakeholders with greater transparency regarding factors that the government may consider in both evaluating compliance with federal fraud and abuse laws and distinguishing between similar arrangements.

Strategy Considerations

The new flexibility may be particularly helpful for companies contemplating or implementing an arrangement similar to another company’s arrangement that is under investigation but for which there are key differences in the facts and circumstances that might render the arrangement low risk under the fraud and abuse laws. This new flexibility may also create a strategy opportunity for entities in the midst of an investigation to escalate interpretive questions relating to the AKS and Beneficiary Inducements CMPL to OIG, which can be expected to consult with main Justice.