The Department of Health and Human Services’ Office of Inspector General (“OIG”) recently issued a favorable advisory opinion to a digital health company that offers direct monetary incentives to patients as part of a technology-enabled contingency management program for patients with substance use disorders.

Contingency management, also known as motivational incentives, is a treatment approach that utilizes tangible rewards to reinforce positive behaviors (e.g., abstinence from opioids) and to motivate and sustain behavioral health efforts (e.g., treatment adherence) in patients who suffer from substance use disorders. Because these monetary incentives are an integral part of the protocol-driven and evidenced-based program, the OIG concluded that it would not impose sanctions under the federal Anti-Kickback Statute (“AKS”) or the Beneficiary Inducements Civil Monetary Penalty (“CMP”) provision, notwithstanding the involvement of federal health care program beneficiaries, providers/suppliers, and reimbursable services.

Nevertheless, the mitigating facts that motivated the OIG’s favorable treatment of the program here—namely, the clinical nature and independence of the program—could likely trigger compliance with other federal and state regulatory frameworks.

Contingency Management Program Basics

As a starting point, the digital health company contracts with a wide variety of entities to provide the program. Among those customers are health insurers, addiction treatment providers, employee assistance programs, research programs, and other treatment providers, many of whom provide services that are billable to federal and state health care plans.

The program’s contingency management tools and incentives offered through a smartphone application and smart debit card technology are designed to provide comprehensive and personalized treatment for substance use disorders (including, for opioid, stimulant, alcohol, and nicotine use disorders). These tools enable, for example, automated appointment reminders and attendance verification, automated medication reminders, drug, alcohol, and tobacco/cotinine testing, self-guided cognitive behavioral therapy, and recovery coaching.

Patients may be referred to the program by a customer or may self-refer. A program enrollment specialist, supervised by a licensed clinical supervisor, collects and inputs patient information into the smartphone application, which uses an algorithm to determine program eligibility, appropriate type and amount of substance use disorder services, substance use testing schedule, frequency of recovery coaching, and behavioral health targets (the “protocol”).

Patients’ compliance with the protocol is tracked through the program’s smartphone application.  As patients meet their behavioral health targets, they receive monetary incentives, which are loaded onto a smart debit card.  The incentives are usually issued in $1 to $3 increments and are capped at a maximum of $200 per month and $599 per year.  The digital health company employs anti-relapse protections, restricting use of the smart debit cards at bars, liquor stores, casinos, or to convert the credit into cash.  Further, the company can monitor usage and receive notifications of blocked purchases, which enables the company to intervene, if necessary.

The company is reimbursed by customers either (i) on a flat, monthly fee basis for each eligible, active patient; or (ii) under a pay-for-performance model, in which the company is paid based on a patient’s achievement of behavioral health and abstinence targets. Under the pay-for-performance model, the customer pays a lower flat rate per active patient, but a substantially higher rate for each patient who achieves the targets.  If a patient does not use the program in a given month, the company does not bill the customer.

The digital health company represents that the fees are consistent with fair market value and do not vary based on the volume or value of referrals. Rather, the fees are based on a patient’s type of substance use disorder, risk profile, protocol, and whether the patient is receiving other substance use disorder treatment.  Fees also include the costs of the application, substance use testing equipment, contingency management tools, and incentives.

Per OIG, Program Does Not Meet Safe Harbors But Presents Minimal Risk of Fraud and Abuse

OIG identified two streams of remuneration that implicate AKS and the Beneficiary Inducement CMP and do not meet a safe harbor or exception. First, customers pay the company fees for services that may be billable to Federal health care programs (e.g., certain types of counseling sessions).  Second, some of the fees that customers pay are passed on to patients as incentives.  For example, when patients attend counseling sessions or achieve a behavioral health target, they receive an incentive.  However, for the reasons below, OIG concluded that it would not impose administrative sanctions because the Program presents a minimal risk of fraud and abuse:

First, although the incentives are cash equivalents, which typically present a high risk of fraud and abuse, the company established the following safeguards to mitigate this risk:

• the company, which is not enrolled in Federal health care programs and has no incentive to induce overutilization, determines patients’ protocols and incentives based on patients’ individual needs;
• the incentives are of relatively low monetary value and are capped on a monthly and annual basis;
• a majority of the incentives are not associated with services that are billable to Federal health care programs; and
• the company employs anti-relapse protections, which restrict the locations at which patients can use incentives and allow the company to monitor patient usage.

Second, the majority of the company’s customers are not enrolled in Federal health care programs. Therefore, they do not have an incentive to induce patients to receive services billable to Federal health care programs.  Even where customers are enrolled in Federal health care programs, fees paid by the customers do not vary based on the volume or value of referrals.  Rather, fees vary based on patients’ protocols, which are determined by the company in accordance with evidence-based research and patients’ individual needs.

Finally, the program is based on research from peer-reviewed publications and incorporates the National Institute of Drug Abuse’s principles of effective substance use disorder treatment.  The research and protocol-driven nature of the program demonstrates that the company intends to provide evidence-based treatment rather than induce patients to receive services reimbursed by Federal health care programs.

Other Considerations

While the OIG blessed this particular arrangement, there is no guarantee that similarly structured programs would be immune from administrative sanction. Regardless, the analysis of this arrangement is informative as to how future arrangements may be reviewed and analyzed by the OIG.

Moreover, apart from the OIG’s fraud and abuse analysis, similar software tools and substance use disorder programs that leverage algorithms to determine patient treatment protocols, hold themselves out as providing and do provide virtual substance use disorder treatment and care management, and utilize licensed health care professionals to render and monitor substance use disorder treatment, may trigger the application of other state and federal health care regulatory frameworks, particularly in the realm of FDA-regulated medical devices, state and federal health privacy laws, telehealth regulations, and licensure and scope of practice requirements for health care professionals.