In its February 14, 2022 advisory opinion the Department of Health and Human Services Office of Inspector General (OIG) allowed a Home Health Agency (HHA), that predominantly serves Medicaid eligible children, to pay the nurse certification program tuition costs for new employees seeking to work as certified nurse aides (CNAs). According to OIG, the tuition payments are permissible under the bona fide employee safe harbor.

The Anti-Kickback statute prohibits a person from knowingly and willfully offering, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in exchange for or to induce the referral of any item or services covered by a federal health care program. However, the statute includes exemptions for certain situations, one of which involves certain payments to bona fide employees.

In this case, the OIG stated that it would not seek enforcement under the federal Anti-Kickback Statute or the Beneficiary Inducements Civil Monetary Penalty Statute as the arrangement to pay the tuition costs would not be deemed prohibited remuneration under either law. However, the advisory opinion was warranted as the tuition program had the added wrinkle of potentially being a benefit to the relatives of medically fragile children using the HHA’s services and charging those services to Medicaid.

Parents of patients could serve as CNAs

In the state where the HHA operates, the state’s Medicaid plan provides reimbursement for services provided by parents or relatives of medically fragile children if the parents or relatives are CNAs employed by an HHA.

The HHA explained that while the tuition reimbursement program in this case would be available to all new employees, they anticipated that the vast majority of arrangement participants would be parents or relatives of Medicaid eligible children in need of HHA services. The HHA further explained that it many of the new employees would refer their own children to the HHA. The HHA also affirmed that the tuition reimbursement program would be advertised to all new employees without any reference to the new employees being able to provide services to their own children or relatives.

New employees had to serve for one year

Importantly, the HHA made it clear that any new employee participating in the arrangement would be considered an employee from hire and would not be required to reimburse the HHA for any tuition costs as long as they remained an employee for at least one year after becoming a CNA. If the new employee left the HHA prior to their employment anniversary, the HHA would require the employee to reimburse a prorated amount of the tuition costs paid. This prorated amount would be based on amount of time worked, and would not take into account the CNA’s ability to refer patients to the HHA.

Ultimately, OIG concluded that the arrangement would implicate the federal Anti-Kickback statute because the HHA’s payment of salaries and program tuition costs for employees who are parents or relatives of medically fragile children would be a remuneration that could induce the employees to refer their children or other medically fragile juvenile relatives to the HHA for services. However, the remuneration, in the form of tuition program payments, would not be considered prohibited remuneration under the Anti-Kickback statute because it would meet the bona fide employee safe harbor.

As a result of this advisory opinion, and in light of wide spread health care staffing shortages, HHAs may consider seeking approval for similar arrangements if there is a similar provision in their state’s Medicaid plan.

Reed Smith will continue to track developments related to tuition, and other non-salary payments in the health care space and OIG opinions on health care fraud-and-abuse regulations. Please reach out to the health care attorneys at Reed Smith if you have any questions about this opinion or seeking advisory opinions from the OIG.