The AO 22-14 requestor is an ophthalmology practice that receives about half of its surgical referrals from optometrists outside of the practice. Post-surgery, the requester and the ophthalmologists co-manage the patients. The requestor proposed to offer two accredited CE programs annually for optometrists on new technologies and pharmacological protocols in the treatment of patients undergoing ophthalmic surgery. The CE would be taught by experienced instructors, both practice physicians and independent physicians. External faculty would be paid an honorarium plus expenses at an FMV rate that would not take into account the volume or value of past business generated or potential future business generated for the requestor or for an industry sponsor by the faculty.

The CE programs offered under the proposed arrangements would be open to all local optometrists in the requestor’s service area, which comprises an approximately 20-mile radial area. The course options would consist of a full-day CE program providing six hours of CE credit and an evening CE program providing two hours of CE credit. Attendance would not be limited to optometrists who refer to the requestor, and there would be no requirement that attendees refer patients to the requestor as a condition of attendance. The selection of attendees also would not be based on past or expected prescribing or ordering of any industry sponsor’s items or services payable by federal healthcare programs. The requestor estimated that 100 optometrists would attend the full-day program and 30 to 50 optometrists would attend the evening program.

PROPOSED ARRANGEMENTS

The requestor proposed offering the CE program with four variations (the proposed arrangements):

• Proposed Arrangement A: The requestor would charge attendees FMV registration fees to attend the CE programs.
• Proposed Arrangement B: The requestor would not charge any registration fee and the requestor would cover all costs of the CE program.
• Proposed Arrangement C: The requestor would not charge any registration fee and would seek pharmaceutical and medical device sponsors to offset some or all of the CE program costs. The requestor would fund any shortfall or donate any sponsorship funds that exceeded the program costs to a local charity.
• Proposed Arrangement D: The requestor would charge a registration fee and offset some of the cost of the CE program with pharmaceutical and medical device manufacturer sponsorships. The requestor would fund any shortfall or donate any sponsorship funds that exceeded the program costs to a local charity.

OIG ANALYSIS

Under these facts, OIG concluded that each of the proposed arrangements would implicate the federal Anti-Kickback Statute (AKS) because, under each proposal, the requestor would give something of value to local optometrists who are actual or potential referral sources of federal healthcare program beneficiaries. Additionally, under proposed arrangements C and D, the requestor, external faculty members and attendees would receive remuneration from industry sponsors who may, in turn, receive orders for their products from the requestor, external faculty members and attendees.

Interestingly, OIG spent a fair amount of time discussing its 2020 Special Fraud Alert on Speaker Programs (SFA) which highlights the risks associated with speaker programs directly organized and paid for by pharmaceutical and medical device companies for healthcare professionals (HCPs). Although recognizing the differences between speaker programs and the proposed arrangements, OIG stated that the following suspect characteristics identified in the SFA may be instructive for those involved in CE events:

Although OIG stated that, generally, none of the proposed arrangements exhibit the types of suspect characteristics highlighted in the SFA, OIG only concluded that one proposed arrangement (Proposed Arrangement A) would pose a sufficiently low risk of fraud and abuse under the AKS, while proposed arrangements B, C and D would present more than a minimal risk.

• Proposed Arrangement A: Here, the requestor would charge attendees a registration fee consistent with FMV for such CE programs. To the extent revenue generated from the FMV registration fees does not cover the CE programs’ expenses, the requestor would cover those costs. Conversely, to the extent the revenue from the registration fees exceeds the CE programs’ expenses, the requestor would donate the excess amount to a local charity. The requestor certified that the registration amounts it proposes to charge and the anticipated number of attendees comport with the estimated amount of expenses, such that any revenue shortfall or overage should not be substantial. In this scenario, and in combination with the low-risk aspects of the program discussed below, OIG concluded this proposed arrangement presented sufficiently low risk.
• Proposed Arrangement B: OIG stated that because this arrangement would involve the provision of free goods or services to an existing or potential referral source that have independent value to the recipient, there is heightened risk this remuneration could induce the optometrist attendees and external faculty to refer surgical patients, including federal healthcare program beneficiaries, to the requestor, which could result in inappropriate patient steering.
• Proposed Arrangement C: OIG stated that because this arrangement would involve the provision of free goods or services to an existing or potential referral source that have independent value to the recipient, there is heightened risk this remuneration could induce the requestor, external faculty and the optometrist attendees to prescribe or order a sponsoring company’s products, including those payable by federal healthcare programs, which could result in inappropriate patient steering or inappropriately increased costs to federal healthcare programs.
• Proposed Arrangement D: OIG highlighted the fact that the requestor is an ophthalmology practice and potentially a direct referral source for sponsoring medical device and pharmaceutical companies, in contrast with more traditional CE program organizers that often are independent entities not directly involved in the provision of patient care (e.g., a professional organization). By paying sponsorships to the requestor to fund its CE programs, the medical device manufacturers and drug companies would pay expenses that the requestor otherwise would incur. Accordingly, OIG could not conclude that the industry sponsorships in Proposed Arrangement D would pose a sufficiently low risk of fraud and abuse to issue a favorable opinion.

ANALYSIS AND TAKEAWAYS

For providers: OIG’s position is relatively clear: providers who are referral recipients of attendees should charge an FMV fee for attending an accredited CE program. This position is consistent with other OIG guidance expressing concerns about a free or below-FMV offering that has substantial independent value to a referral source. OIG also appears to view industry sponsorships of provider-run CE with skepticism. The sponsorship dollars can act to subsidize the attendee tuition cost, which conveys remunerative benefit to the attendees, or reduce the hosting provider’s costs or otherwise provide additional revenue, which conveys a remunerative benefit to the hosting provider.

The nuanced question for providers is distinguishing accredited CE from other types of educational offerings that a healthcare provider may offer. Many healthcare providers offer educational classes to their communities, often as part of their public health or non-profit missions. Some, though not all, of these classes provide CE or other credits. In addition, many healthcare institutions host conferences and solicit industry and vendor sponsorship. As is often the case with interpreting unfavorable advisory opinions, one has to keep in mind the very high bar OIG applies; the arrangement must pose no more than minimal risk to obtain a favorable opinion. Although it is the best of times to sit within a favorable opinion, it is not necessarily the worst of times for an activity to fall outside of a favorable opinion. Doing so, however, means that the arrangement merits a careful evaluation of the facts and circumstances to assess risk level. In light of AO 22-14, providers may wish to consider evaluating their educational programming activities and policies.

For manufacturers: OIG’s position on industry-sponsored CE provided by a third party is somewhat less clear. Industry can take comfort in OIG’s acknowledgment that “CE programs often are fully or partially subsidized by commercial sponsors that provide educational grants or other funding to CE program organizers” who “often are independent entities not directly involved in the provision of patient care […].” However, OIG also says “there is heightened risk that [industry sponsorships] could induce [the requestor], external faculty and attendees to prescribe or order a sponsoring company’s products, including those payable by federal healthcare programs, which could result in inappropriate patient steering or inappropriately increased costs to federal healthcare programs.” Although this statement was made in the context of a provider-run CE program, it carries a risk of being taken out of that context and applied to third-party CE programs and interpreted that OIG considered these activities as posing more risk than they actually do.

The industry has long relied on the PhRMA Code on Interactions with Health Care Professionals and the AdvaMed Code of Ethics (collectively the codes), which allow pharmaceutical and medical device companies to provide financial support to third-party conference sponsors to reduce the overall conference registration fee for all attendees, so long as the sponsor retains control over the selection of content, faculty, educational methods, materials, and venue or digital platform in accordance with the conference guidelines. The codes do not expressly address the circumstance where the third-party conference organizer has physician ownership or is a physician practice. It may be that PhRMA and AdvaMed assumed that third-party conference hosts did not have physician ownership, such as professional societies.

The codes also provide guidance on the nature of the conference, such as that the conference or meeting should be held at an appropriate location where (a) the gathering is primarily dedicated, in both time and effort, to promoting objective scientific and educational activities and discourse (one or more educational presentation(s) should be the highlight of the gathering), and (b) the main incentive for bringing attendees together is to further their knowledge on the topic(s) being presented. Finally, the codes state that financial support should not be offered for the costs of travel, lodging or other personal expenses of non-faculty healthcare professionals attending third-party scientific or educational conferences or professional meetings, either directly to the individuals attending the conference or indirectly to the conference’s organizer. Similarly, funding should not be offered to compensate for the time spent by healthcare professionals attending the conference or meeting.

Although these codes are voluntary and do not rise to the level of OIG guidance, OIG has previously encouraged compliance with the codes. It seems likely that organizing CE within the guidance of the codes would still result in a low-risk conclusion when the support is to a third-party CE program, since the distinguishing factor in AO 22-14 was that the requestor was not a third-party CE organizer. CE support aligned with the relevant code, but made to a provider organizing the CE program, would require additional analysis in light of AO 22-14 to assess the level of potential risk.

Another point of potential confusion in AO 22-14 is whether there is a difference between “free CE” from “below-FMV CE” in the third-party-organized programs with industry sponsorship. AO 22-14 does not discuss differences, probably because the difference did not change OIG’s conclusion that either presents more than minimal risk under the AKS when the CE is offered by a potential referral source. Although the guidance under the codes tend to focus on third-party sponsorships that reduce CE tuition cost rather than eliminate it, a third party not charging tuition similarly could also be low risk where the program otherwise complies with the relevant code and with the SFA.

Despite these questions, AO 22-14 is a useful reminder that industry CE sponsorships or grants to third-party CE organizers should be evaluated for AKS compliance.

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