When Food Is Medicine: OIG Clears the Way for FQHC Produce Benefits

The Department of Health and Human Services Office of Inspector General (“OIG”) recently issued a favorable opinion, AO 26-16, regarding a federally qualified health center’s (“FQHC’s”) provision of produce boxes and vouchers to patients diagnosed with certain health conditions (the “Arrangement”). Although the Arrangement would generate prohibited remuneration under the Beneficiary Inducements Civil Monetary Penalty Law (“CMP”) and the federal Anti-Kickback Statute (“AKS”) if the requisite intent were present, the OIG concluded that it would not impose administrative sanctions on the FQHC in connection with the Arrangement.

The Arrangement

In addition to providing medical, dental and pharmaceutical services, the FQHC is providing a food-as-medicine program for a 6-month period to a group of 50 financially needy patients with diabetes or hypertension. For one group of participants, the FQHC delivers weekly boxes with $30 worth of fresh fruits and vegetables. The other participant group receives weekly produce vouchers worth $20 each, redeemable at local grocery stores and farmers markets for healthy food only. In order to ensure the vouchers are only redeemable for healthy food, a third-party voucher company (1) engages in data tracking; (2) checks receipts regularly; (3) conducts site visits; and (4) signs memoranda of understanding with all participating retailers regarding the parameters for voucher use.

Participants undergo an initial, midpoint and final health assessment consisting of a nutrition assessment, meal plan development, clinical laboratory testing, counseling and other services. Additionally, physicians oversee the process, dietitian consultations and individual and group therapy sessions. The dietitian, counseling and physician services are provided by the FQHC, and clinical laboratory testing is provided by a third-party laboratory.

Although program participants do not incur any charges for the food boxes or vouchers, the FQHC bills participants and their insurers, as applicable, in accordance with the FQHC’s fee schedule and sliding fee discount policy for all reimbursable services. The FQHC also partially funds the program through grants. Pending financial feasibility, the FQHC plans to expand the program to patients with additional diagnoses. To be eligible for the program, participants must (1) be an existing patient of the FQHC between 18-85 years old; (2) be diagnosed with certain categories of diabetes or hypertension; (3) be willing to receive the program’s nutrition and behavioral modification counseling; (4) have the ability to participate in optional group sessions without a language interpreter; and (5) meet the FQHC’s established criteria for financial hardship. The FQHC certified that insured status is not considered when selecting participants for the program.

The OIG’s Analysis

The OIG stated that the Arrangement implicates the AKS because the FQHC provides free produce boxes and vouchers, which could induce participants to receive federally reimbursable items and services from the FQHC, and there are no applicable safe harbors. Additionally, the Arrangement implicates the CMP because beneficiaries may be influenced to select the FQHC for the receipt of federally reimbursable items and services (e.g., nutrition and lab testing furnished during the health assessments). Because the free produce boxes and vouchers are tied to the provision of other reimbursable items and services in connection with the health assessments, the Arrangement does not satisfy the Financial Need-Based Exception. Although the OIG noted “longstanding concerns regarding the provision of free items and services to federal health care program beneficiaries,” the OIG concluded that the Arrangement’s risk of fraud and abuse is sufficiently low because the Arrangement is (1) “unlikely to result in overutilization or inappropriate utilization or increased costs to Federal health care programs;” and (2) “unlikely to result in inappropriate steering or unfair competition.”

1. With respect to overutilization, the OIG noted that “the provision of produce boxes and produce vouchers is consistent with the HRSA-approved additional services [the FQHC] may provide.” The remuneration is in-kind and narrowly tailored to the purposes of the arrangement (disease management through access to healthy food). Further, although the required health assessments may be reimbursable by federal health care programs, the assessments are appropriate means to “establish baseline health metrics and individualized care plans, which could improve patient outcomes and reduce Federal health care program costs over time.”
2. With respect to patient steering and unfair competition, the nutrition boxes and vouchers are unlikely to “materially influence a beneficiary’s provider selection over the long term” because “the Arrangement is limited in value and duration” and participants would still incur out-of-pocket costs for items and services in connection with the required health assessments. Additionally, the FQHC employed various safeguards to reduce the risk of unintended value beyond the purposes of the program: (1) vouchers are only usable at local grocery stores and farmers markets to purchase healthy food options; and (2) the third-party voucher company engages in practices to ensure participants are only able to redeem the vouchers for healthy food.

Practical Takeaways

AO 26-16 approves an arrangement for an FQHC to provide a limited scope food-as-medicine program, including the provision of certain free in-kind items, to underserved patients under strict guardrails intended to reduce the risk of AKS and CMP enforcement. The AO provides a “fresh” approach for providers looking for ways to promote the health and well-being of patients, in connection with the provision of traditional health care services. As with all OIG advisory opinions, AO 26-16 is specific to the facts of the requestor’s proposed arrangement and certifications; entities should consult with legal counsel to determine if and how this opinion may be relied upon to assess AKS and CMP risk of a proposed arrangement.

For help in understanding the impact of this Advisory Opinion or guidance assessing AKS or CMP risk under other arrangements, please contact:

• Erin Drummy at (317) 977-1414 or edrummy@hallrender.com;
• Michael Fiedler at (248) 457-7810 or mfiedler@hallrender.com; or
• Your primary Hall Render contact.