Can Patient Assistance Programs Help Patients Pay for Medical Costs?

When an expensive treatment option is unavailable to a patient because of cost or lack of insurance coverage, some healthcare providers turn to a Patient Assistance Program or PAP to help their patients pay for treatment. The Department of Health and Human Services Office of the Inspector General (OIG) has long recognized that PAPs provide important safety net financial assistance to patients that cannot afford the costs of treatment.

However, OIG believes PAPs also present a risk of fraud, waste, and abuse. OIG’s primary concerns are that donor contributions to the PAP and the PAP’s grants to patients both implicate the Anti-Kickback Statute because they could induce or influence the PAP to send business to the donor or influence the patient to choose certain items. Similarly, OIG has expressed concern that a PAP’s grants to patients implicate the Beneficiary Inducement Statute because it could influence the patient’s selection of a particular provider.

Therefore, a PAP should be structured with certain safeguards in place to steer clear of fraud, waste, and abuse allegations. These safeguards may include structuring the PAP as an independent charitable organization that is not controlled by the donors. OIG has indicated that, in order to ensure such independence, a PAP should not exert direct or indirect influence over its donors, nor should donors have links to the charity that could directly or indirectly influence the operations of the charity or its grant programs. Safeguards may also include making the assistance available to all eligible patients on an equal basis and providing it on a first-come, first-served basis to the extent that funding is available; awarding assistance without regard to any donor’s interests and without regard to the patient’s choice of product, provider, practitioner, supplier, or insurance plan; and providing assistance based upon a reasonable, verifiable, and uniform measure of a patient’s financial need. A PAP and providers should also be cautious about advertising the existence of the PAP or the availability of assistance.

Lastly, some PAPs are intended for the benefits of patients with a particular condition. These types of PAPs are not problematic in and of themselves. However, OIG has indicated that such “disease funds should be defined in accordance with widely recognized clinical standards and in a manner that covers a broad spectrum of products.”

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding the Patient Assistance Programs. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney  at 248-544-0888 or wapc@wachler.com.