OIG Gives Thumbs Down to Payment of Sign-on Bonuses by Home Care Agency

In an unfavorable Advisory Opinion issued last week[1], the Office of Inspector General, U.S. Department of Health and Human Services (“OIG”) found that a home care agency’s plan to market sign-on bonuses to prospective employees with the intention of employing those individuals to provide services to family members could result in sanctions for violating the Anti-Kickback Statute (“AKS”)[2], and also would result in prohibited remuneration under the Beneficiary Inducements CMP.[3]

The specific agency, program and state of operation are not disclosed, but the Advisory Opinion describes a program in which the home care agency provides Medicaid-funded services through attendants who are selected by the beneficiaries. The services include personal care services (e.g., bathing and dressing), homemaker services (e.g., cleaning and meal preparation), and health maintenance activities (e.g., medication administration. medical management or respiratory care). The agency submits claims to Medicaid and receives payment for the services. The agency certified to OIG that it expected the attendants to be primarily family members of the clients, who are parents, grandparents, siblings, children or other minor relatives for whom the attendants would act as guardians. The agency also certified that the attendants likely would be selecting the home care agency on behalf of their loved ones.

The proposed arrangement involved the agency marketing employment opportunities to prospective attendants that included sign-on bonuses which, according to the agency, were incentives being offered by competing organizations. In its advertising materials, the agency would, in addition to providing an overview of the position and listing employee qualifications and pay rate ranges, advertise the sign-on bonuses, the purpose of which would be to influence attendants to choose employment with the agency over its competitors for the provision of services to the client. The agency certified that, upon hire, the attendants would become bona fide employees.

OIG analyzed the proposed arrangement under the AKS and the Beneficiary Inducements CMP. Under the former, OIG concluded that given the stated expectation that attendants would be selecting the agency on behalf of their family members, the sign-on bonus appeared to be a solicitation for a referral before the start of employment and could not be considered protected under the AKS employment safe harbor. OIG further concluded that the risk of fraud and abuse was more than minimal and that the bonus could potentially inappropriately steer attendants to select the agency over a competitor for the provision of Medicaid-reimbursable items and services to the client family member.  Likewise, OIG concluded that the Beneficiary Inducement CMP would be implicated because the sign-on bonus would be likely to influence an attendant to choose the agency for Medicaid-reimbursable items and services, and that no exception existed under the statute that could protect the bonus offer.

OIG distinguished the proposed arrangement from a bonus offered with the hope of future referrals but without any referral guarantee because the proposed advertisement would be targeted toward individuals “whose employment would, in most cases, be based solely on the provision of services to the employee’s family member.” OIG also noted potential unfair competition and quality of care concerns, commenting that the proposed arrangement could result in home care agencies offering “increasingly higher sign-on bonuses to induce attendants” and that attendants, in turn, may be motivated to select an agency “based on the amount of a sign-on bonus offered and not the quality of the agency.” OIG ultimately concluded that the proposed arrangement would result in prohibited remuneration under the AKS (if the required intent to induce or reward referrals were present) and also would result in prohibited remuneration under the Beneficiary Inducements CMP, each of which would constitute grounds for the imposition of sanctions.

In view of this Advisory Opinion, any home care agencies contemplating marketing programs involving the offer of compensation in the form of sign-on bonuses to prospective employees need to carefully evaluate the details of the programs for compliance. If prospective employees will be providing services to Medicaid-eligible family members and effectively functioning as agents of those family members in choosing a home care agency through which such services will be provided, the marketing program could run afoul of the AKS and Beneficiary Inducements CMP. Legal counsel knowledgeable about these laws can assist in providing privileged advice around these issues.

[1]  Advisory Opinion No. 25-12, https://oig.hhs.gov/documents/advisory-opinions/11440/AO-25-12.pdf

[2] 42 U.S.C. §1320a-7b(b).

[3] 42 U.S.C. § 1320a-7a(a)(5).