HHS OIG Advisory Opinion 25-10: Structuring Charitable Assistance to Minimize Regulatory Risks

The Department of Health and Human Services, Office of Inspector General (“OIG”) recently released a favorable advisory opinion, OIG Advisory Opinion No. 25-10 (“AO 25-10” or the “Opinion”) to a business that provides “family-powered therapy” to children with a particular disorder (the “Company”) and a Company-founded and -funded charitable organization (the “Foundation”) that provides grants to certain recipients of the therapy (the “Arrangement”). In the Opinion, OIG analyzes whether the Arrangement would constitute grounds for sanctions under the civil monetary penalty provisions at sections 1128A(a)(5) and (7) of the Social Security Act (the “Act”), as those sections relate to the commission of acts described in section 1128B(b) of the Act (the “federal Anti-Kickback Statute” or “AKS”) or prohibition of inducements to beneficiaries (the “Beneficiary Inducement CMP”). The Company and Foundation (collectively, the “Requestors”) also sought confirmation that the Arrangement would not expose them to sanctions under the exclusion authority at section 1128(b)(7) of the Act. OIG concluded that though the Arrangement would generate prohibited remuneration if the requisite intent were present, OIG would not impose sanctions.

The Advisory Opinion

The Company provides specialized “family-powered therapy” to pediatric patients with a particular disorder. The therapy is generally covered by health insurance, including federal healthcare programs. Even so, access to the therapy can be financially burdensome, as the insurance coverage can require patient cost-sharing amounts. Adding to the financial burden, the involved caregiver must initially commit to at least 15 hours of therapy per week, often during typical working hours and thus to the detriment of their work schedule.

Certain Company employees formed the Foundation, a nonprofit, tax-exempt charitable organization, to help defray some expenses of qualifying families through the use of grants. While Company executives assisted with the Foundation’s operational setup and development of grant awards criteria, no Company employee is on the Foundation’s board of directors or will be permitted to work or volunteer at the Foundation by the end of 2025. The Foundation’s discretion as to the use of financial donations from the Company is absolute, independent, and autonomous. Further, the donations are unrestricted and not contingent upon any future actions by the Foundation (i.e., provision of patient data or referrals to the Company).

Families qualify to receive Foundation grants if they: (1) have a family household income within certain limits; (2) have a child receiving family-powered therapy from any therapy provider; and (3) are not receiving any other compensation for their participation in the therapy. Families are approved on a first-come, first-served basis, up to the full budget amount of the grant program (subject to certain caps).

OIG observed that the Company’s investment in establishing and funding the Foundation is remuneration that implicates the AKS. Further, the Foundation’s use of the donations to provide grants to families to help defray costs implicates the AKS and the Beneficiary Inducement CMP.

But OIG concluded that the risk of fraud and abuse under the AKS and steering under the Beneficiary Inducement CMP were sufficiently low for several reasons:

• Direct-to-Family Payments: Grant funds are paid directly to families, not to whatever therapy company they might be using. This structure avoids the appearance of subsidizing any provider’s services.
• Unrestricted Donations: The Company makes unrestricted financial contributions to the Foundation. These funds are not earmarked for specific patients or tied to referrals, reducing the risk of quid pro quo arrangements.
• Independent Governance of the Foundation: Although the Foundation was formed by Company employees, it operates as a separate tax-exempt entity. The Company does not control the Foundation’s board or grant decisions.
• No Influence Over Grant Decisions: The Company refers patients to the Foundation but does not participate in or influence the grant approval process. The Foundation does not consider donor interests when making awards.
• Objective Grant Criteria: The Foundation uses publicly available, predefined eligibility criteria and awards grants on a first-come, first-served basis. This ensures that financial assistance is not selectively offered to induce referrals.

• No Tied Incentive: The grants were not conditioned on the use of the Company’s services. Families could receive assistance regardless of whether they chose to receive services from the Company or another therapy provider.

These factors helped the OIG conclude that the arrangement would not constitute grounds for sanctions under the AKS or the Beneficiary Inducement CMP.

Analysis

AO 25-10 is OIG’s latest guidance on structuring charitable support in a way that aligns with regulatory expectations.¹ These Opinions underscore the importance of clear separation between donor and foundation, objective grant criteria, and lack of donor influence—features that distinguished the Requestors’ proposed arrangements with others that recently resulted in enforcement actions.

• Teva Pharmaceuticals USA Inc. and Teva Neuroscience Inc. (collectively, Teva) (2024)
  • Teva agreed to pay $450 million to resolve two kickback schemes, one of which involved the “gam[ing] of the charitable foundation process.” Specifically, Teva was alleged to have coordinated with multiple third parties, including two supposedly independent copay assistance foundations, to ensure that donations to the foundations were used specifically to cover the copays for one of Teva’s drugs.
• Jazz Pharmaceuticals, Lundbeck LLC, and Alexion Pharmaceuticals Inc. (2019)
  • These three companies agreed to pay a combined $122.6 million to resolve allegations that they violated the False Claims Act by using purportedly independent foundations to subsidize Medicare and ChampVA copays for their own drugs. The DOJ emphasized that such arrangements undermine cost-control mechanisms and violate the Anti-Kickback Statute.
• Chronic Disease Fund, Inc. d/b/a Good Days from CDF (“Good Days”) and Patient Access Network Foundation (2019)
  • These two charities paid $6 million to settle claims that they operated as conduits for illegal kickbacks from pharmaceutical companies. The DOJ alleged that the charities directed donations to benefit specific donors’ drugs and provided data that linked patient assistance to donor contributions.
• Pfizer Inc. (2018)
  • Pfizer paid $23.85 million to settle claims that it worked with Good Days to establish a fund that would exclusively support patients taking one of its drugs. The DOJ alleged that Pfizer maintained close ties with the foundation, including influencing its operations and receiving data on patient usage.
• United Therapeutics Corporation (2017)
  • United Therapeutics paid $210 million to resolve allegations that it funneled donations through a foundation to cover Medicare copays for its pulmonary arterial hypertension drug. The DOJ alleged that United Therapeutics influenced the foundation’s grant criteria to ensure that assistance was directed to patients using its drug, effectively steering funds to support its own product.

These settlements emphasize the importance of structural safeguards like those highlighted in AO 25-10.

Though OIG concluded that it would not sanction the AO 25-10 Requestors for their Arrangement, this Opinion — and others exploring the sanctionability of offers of assistance to federal healthcare program beneficiaries — illustrates that healthcare stakeholders should work with experienced counsel to carefully analyze contemplated arrangements to ensure compliance with healthcare fraud and abuse authorities. For more information on OIG Advisory Opinion No. 25-10 or other issues addressed herein, please contact AGG Healthcare attorney Lisa J. Churvis.

[1] OIG has examined charitable support programs offering varied forms of patient assistance in previous advisory opinions, including AO 15-17 (insurance premiums, copayments, and deductibles); 15-16 (out-of-pocket expenses); and 15-14 (imaging services). OIG has also published a Supplemental Special Advisory Bulletin providing guidance on what OIG considers to be key safeguards to ensuring a charity’s independence from its donors. https://oig.hhs.gov/documents/special-advisory-bulletins/879/independent-charity-bulletin.pdf.