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OIG Approves Limited-Function Smartphones for Patients Under ‘Promotes Access to Care’ Exception to Beneficiary Inducement CMP

On Jan. 24, 2019, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services issued Advisory Opinion No. 19-02, which approved a proposal by a pharmaceutical company (Requestor) to lend, on a temporary basis, a limited-functionality smartphone to financially needy patients to allow physicians to monitor the patients’ adherence to certain antipsychotic medications (Proposed Arrangement). The OIG concluded that the Proposed Arrangement would not constitute grounds for the imposition of civil monetary penalties against beneficiary inducement (Beneficiary Inducement CMP), or administrative sanctions under the Anti-Kickback Statute (AKS).

The advisory opinion addresses issues OIG considers when evaluating the “promotes access to care” exception to the Beneficiary Inducement CMP, particularly in light of new health care technologies such as digital drugs and smartphone apps.


The advisory opinion request pertained to an unspecified drug developed by the Requestor and approved by the Food & Drug Administration, but according to the Requestor, drug nonadherence or partial adherence posed a problem in certain patient populations. The Requestor stated nonadherent patients increased utilization of other health care services, resulting in increased costs to the health care system. The FDA recently approved a Digital Medicine (DM) version of the drug, which consists of a tablet of the drug embedded with an ingestion event marker (IEM), a sensor paired with a smartphone application (App) for use by the patient. With patient consent, the DM version can give access of the adherence data along with other health care data to their health care providers.

Under the Proposed Arrangement, the Requestor would loan a “highly” limited-function smartphone capable of running the required App to patients who: (1) have been prescribed a specific medication; (2) meet certain criteria as specified by the patient’s insurer; (3) have an annual income below a certain level; and (4) do not already possess a technology device capable of running the App. The program would not be advertised to patients but would be described to prescribers. All smartphone features except the application necessary to monitor adherence and make domestic phone calls would be disabled. The smartphone would only be provided to the patient for a maximum of two 12-week periods and would then be disabled.

Legal Analysis

The OIG reviewed the criteria for the “promotes access to care” exception to the Beneficiary Inducement CMP. To qualify for the exception, remuneration – in this case, the smartphone – must: (1) promote access to care; and (2) pose a low risk to the Medicare and Medicaid programs and their beneficiaries.

Promotes Access to Care

The OIG explained that to “promote access to care,” the remuneration must improve beneficiaries’ ability to obtain items and services payable by Medicare or Medicaid. The OIG previously noted that arrangements should give patients the tools they need to remove barriers caused by socioeconomic, educational, geographic, mobility, and other circumstances.

Here, the OIG concluded that the smartphone was necessary to provide patients with access to the App, which they would be otherwise unable to obtain, because the smartphone would improve patients’ ability to take advantage of the full scope of benefits of the DM Drug, an item payable by Medicare and Medicaid.

Poses a Low Risk of Harm

Under the second prong of its analysis, the OIG reviewed whether the Proposed Arrangement would constitute a “low risk of harm.” In order to satisfy this criteria, the remuneration provided must: (1) be unlikely to interfere with, or skew, clinical decision making; (2) be unlikely to increase costs to federal health care programs or beneficiaries through inappropriate or over-utilization; and (3) not raise patient safety or quality-of-care concerns.

The OIG concluded the Proposed Arrangement was not likely to interfere with clinical decision-making because although the DM Drug and smartphone could encourage the prescriber to prescribe the DM Drug for its ability to transmit data, the Requestor limiting the smartphone functions and making it available only to low-income patients created a low risk that prescribers would be skewed in their prescribing.

Further, the OIG concluded that the Proposed Arrangement was not likely to increase costs to federal health care programs, and patients were unlikely to select the digital version of the drug to obtain the limited use smartphone. The OIG noted that if the smartphone contained other features like an internet browser, camera, or other applications, its conclusion would probably have been different. Finally, the OIG noted no patient safety or quality-of-care concerns. Hence, the OIG found that the Proposed Arrangement satisfied the Promotes Access to Care Exception.

AKS Analysis

In line with its analysis of the Beneficiary Inducement CMP, the OIG found that the Proposed Arrangement would not result in a violation of the AKS, as it would not be advertised, would be provided for only a limited time, and was integral to the treatment of the patient.


Advisory Opinion No. 19-02 provides helpful clarity for health care providers seeking to encourage patient utilization of new health care technologies that can promote patient access to care. Pursuant to the OIG’s conclusion, providers need to ensure that any remuneration is narrowly tailored to promote the patient’s health care needs, and minimizes prescriber inducement.