DHHS OIG Policy Statement on SADs

The U.S. Department of Health and Human Services Office of the Inspector General recently released a Policy Statement Regarding Hospitals That Discount or Waive Amounts Owed by Medicare Beneficiaries for Self-Administered Drugs Dispensed in Outpatient Settings. Hospitals will not be subject to administrative sanctions for discounting or waiving costs for self-administered drugs (SADs) received in outpatient settings when those SADs are not covered by Medicare Part B. Generally, Medicare Part B does not cover SADs unless they are required for hospital outpatient services to patients. In addition, Medicare Part D may cover SADs received by Medicare beneficiaries in outpatient settings, but most hospital pharmacies do not participate in Medicare Part D, and Medicare beneficiaries could pay much more for SADs than they would have paid at retail pharmacies. The new OIG Policy Statement resolves this apparent inequity, and reassures hospitals they will not be subject to fraud and abuse claims concerning costs of noncovered SADs. Hospitals must uniformly apply discounts or waivers on noncovered SADs, rather than base them on a beneficiary’s diagnosis or treatment. Hospitals may not market or advertise such discounts or waivers, or claim discounted or waived amounts as bad debt or shift such costs to Medicare/Medicaid programs or other payers.