Moving the HME Industry Forward


Providing Free Tablets and Other Technology

February 24, 2014

AMARILLO, TX – Over the last several years, the health care industry has made a concerted effort to simplify, speed up, and secure ways in which health information is shared. The proliferation of electronic health records is an example of this.

By storing health records electronically, important information can be shared between health care providers at the click of a button. This enables providers to not only make decisions based on more thorough and complete information, but it also helps providers make assessments and decisions faster, which in turn means patients receive the care they need faster.

This trend has increased as technology has rapidly progressed in its functionality and has become widely available to the masses. The HME industry has caught on, and I have noticed a recent increase in questions from HME suppliers related to the use of technology in various ways to improve the efficiency of operations. Often, these questions have something to do with the use of a tablet device.

While the proposed arrangements that I have received inquiries about vary, it is not uncommon for these proposed arrangements to involve the provision of a free tablet by one party to another to make the submission of orders and paperwork faster and easier. The idea of one health care provider furnishing free technology to another provider is not a new one, but the technology available to us (such as tablets), and the ways in which it can be used are evolving, so being familiar with legal issues that can arise is important.

The Medicare-Medicaid Anti-Kickback Statute prohibits a supplier from offering or giving anything of value to induce a person to refer federal health care program patients to the supplier, or to purchase or order an item from the supplier for which payment may be made under a federal health care program.1 Therefore, it is important for a supplier to perform careful analysis before giving or providing anything of value, including free tablets, to those who order products from, or provide referrals to, the supplier. Fortunately, the OIG has provided some helpful guidance as it relates to the provision of valuable technology.

In July 1997, the OIG published a letter from the Chief of its Industry Guidance Branch addressing the question of “whether the provision of free fax machines, free computers and free fax lines by a supplier of transtelephonic monitoring services to physicians who refer patients to such supplier implicates the Medicare and Medicaid anti-kickback statute.”2

In its letter, the OIG cited to commentary included in a final rule issued by the OIG in 1991, which promulgated certain safe harbors to the anti-kickback statute. In that commentary, the OIG contrasts situations in which (1) a computer is given to a physician that can only be used to print results of lab tests, and (2) a computer is given to a physician that the physician is free to use for a variety of purposes. With regard to the first situation, the OIG highlighted “that the computer has no independent value apart from the service being provided and that the purpose of the free computer is not to induce an act prohibited by the [anti-kickback] statute . . . .”3 With regard to the second situation, the OIG highlighted that “the computer has a definite value to the physician, and, depending on the circumstances, may well constitute an illegal inducement.”4

The letter goes on to state that the OIG is aware of arrangements in which free technology and equipment is provided “with a condition that such equipment is only to be used in connection with [the supplier’s] service. However, in determining whether a free or ‘loaner’ computer or fax machine constitutes illegal remuneration, the substance – – not the form – – of the transaction controls and any reasonably foreseeable ‘misuse’ of the equipment implicates the entity providing the equipment as well as the user.”5 In evaluating any arrangement in which free technology is given to a referral source, the OIG looks at the following factors in determining whether the arrangement might violate the anti-kickback statute:

1) The criteria used by the supplier of the equipment to determine which customers receive the equipment;
2) The ownership of the equipment;
3) The location and access to the equipment at the customer’s place of business;
4) The procedures used by the customer and supplier to police unauthorized use of the equipment;
5) The value added to the core service being provided by the additional general purpose equipment; and
6) The number and extent of similar arrangements with other parties.

Based on the OIG’s guidance, the most preferred way for a supplier to reduce the kickback risk associated with the provision of a free tablet is to limit the functionality of the tablet so that it can only be utilized in conjunction with the supplier’s services. In other words, if the supplier furnishes a tablet to enable the recipient to submit orders and documentation, that is all the recipient should be able to do with the tablet. The recipient should not be able to access personal email accounts, surf, change a Facebook status, etc.

If, on the other hand, it is not possible to limit the functionality of a tablet, then each of the factors listed above should be used to develop ways to reduce the risk associated with the tablet. The following thoughts and comments related to a few of the factors should provide some assistance:

1) Criteria used to determine who gets a tablet: While it may seem that a supplier would only want to incur the expense of providing order-simplifying technology like a tablet to those who refer a high number of patients or who order significant amounts of the supplier’s products, the OIG would be very likely to disfavor an arrangement in which the receipt of a tablet is tied to the number of referrals received or the amount of product ordered.

2) Ownership of the tablet: It is advisable that the supplier retains ownership of each tablet.

3) Location and access to tablets at recipient’s place of business: The supplier might consider requiring each tablet recipient to sign a written agreement in which the recipient consents to follow certain rules related to the use of the tablets, such as the following: (i) the tablet is only to be used for submitting orders and documentation to the supplier, and (ii) the tablet must be left at the recipient’s facility every night.

4) Procedures used to police unauthorized activity: The supplier might consider investing in installation of tablet usage monitoring software on each of the tablets it furnishes. This type of software is commercially available. While purchasing monitoring software and requiring an employee to spend some time at regular intervals to review tablet usage reports would impose some additional cost to the supplier, it could serve as an efficient way to reduce the risk associated with the tablet program.

Todd A. Moody, JD, is an attorney with the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. He represents DME suppliers, pharmacies, infusion companies, and other health care providers throughout the United States. Moody can be reached at (806) 345-6343 or