Free Hearing Aids from Cochlear Implant Manufacturer May Violate Fraud and Abuse Laws

The U.S. Department of Health and Human Services Office of Inspector General (OIG) posted on October 25, 2023 Advisory Opinion No. 23-08, in which OIG rejected a proposed arrangement from a cochlear implant device manufacturer (the requestor) that would provide a free hearing aid to certain qualified patients who received a cochlear implant. OIG concluded the proposed arrangement could generate prohibited remuneration under the federal Anti-Kickback Statute (AKS) and the Beneficiary Inducement Law and could violate those laws if the requisite intent were present.

Under the proposed arrangement, the manufacturer would offer a bundle consisting of a cochlear implant made by the manufacturer and a free hearing aid manufactured by a third party. The cochlear implant would be purchased by a hospital or ambulatory surgical center (ASC), and for certain “bimodal hearing candidates,” a hearing aid would be provided for free to the patient along with the cochlear implant. OIG determined that the proposed arrangement implicated the AKS because the manufacturer would provide remuneration in the form of a free hearing aid that may induce patients and providers (e.g., ASCs) to purchase the manufacturer’s cochlear implant, which is reimbursable by FHCPs.