OIG Declines to Apply Sanctions Despite AKS Risk for Food-as-Medicine Program

The U.S. Department of Health and Human Services Office of Inspector General (OIG) recently issued Advisory Opinion 26-16, concluding that it would not impose administrative sanctions in connection with a Federally Qualified Health Center's (FQHC) food-as-medicine program, despite determining that the arrangement implicates both the Federal Anti-Kickback Statute (AKS) and the Civil Monetary Penalty Law (CMPL). 

Although advisory opinions are binding only on the requestor and to the specific facts presented, AO 26-16 offers useful insight into how OIG evaluates programs designed to address social determinants of health, while balancing traditional fraud and abuse concerns. 

The Proposed Arrangement

The requestor, a FQHC serving predominantly low-income patients, proposed a six-month “food-as-medicine program” for 50 financially needy patients diagnosed with diabetes or hypertension. Participants would receive either weekly produce boxes valued at approximately $30, or produce vouchers valued at approximately $20. The vouchers are redeemable only for approved healthy food options at participating grocery stores and farmers markets.

Participants would also undergo three health assessments that included nutrition evaluations, individualized meal planning, laboratory testing, behavioral health counseling, and physician oversight. While the produce would be provided free of charge, the FQHC would continue billing patients and applicable insurers for reimbursable clinical services. The arrangement is supported through grant funding, with the goal of expanding to patients with other nutrition-related diagnoses.

OIG's Analysis

OIG concluded that the arrangement implicates both the AKS and the Beneficiary Inducements CMPL. Specifically, OIG determined that the free produce could induce Federal healthcare program beneficiaries to obtain reimbursable services from the FQHC, such as nutrition services, laboratory testing, and other services furnished as part of the required health assessments. OIG also noted that no AKS safe harbor protected the arrangement. 

OIG likewise found that the arrangement implicated the Beneficiary Inducements CMPL because the free produce could influence beneficiaries to select the FQHC for reimbursable services. The agency further concluded that the CMPL's financial need-based exception was unavailable because the produce benefits were tied to the receipt of other reimbursable items and services furnished through the program. 

Despite these conclusions, OIG exercised its enforcement discretion and declined to impose administrative sanctions based on the specific facts presented. 

Why OIG Found the Risk of Fraud and Abuse Sufficiently Low

Although the arrangement implicated both statutes, OIG concluded that the overall risk of fraud and abuse was sufficiently low to warrant a favorable opinion. Several factors drove that conclusion.

1. The arrangement furthered legitimate clinical objectives. The FQHC represented that the program was intended to improve management of diabetes and hypertension, encourage healthy eating, and reduce complications associated with chronic disease. OIG also observed that the accompanying reimbursable services appeared medically appropriate and could improve patient outcomes while potentially reducing long-term Federal healthcare program costs.
2. The remuneration was limited in both value and duration. Participants received only one produce box or voucher per week for six months, reducing the likelihood that the benefit would improperly influence provider selection.
3. The voucher program incorporated meaningful safeguards. The third-party administrator restricted purchases to healthy foods, monitored voucher redemption activity, reviewed receipts, conducted retailer training and site visits, and entered into agreements governing voucher use. OIG concluded that these controls reduced the risk that the vouchers would provide value beyond the program's stated clinical purpose.
4. Participant eligibility was based on objective clinical and financial criteria rather than insurance status, further reducing concerns regarding inappropriate steering. 

Significance For Social Determinants of Health

Although AO 26-16 cannot be relied upon by organizations other than the FQHC that requested it, the opinion addresses an area of growing interest across the healthcare industry. Providers, health systems, accountable care organizations, and payors are increasingly exploring interventions that address social determinants of health, including nutrition support, as part of broader efforts to improve outcomes for patients with chronic disease. 

AO 26-16 reflects OIG's continued willingness to evaluate programs addressing social determinants of health based on their particular facts and safeguards rather than the mere existence of remuneration. The opinion suggests that OIG could continue to focus on whether programs are clinically driven, narrowly tailored, and supported by safeguards designed to prevent patient steering, overutilization, and misuse of benefits.

Implications Beyond FQHCs

For organizations considering similar initiatives, the opinion reinforces that careful program design remains critical. Importantly, OIG did not conclude that food-as-medicine programs fall outside the AKS or Beneficiary Inducements CMPL. Instead, it expressly found that the arrangement implicated both statutes before exercising enforcement discretion because of the program's specific design and safeguards. The arrangement's clinical purpose, limited remuneration, objective eligibility criteria, and controls governing voucher use all featured prominently in OIG's analysis. At the same time, OIG emphasized that the opinion is limited to the facts presented and may not be relied upon by any party other than the requesting FQHC. 

As healthcare organizations continue investing in food-as-medicine and other social determinant of health programs, AO 26-16 provides a useful framework for balancing innovation and population health objectives with longstanding fraud and abuse considerations. 

Reed Smith will continue to monitor developments related to OIG Advisory Opinions.  If you have questions about this advisory opinion, would like to seek an advisory opinion of your own or find yourself the subject of a False Claims Act investigation or lawsuit, please do not hesitate to reach out to the health care lawyers at Reed Smith.