Typically, the AKS employment statutory exception and regulatory safe harbor broadly protects employment compensation paid by an employer to a bona fide employee for employment in furnishing covered items and services. The 1989 proposed safe harbor rule and 1991 final safe harbor rule confirmed that employer payments to employees for generating business for the employer were protected by the safe harbor.

However, OIG determined that “in the unique and specific circumstances” of this request, the sign-on bonus operated not as ordinary employment compensation but as “an inextricable link between the employment of the Attendant and the referral” of their family member to the home care agency prior to the start of employment, because the Attendant is also the person choosing the agency for their family member. OIG viewed the advertising of the bonus as a “solicitation for an all but guaranteed referral before employment commences.” OIG contrasted more traditional and common situations, where sign-on bonuses are offered to prospective employees with simply “the hope of future referrals but without any guarantee of referrals.” In addition to the steering risk, OIG expressed concerns that this type of bonus could create risk of unfair competition and reduced quality of care if agencies must engage in an ever-increasing bonus war, as well as risk that Attendants would select agencies based on receiving the bonus rather than on the quality of the agency.

It is important to read this opinion in context of the “unique and specific circumstances” that OIG takes pains to point out. OIG states that where the person obtaining the bonus is the person selecting the agency for the beneficiary and the person being employed to provide the care to the beneficiary, the employment safe harbor does not cover the bonus payment. This unique and specific circumstance should not indicate risk in paying sign-on bonuses to other types of prospective employees, such as nurses or home care attendants who will not care for their own family members.

The opinion also does not call into question the broader use of legitimate, performance based incentive compensation for employees, such as payments related to actual work performed, quality outcomes, productivity, or other job related measures, including generating business for the employer. While OIG states that a sign-on bonus is “low risk” under the AKS, OIG does not fully explaining why a sign-on bonus under normal circumstances would not be covered by the employment exception or safe harbor. The safe harbor itself protects not only payments for performing work, but also payments “for employment in the furnishing” of covered items or services. This language should be read to include any payment “for employment,” including a payment for accepting an employment offer.

Finally, readers should also keep in mind that unfavorable opinions are only published when the requestor wants the opinion published. If OIG intends to issue an unfavorable opinion, it informs the requestor and provides an opportunity to amend or withdraw the request. Thus, the requestor wanted this opinion published, potentially to chill competitors from offering the type of sign-on bonuses described in the opinion.

In response to the opinion. home care agencies should review their sign-on bonus programs for family-member attendants in Medicaid (and Medicaid managed care organization) consumer directed programs.