Office of the Inspector General (OIG) of the United States Department of Health and Human Services (HHS)

Application of Certain Fraud and Abuse Authorities to Certain Types of Arrangements

Would it be an impermissible inducement for a hospital to offer patients who are Federal health care program beneficiaries or their family members a gift card as an incentive to transfer from the hospital to another hospital in the same health system?

Updated 11/5/2026

Whether an arrangement involves an impermissible inducement depends on the facts and circumstances, including the intent of the parties.  The Office of Inspector General (OIG) would have significant concerns if a hospital offered or provided a gift card (or cash or other cash equivalents) to a Federal health care program beneficiary specifically to induce them to transfer from the hospital to a hospital in the same health system.  For purposes of this frequently asked question (FAQ), we consider a hospital in the same health system to be any affiliated hospital, including but not limited to, hospitals with common ownership, a wholly owned subsidiary, a joint venture, or any other affiliation.

The Federal anti-kickback statute makes it a criminal offense to knowingly and willfully offer or pay any remuneration to induce, or in return for, the referral of an individual to a person for the furnishing of, or arranging for the furnishing of, any item or service reimbursable under a Federal health care program.  The Beneficiary Inducements Civil Monetary Penalty (CMP) provides for the imposition of CMPs against any person who offers or transfers remuneration to a Medicare or State health care program beneficiary that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier for the order or receipt of any item or service for which payment may be made, in whole or in part, by Medicare or a State health care program.

If a hospital offered a gift card to a Federal health care program beneficiary to induce that person to transfer to an affiliated hospital, both the Federal anti-kickback statute and the Beneficiary Inducements CMP (if the patient were a Medicare or State health care program beneficiary) would be implicated.  No safe harbor or exception would apply.  We have longstanding and continuing concerns regarding the provision of valuable gifts to Federal health care program beneficiaries because of the harms that could result, including patient steering, unfair competition, and improper utilization, as well as concerns about lower quality and higher costs.  We have identified the following risks associated with the offer and provision of gift cards to induce a Federal health care program beneficiary to transfer to an affiliated hospital for care:

• Unfair competition and inappropriate steering: A gift card could be an attractive incentive for a patient to agree to transfer from the hospital to an affiliated hospital rather than staying at the original hospital or transferring to a competitor hospital or another clinically appropriate care setting, raising the risk of inappropriate steering and unfair competition.  For example, the offer or provision of gift cards by larger hospital systems with greater resources may disadvantage other hospitals that do not offer gift cards but may be a closer or better option for a particular beneficiary.
• Increased costs to Federal health care programs: If the hospital to which a patient was induced by a gift card to transfer was, for example, a critical access hospital, then it is possible that a Federal health care program would pay more for the patient care.
• Potential quality of care issues: Not all hospitals in a hospital system necessarily provide the same quality of care.  Gift cards may induce patients to transfer to a lower quality hospital than the hospital to which they presented, which may negatively impact their care.

The above list is illustrative and may not be exhaustive of potential risks.

Circumstances in which a hospital offers or provides remuneration to a Federal health care program beneficiary (other than a gift card, which is addressed herein) to induce them to transfer to another hospital are beyond the scope of this FAQ.  However, we note that such arrangements could implicate the Federal anti-kickback statute and Beneficiary Inducements CMP and should be evaluated on a case-by-case basis for compliance with the law.  We emphasize that nothing in this FAQ is intended to supersede or alter any Emergency Medical Treatment and Labor Act requirements or any other applicable hospital Conditions of Participation.