Patient Inducements: The New Dos and Don’ts


The limits on giving free goods and services to Medicare and Medicaid patients are complex. Here’s how to avoid regulatory trouble.

Fam Pract Manag. 2018 Jul-Aug;25(4):16-19.

Author disclosure: no relevant financial affiliations disclosed.

Providing patients with free items and services, such as an educational video or transportation to an appointment, could be part of a successful strategy to help patients improve their health. However, the federal government is wary of health care groups using these “inducements” to steer Medicare and Medicaid patients toward specific providers or products, and it can impose strict penalties on those who do, including fines, jail time, civil money penalties, and exclusion from future participation in federal programs.1

Regulators do not have to demonstrate that a gift was intended to influence a patient’s choice of provider, only that the donor knew or should have known that the gift would “likely” influence it.According to the regulations, mentioning the gift in advertising or marketing would suggest inducement, and so would indirect promotion of gifts by word of mouth.

Government regulations released in 2002 and updated in 2016 established parameters for permissible inducements. This article describes how physicians can give Medicare and Medicaid patients items and services of value without running afoul of the law.


  • Federal regulations strictly define the type and value of free goods or services physicians can provide to patients to avoid improper influence on the patient’s choice of health care provider.

  • Violating these “inducement” rules can lead to fines, imprisonment, civil money penalties, and exclusion from participating in federal health care programs.

  • Physicians may offer goods or services of “nominal value” with no restrictions – generally, items that are worth $15 or less and do not add up to more than $75 a year per patient.

  • Other exceptions include offering local transportation to patients, providing goods or services that improve the patients’ access to preventive care, and assisting patients who have financial need.


The Office of the Inspector General (OIG) in 2002 provided some initial guidance by announcing that physicians and other health care providers could offer gifts of “nominal value” without restrictions. It defined “nominal value” as having a retail worth of $10 or less per gift up to an annual limit of $50 per patient and specified that cash or cash-equivalent items are not permitted. These rules also approved waiving copays based on financial need, as well as providing certain preventive care services at no charge. But these exemptions were restricted to prenatal services, postnatal well-baby services, and services recommended by the U.S. Preventive Services Task Force, such as blood pressure screenings.

In 2016, the OIG raised the “nominal value” amounts to $15 per gift and an annual limit of $75 but issued


Alice Gosfield is principal of Alice G. Gosfield & Associates in Philadelphia.

Author disclosure: no relevant financial affiliations disclosed.


1. U.S. Department of Health & Human Services. Civil Monetary Penalties. §1128A(a)(5); 42 CFR §1003.1000(a). Accessed June 4, 2018.

2. U.S. Department of Health & Human Services. Exceptions. 42 CFR §1001.952(bb)(2). Accessed June 4, 2018.

3. U.S. Department of Health & Human Services. Definitions. 42 CFR §1003.110(6). Accessed June 4, 2018.


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