OIG Issues Favorable Advisory Opinions Concerning Space and Equipment Subleases and Limited Free Patient Services

Introduction

On May 1, 2026, the Office of Inspector General (OIG) for the US Department of Health and Human Services (HHS) posted two favorable advisory opinions, Advisory Opinion 26-08 and Advisory Opinion 26-09, offering insights into the OIG’s analytical framework for evaluating potential Anti-Kickback Statute (AKS) risk arising out of two fact patterns that occur with some frequency in the healthcare industry.

First, in Advisory Opinion 26-08, OIG provided a favorable opinion regarding space and equipment leases between referral sources because the proposed arrangement met all of the elements of the requisite safe harbors. Second, in Advisory Opinion 26-09, OIG approved a limited free patient-services offering, which it concluded would not be subject to enforcement because of various risk-mitigating factors, including, but not limited to, a lack of marketing of the program. We summarize both opinions below.

Advisory Opinion 26-08 (Lease Arrangements With Referral Sources)

In Advisory Opinion 26-08, OIG issued a favorable opinion regarding proposed sublease arrangements between referral sources at a centralized hearing loss center owned by a physician. The proposed center would be established to create a centralized location for patient hearing care by bringing together patients, caregivers, audiologists, physicians, and cochlear implant manufacturers in one physical space. Along with the lease of space for participants, some arrangements also would include equipment leases. The physician owner also would refer patients to the center’s leasing providers. Based on the representations made by the requestor regarding the space and equipment lease terms among the referral sources, OIG concluded that the arrangements would be protected by the safe harbors for the rental of space and equipment because the elements of the safe harbors were met fully.

Proposed Arrangement

The subleases under the proposed arrangement would:

• Specify the space and equipment (if applicable) subleased between the parties.
• Specify the exact schedule for the use of the space and equipment (for part-time arrangements).
• Include a one-year term and would not exceed what is reasonably necessary to accomplish the commercially reasonable business purpose of the rental.
• Include a fee that is fixed in advance and consistent with fair market value in an arm’s-length transaction that would not be determined in a manner that takes into account the volume or value of referrals made between the parties.

OIG’s rationale: OIG issued a favorable opinion because it concluded that the arrangement satisfied all elements of the applicable safe harbor(s) and did not constitute suspect “sham lease arrangements.” In particular, the requestor certified that: (i) the only remuneration it would receive from referral sources would be the lease payments, from which it would not profit; (ii) no additional remuneration would be exchanged among the requestor, its physician owner, or the sublessees in connection with operation of the center; and (iii) the arrangement would not involve any referral requirements or pressure among the parties to refer patients.

Key Takeaways: OIG reiterated its longstanding concern regarding sham lease arrangements and, in a notable footnote, specifically highlighted medical device manufacturers as an area of concern. OIG emphasized that certain arrangements may appear to satisfy safe harbor requirements on paper but, in reality, function as disguised payments for referrals, such as where the leased space or equipment is not actually used. Providers or entities considering similar sublease arrangements should ensure that the leased space is needed and will be used by the lessee, that there is no actual or perceived pressure to generate referrals, even if the arrangement otherwise satisfies the technical requirements of the safe harbors, and that the fees for space or equipment are consistent with fair market value.

Advisory Opinion 26-09 (Free Orthodontic Treatment)

In Advisory Opinion 26-09, OIG issued a favorable opinion regarding a proposal for a pediatric dental and orthodontic services provider to provide free, comprehensive orthodontic treatment to one of its patients each year at each of its three practice locations. The requestor certified that the sole intent of the program was to uplift an underserved pediatric patient at each location and to educate the public on the impact of orthodontic treatment on oral and mental health.

Proposed Arrangement

Under the proposed free services arrangement:

• The services provided typically span 12 to 24 months and are valued at approximately $4,725 per patient.
• The program would be limited to existing patients nominated by the practice, regardless of their insurance type (including commercial, Medicaid, or no insurance).
• If an insured patient is selected, they must provide documentation evidencing coverage for the treatment was denied by their insurer, and the requestor would not bill federal healthcare programs for the free services.
• Selection of eligible patients would be based on demonstrated clinical and financial need as well as the potential for community impact (e.g., foster care experience). Patients cannot nominate themselves and must meet basic oral health requirements before receiving the orthodontic care.
• There would be no requirement or obligation that any pre-clearance care (if needed) or any other future services are provided by the practice to the patient, which may be billed to payors.
• The practice would maintain thorough records around the program and conduct periodic audits of its selection process.
• The program would not be marketed in any way to obtain new patients. There would be no in-office advertisements or other targeted patient messages. The practice may make limited public references to the program on its website/social media platform(s) or in relevant community settings for the sole purpose of highlighting the community service aspect of the program and positive impact on the selected patients.

OIG’s rationale: OIG concluded that the arrangement implicated both the AKS and the Beneficiary Inducements Civil Monetary Penalty (CMPL) provision and reiterated its longstanding concerns regarding the provision of free items and services that induce decision-making regarding items or services payable by federal healthcare programs but stated that it would not impose sanctions or seek enforcement against the program because of several mitigating factors. Specifically, OIG emphasized that its decision to approve the program relied heavily on the fact that the practice did not publicize, market, advertise, or otherwise identify the program to new patients because doing so would present a higher risk of patient steering and unfair competition. Additionally, OIG concluded that the robust internal evaluation and scoring system used to identify eligible patients relied on factors that do not incentivize overutilization (e.g., financial hardship). Finally, OIG identified other risk-mitigating factors, including its limited scope (one patient per practice per year) and its limited charitable references to the program that were not promotional in nature.

Key Takeaways: The opinion is another example of OIG’s continued willingness to approve narrowly tailored charitable assistance programs that technically implicate the AKS and CMPL, provided the arrangement includes robust safeguards designed to minimize patient steering, overutilization, and unfair competition concerns. Here, OIG placed significant weight on the program’s limited scope, objective financial- and clinical-need-based selection criteria, and limited advertising activities, all of which demonstrated that the program was not being used as a patient acquisition or marketing tool. Stakeholders considering free or subsidized services arrangements should be mindful of appropriate safeguards tailored to applicable safe harbors and relevant OIG guidance.

Conclusion

Although these opinions represent a favorable outcome for the requestors, it is important to understand that OIG’s approval of both arrangements was very fact-specific. As it typically does in its opinions, OIG warns that its outcome may have been different if the programs reflected different facts (e.g., were advertised in any way to induce new patients). Even so, while OIG’s advisory opinions are binding only on the requestor, these opinions serve as helpful guideposts for providers looking to enter into similar arrangements or to be considered in reevaluating existing arrangements as part of internal compliance efforts.

A party also may present an existing or proposed arrangement to OIG and obtain a binding determination as to whether OIG would pursue administrative sanctions for the arrangement. This can be especially valuable for innovative business models or novel financial arrangements that may present regulatory risk. The advisory opinion process works best when legal counsel is involved during the structuring phase and before arrangements are finalized.

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The Goodwin Healthcare team will continue to monitor activity from the OIG, including its issuance of new advisory opinions. For more information on the issues discussed in this alert, please contact the authors or reach out to Goodwin’s Healthcare Regulatory and Compliance group or the Goodwin lawyer whom you typically consult.

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