Permissible Rewards and Incentives

100.5 – Permissible Rewards and Incentives (Rev. 121, Issued: 04-22-16, Effective: 04-22-16, Implementation: 04-22-16) Rewards and/or incentives may not be offered in the form of cash or monetary rebates, including reduced cost-sharing or premiums. Otherwise, MAOs have considerable flexibility with regard to what may be offered as a reward or incentive. Gift cards are a permissible form of reward or incentive as long as they are not redeemable for cash. MA plans are encouraged to offer enrollees a choice of gift cards from which to choose in order to account for differences in enrollees’ preferences and accessibility of retailers. Discount coupons are also a permissible form of reward or incentive as long as they are not transferable for cash and follow the valuing guidelines addressed above. However, we would note that coupons that provide only nominal discounts may not provide adequate incentive to drive the intended changes in enrollee behavior and thus not align with CMS valuing guidelines. An RI Program that is designed so that enrollees earn “points” or “tokens” that can be used to “purchase” rewards (or some variation of this type of program) is permissible as long as the “points” and the rewards that may be “purchased” are earned and valued (according to CMS guidelines as set forth within this guidance and in accordance with §422.134) and are redeemed during the contract year in which they are earned. Rewards and/or incentives must be tangible items that align with the purpose of the RI Program and must directly benefit the enrollee. For example, a plan’s charitable contribution made on behalf of the enrollee does not satisfy the CMS criteria as a permissible reward or incentive because the enrollee who earned the reward does not benefit from such a contribution by the plan. However, the use of points (which are not themselves tangible), to purchase a reward, does satisfy CMS criteria because the points are used by each enrollee to obtain a tangible reward that is of value to the enrollee. Rewards and/or incentives that are to be won based on probability, including programs in which an enrollee may earn entries into a lottery or drawing in order to receive a reward or incentive of a significant value, are not permissible because all enrollees who participate in and complete the services or activities required of them within the RI Program’s design must receive a tangible reward and incentive. The potentially negligible chance of winning the reward in such a scheme (depending on the pool of eligible enrollees) does not qualify as a tangible reward or incentive. Furthermore, RI Programs structured in this manner are potentially vulnerable to fraud and abuse implications.