Health Care Reform Resource Center
33 Davis Brown Attorneys Selected for The Best Lawyers in America 2014
Davis Brown Attorneys Named Among Best in the U.S.
Immigration Client Resource Center
Voted Des Moines' Best Law Firm

Davis Brown Health Law Blog  



Health Law Blog: Office of Inspector General Proposes New Safe Harbors to the Anti-Kickback Statute and Civil Monetary Penalty Rule - October 8, 2014

On October 3, 2014, the US Department of Health and Human Services, Office of Inspector General (“OIG”) issued a Proposed Rule that, among other things, would protect additional payment practices and business arrangements from criminal prosecution or civil sanction under the Anti-Kickback Statute (“AKS”) and Civil Monetary Penalties (“CMP”) Law.

Most of the changes that the OIG is proposing are to codify statutory changes that had previously been set forth in other legislative acts, including the Medicare Prescription Modernization Act of 2003 (“MMA”) and the Patient Protection and Affordable Act of 2010 (“ACA”).  A few changes, however, provide new protection to “certain services that the industry has expressed an interest in offering” and which the OIG believes could be offered at “low risk to Federal health care programs.”   

 

The Anti-Kickback Statute

 

The AKS provides criminal penalties and civil sanctions for individuals or entities that knowingly offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under Federal health care programs.  42 U.S.C. § 1320a-7b(b).  Because the broad reach of the statute, the OIG has promulgated safe harbor regulations (“Safe Harbors”) which define practices that are not subject to the AKS because such practices are understood to present a low risk of fraud and abuse.  The Safe Harbors set forth specific conditions that, if met, assure entities involved of not being prosecuted or sanctioned for the arrangement qualifying for the Safe Harbor.

 

In the Proposed Rule, the OIG proposes the following modifications to the AKS Safe Harbors:

  • Referral Services:  The OIG proposes a technical correction to the existing Safe Harbor for referral services, 42 C.F.R. § 1001.952(f), clarifying that the Safe Harbor protection would not extend to payments for referral sources that are based on the volume or value of referrals to, or business otherwise generated by, “either party for the other party.”
     
  • Pharmacy Part D Cost-Sharing Waivers:  Consistent with changes in the MMA, the OIG proposes to add a new provision to the existing Safe Harbor for cost-sharing waivers, 42 C.F.R. § 1001.952(k), that would allow a pharmacy to waive a beneficiary’s Part D cost-sharing responsibilities if (a) the waiver is not advertised; (b) the pharmacy does not routinely waive cost-sharing; and (c) before waiving the cost-sharing, the pharmacy either determines that the beneficiary has a financial need or makes a reasonable effort to collect from the beneficiary.

  • Ambulance Cost-Sharing Waivers:  The OIG proposes to add a second new provision to 42 C.F.R. § 1001.952(k), that would allow an ambulance provider to waive Medicare cost-sharing responsibilities if the provider (a) is owned by a state, political subdivision of the state, or federally recognized Indian tribe; (b) is the Part B provider of the services; (c) is not providing free services which are paid for by a government entity; (d) offers the waiver uniformly; and (e) does not shift the burden for the waiver to Federal health care programs, other payors or individuals.
     
  • MA Organizations and FQHCs:  Consistent with changes in the MMA, the OIG proposes to add a new Safe Harbor that would protect payments between a federally qualified health center (“FQHC”) and a Medicare Advantage (“MA”) organization made pursuant to a written agreement that provides for the MA organization to make payments to the FQHC in an amount no less than the amount of payment that the plan would make for the same services if the services were furnished by another type of provider.

  • Medicare Coverage Gap Discount Program:  Consistent with changes in the ACA, the OIG proposes to add a new Safe Harbor that would protect a discount in the price of a drug that a manufacturer offers a beneficiary under the Medicare Coverage Gap Discount Program, provided that the manufacturer is in compliance with all requirements of that program. 

  • Local Transportation Services:  The OIG proposes a new Safe Harbor that would generally protect free or discounted local transportation for established patients who are Federal health care program beneficiaries for the purpose of obtaining medically necessary services if (a) the discount is based on the volume or value of Federal health care program business; (b) the services are not luxurious or overly expensive; (c) the services are not advertised; (d) the services do not include advertising; (e) the drivers are not paid on a per-beneficiary basis; (f) the services are only for established patients within the local area (defined as within 25 miles) of the provider; and (g) the provider does not shift the burden of the burden for the waiver to Federal health care programs, other payors or individuals

Particularly for the proposed new Safe Harbors for ambulance services and local transportation, the OIG is seeking comment.  While the OIG has tackled these practices in a series of advisory opinions, the OIG is still seeking input on several significant aspects of the practices.  For example, with respect to local transportation services, the OIG is interested in understanding whether local transportation services in rural areas (e.g. medical underserved areas) should extend beyond 25 miles, and whether, and to what extent, the services should include existing public transportation.  

 

The Civil Monetary Penalty Law

 

The CMP Law provides for civil sanctions for individuals and entities that, among other things, offer remuneration to a Federal health care program beneficiary, if the remuneration is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of any item or service for which payment may be made by a Federal health care program.  42 U.S.C. § 1320a-7a(a)(5).  “Remuneration” includes transfers of items or services for free or less than fair market value.  42 U.S.C. § 1001.101.  In 2010, the ACA included four additional exceptions to the definition of remuneration.

In the Proposed Rule, the OIG proposes to codify those exceptions into the CMP Law regulations.

  • Promotes Access / Low Risk of Harm:  The OIG proposes a new exception to the definition of “remuneration” that would protect a payment “which promotes access to care and poses a low risk of harm to patients and Federal health care programs.”
  • Retailer Reward Programs:  The OIG proposes another new exception that would protect an offer or transfer of items or services for free of less than fair market value if (a) the items consist of retailer rewards such as coupons or rebates; (b) the items are offered on equal terms to the general public and regardless of health insurance status; and (c) the offer is not tied to the provision of services reimbursed under a Federal health care program.
  • Financial Need-Based Exception:  The OIG proposes an exception that would except from the definition of “remuneration” the offer or transfer of items or services that (a) are not part of an advertisement; (b) the offer is not tied to the provision of services reimbursed under a Federal health care program; (c) there is a reasonable connection between the offer and the medical care of the individual; and (d) the person provides the item or service after determining that the individual is in financial need.
  • Cost-Sharing Waivers for Generic Drugs:  The OIG proposes to add an exception to the definition of remuneration for a waiver by a Prescription Drug Plan (“PDP”) and Medicare Advantage organizations of the first fill of a covered Part B generic drug.

 

For each of these newly proposed exceptions, the OIG is seeking comment.  The proposed language of these exceptions is general and will require significant elaboration and clarification through the rule-making process in order to provide sufficient guideposts to health care providers on how to proceed under the CMP Law.  For example, for the proposed exception promoting access to health care, OIG is interested in understanding whether it should more broadly interpret “access to care” to include care that is “non-clinical but reasonably related to the patient’s medical care, such as social services.”  Similarly, for the proposed exception retailer rewards programs, the OIG is interested in understanding whether entities that primarily sell items that require a prescription (e.g. medical equipment stores) should be considered “retailers.”

 

The OIG also proposes to codify the “gainsharing provision” of the CMP Law, which prohibits hospitals from knowingly paying a physician to reduce or limit services provided to a Medicare or Medicaid beneficiary who are under the physician’s care.  42 U.S.C. § 1320a-7a(b).  In light of the growth of quality-based reimbursement, the use of incentive plans and performance standards, including those in the ACA-mandated shared-savings programs, the OIG is seeking comment on several key aspects of the new regulatory provision.  For example, the OIG is interested in understanding whether “reducing or limiting services” should include a decision to standardize certain items (e.g. surgical instruments) or to rely on protocols based on quality metrics.  

 

The Proposed Rule can be found here. Note that for any comments to be considered, the comments must be delivered, whether electronically, by mail, or by courier, by December 2, 2014.