Kusserow’s Corner: OIG Proposes to Add New Anti-Kickback “Safe Harbors”

During my tenure as the HHS Inspector General, the Office of Inspector General (OIG) sought and was given the authority to develop what has come to be known as “Safe Harbor” regulations that would immunize certain payment and business practices that are implicated by the Anti-Kickback Statute (AKS) from criminal and civil prosecution under the statute. We issued the first 11 Safe Harbors in 1991 and from time to time since, additional Safe Harbor rules or modification of rules have taken place. On October 2, 2014, the OIG issued a proposed rule to the Federal Register to once again amend the AKS Safe Harbors and the civil monetary penalty (CMP) rules. The stated purpose of the proposed rule was to clarify recent legislation; including the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and the Patient Protection and Affordable Care Act that had AKS exceptions and modifications of the definition of “remuneration” under the civil monetary penalties law. They also intend to make technical corrections to existing regulations and propose new AKS Safe Harbors to protect certain services that the OIG believes could be, if properly structured and with appropriate safeguards, low risk to Federal health care programs. In addition, the civil monetary penalties law includes a “gainsharing” CMP provision that has yet to be codified in regulations that they intend to interpret and codify that provision in this proposed rule. This proposed rule is open to public comments until December 2, 2014. All comments received before the end of the comment period will be posted at http://www.regulations.gov for public viewing.

Remuneration covered under the AKS specifically includes, without limitation, kickbacks, bribes, and rebates, whether made directly or indirectly, overtly or covertly, in cash or in kind. In addition, prohibited conduct includes not only the payment of remuneration intended to induce or reward referrals of patients, but also the payment of remuneration intended to induce or reward the purchasing, leasing, or ordering of, or arranging for or recommending the purchasing, leasing, or ordering of, any good, facility, service, or item reimbursable by any federal health care program. Because of the broad reach of the statute, concern was expressed that some relatively innocuous commercial arrangements were covered by the statute and, therefore, potentially subject to criminal prosecution. The proposed amendment to the definition of “remuneration” includes adding certain statutory exceptions for:

  • copayment reductions for certain hospital outpatient department services;
  • certain remuneration that poses a low risk of harm and promotes access to care;
  • coupons, rebates, or other retailer reward programs that meet specified requirements;
  • certain remuneration to financially needy individuals; and
  • copayment waivers for the first fill of generic drugs

The Gainsharing under the Omnibus Budget Reconciliation Act (OBRA) of 1986 authorized the impositions of CMPs for certain incentive payments made to physicians by hospitals, risk-sharing health maintenance organizations (HMOs), and competitive medical plans. Over time, this provision has been amended to repeal the provisions relating to HMOs and other risk-sharing entities and to make various other changes in terminology. The OIG proposes further modifications to protect certain cost-sharing waivers that pose a low risk of harm and make technical corrections to the introductory language to account for new subparagraphs. They recognized that gainsharing can be beneficial and they have approved 16 gainsharing arrangements through our advisory opinion process. They found in many cases those arrangements presented few risks relative to those of other gainsharing arrangements.

Referral Services

The OIG proposes to make a technical correction to the Safe Harbor for referral services that originally required that any fee a referral service charged a participant be “based on the cost of operating the referral service, and not on the volume or value of any referrals to or business otherwise generated by the participants for the referral service. This language created an unintended ambiguity, such that the Safe Harbor could have been viewed as permitting referral services to adjust their fees on the basis of the volume of referrals they make to the participants.

Cost-Sharing Waivers

Generally, the reduction or waiver of Medicare or other Federal health care program cost-sharing amounts may implicate the anti-kickback statute. Although the OIG continues to have concerns about potentially abusive waivers of cost-sharing amounts under the AKS, they propose to add language to protect certain cost-sharing waivers that pose a low risk of harm and make technical corrections to the introductory language to account for new subparagraphs.

Free or Discounted Transportation

To protect free or discounted local transportation services provided to Federal health care program beneficiaries, the OIG concluded that Congress intended that the statute not preclude the provision of complimentary local transportation of nominal value. They have interpreted “nominal value” to mean no more than $10 per item or service or $50 in the aggregate over the course of a year, but now are concerned that this interpretation may be overly restrictive in the context of complimentary local transportation. The proposed Safe Harbor would protect free or discounted local transportation made available to established patients (and, if needed, a person to assist the patient) to obtain medically necessary items and services.

Civil Monetary Penalty Authorities

The OIG proposes to amend the definition of “remuneration” related to the beneficiary inducements CMP to: (a) add a self-implementing exception that was enacted in BBA of 1997 but was never codified in our regulations; and (b) codify amendments that were enacted in ACA.

Financial-Need-Based Exception

The definition of “remuneration” may be modified related to the offer or transfer of items or services for free or at less than fair market value after a determination that the recipient is in financial need and meets certain other criteria.

Waivers of Cost-Sharing for the First Fill of a Generic Drug

The OIG also proposes to except from the definition of “remuneration” waivers by a PDP sponsor of a Part D plan or MA organization offering MA-PD plans of any copayment that would be otherwise owed by their enrollees for the first fill of a covered Part D drug that is a generic drug.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2014 Strategic Management Services, LLC. Published with permission.