OIG Proposes New Safe Harbors Under Anti-Kickback Statute and Civil Monetary Penalty Regulations

OIG Proposes New Safe Harbors Under Anti-Kickback Statute and Civil Monetary Penalty Regulations


In the Friday, October 3, 2014 issue of the Federal Register (79 F.R. 59717 et. seq), the Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) published a proposed rule (“Proposed Rule”) to amend the safe harbors regulations promulgated under the federal Anti-Kickback Statute (“AKS”) and civil monetary penalty statute (“CMP”). 

The Proposed Rule was prompted by (i) statutory changes included in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the Patient Protection and Affordable Care Act (“PPACA”), and changes to the definition of “remuneration” included in PPACA and the Balanced Budget Act of 1997; and (ii) industry feedback.

In proposing the safe harbor changes, the OIG stated in the preamble to the Proposed Rule that it seeks, “an appropriate balance between protections for beneficial arrangements and safeguards to prevent unscrupulous individuals and entities from taking advantage of the safe harbors to increase costs to programs and patients or compromise quality of care.”  (79 F.R. 59719-720)

The Proposed Rule suggests the following changes to the AKS safe harbors:

  • Adding a safe harbor for pharmacy waivers of Medicare Part D cost sharing if: (1) the waiver or reduction is not advertised or part of a solicitation; (2) the pharmacy does not routinely waive the cost-sharing; and, (3) before waiving, the pharmacy either determines in good faith that the beneficiary has a financial need or the pharmacy fails to collect the cost-sharing after making a reasonable effort to do so;
  • Adding a safe harbor to protect reductions or waivers of co-insurance or deductibles for emergency ambulance services owned and operated by a state or a political subdivision of the state under specified conditions, including that the ambulance provider offer the reduction or waiver on a uniform basis, without regard to patient-specific factors;
  • Adding a safe harbor protecting certain remuneration between a federally qualified health center and a Medicare Advantage organization;
  • Codifying the provision of PPACA which protects discounts under the Medicare Coverage Gap Discount Program (“MCGDP”) to protect a discount in the price of an “applicable drug” furnished to an “applicable beneficiary” under the MCGDP so long as the manufacturer participates in, and is in compliance with, all the requirements of the MCGDP; 
  • Adding a new safe harbor to protect certain free local transportation or discounted local transportation services for established patients obtaining medically necessary items and services whose conditions require frequent or critical appointments, but who do not have reliable transportation.  Further, the transportation could not be greater than 25 miles one-way; and
  • A technical correction to the existing safe harbor for referral services (42 C.F.R. 1001.952(f)) to correct language originally finalized in 1999.

In addition to proposed changes to the safe harbors, the Proposed Rule amends the definition of “remuneration” in the CMP regulations.  These amendments include exceptions to the definition of “remuneration” for the following activities: (1) certain reductions in copayments for covered hospital outpatient department services; (2) certain remuneration that promotes access to care and poses a low risk of harm to patients and federal programs; (3) certain retailer rewards programs; (4) items or services of free or below fair market value for financially needy individuals under certain circumstances; and (5) waivers of copayments owed for the first fill of a covered, generic Part D drug under specified circumstances.

Finally, the OIG Proposed Rule, if adopted as a final rule, will codify the statutory gainsharing CMP which prohibits a hospital from knowingly making a payment, directly or indirectly, to a physician as an inducement to reduce or limit services to Medicare or Medicaid or prescription beneficiaries.  

As part of the Proposed Rule, OIG invites interested parties to provide comments.  Comments are due to the OIG no later than 5 p.m. EST on December 2, 2014.

As the healthcare delivery system continues to evolve, proposed regulatory modifications to the AKS and CMP are initiated by the OIG to provide additional clarity to parties to ensure compliant activities while prohibiting federal health care program dollars from, “undue risk of harm associated with referral payment.” (79 F.R. 59719).  If the new AKS safe harbors are adopted, it would represent the first new safe harbors since 2007 (existing safe harbors have been modified in the interim).

Saul Ewing attorneys have substantial experience in analyzing and advising clients with respect to the federal fraud and abuse statutes, including aiding clients to structure compliant transactions.  For more information on these matters, please contact the authors or the attorney at the firm with whom you are regularly in contact.  

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