OIG Revises and Adds Anti-Kickback Statute Safe Harbors and Civil Monetary Penalty Rules

OIG Revises and Adds Anti-Kickback Statute Safe Harbors and Civil Monetary Penalty Rules


In what may be one of the final federal health care revisions implemented during the Obama Administration, on December 7, 2016 the U.S. Department of Health and Human Services (“HHS”), Office of Inspector General (“OIG”), published a final rule (the “Final Rule”) in the Federal Register.  The Final Rule revises and adds new safe harbors to the federal Anti-Kickback Statute (“AKS”) and amends the civil monetary penalty (“CMP”) regulations regarding beneficiary inducements.

The AKS makes it a crime to knowingly and willfully offer, pay, solicit or receive remuneration to induce or reward business reimbursable under federal health care programs.  Periodically since 1991, the OIG has created so-called Safe Harbors to the AKS that protect certain business arrangements from prosecution if each of the elements of the Safe Harbor is satisfied.  Because the scope of the AKS is broad, and the penalties for non-compliance are significant, structuring an arrangement that fits within a Safe Harbor is very important.

The Final Rule adds five new Safe Harbors to the AKS and makes technical amendments to other existing AKS Safe Harbors.  In the preamble to the Final Rule, the OIG states its belief that “the safe harbors in this rule further the goals of access, quality, patient choice, appropriate utilization, and competition, while protecting against increased costs, inappropriate steering of patients, and harms associated with inappropriate incentives tied to referrals” (81 FR 88369). 

The new Safe Harbors protect the following arrangements under specific conditions:

  • A pharmacy’s waiver of Medicare Part D cost-sharing for financially needy beneficiaries;
  • Reductions or waivers of cost-sharing owed for emergency ambulance services furnished by an ambulance provider owned and operated by a State, a subdivision of a State  or a federally recognized Indian tribe;
  • Remuneration between a Medicare Advantage Organization and federally qualified health center;
  • Discounts on applicable drugs by a pharmaceutical manufacturer to applicable beneficiaries; and
  • Free and discounted local transportation made available by certain entities.

All parties in the health care delivery system should review these new Safe Harbors and understand the specific provisions that need to be followed to ensure the protection of the Safe Harbor.  

The CMP law permits the HHS Secretary to impose penalties on individuals who defraud Medicare or Medicaid or engage in certain other unlawful conduct, including providing remuneration to beneficiaries that a provider knows or should know will likely influence the beneficiary to receive services from a particular provider, practitioner or supplier.  Understanding the definition of “remuneration” is very important to ensuring CMP law compliance.

The Final Rule includes the codification of statutory amendments to the CMP’s definition of “remuneration” that were included in the Affordable Care Act.  The revisions in the Final Rule detail specific situations that are excluded from the definition of “remuneration” (and are therefore not impacted by the CMP), including:

  • Reductions of co-pays by hospitals for certain outpatient department services;
  • Remuneration that promotes access to care and poses a low risk of harm to patient and federal health care programs;
  • Certain retailer rewards programs;
  • Offers or transfer of items or services for free or less than fair market value to recipients with financial need; and
  • Waiver of co-pay obligation for the first fill of a Medicare Part D covered generic drug.

The Final Rule is in the December 7, 2016 issue of the Federal Register (81 FR 88368 et seq.).

Health care providers and suppliers and all parties in the health care delivery system should review the Final Rule and understand the parameters of the revised and new Safe Harbors and the expanded “remuneration” exceptions in the CMP that may impact a prospective business relationship.

Saul Ewing attorneys regularly counsel clients on compliance with federal and state fraud and abuse laws, including the AKS and the Stark Law, and help clients structure and maintain compliant arrangements that achieve business goals.  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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