OIG Proposes New Anti-Kickback Safe Harbors and Civil Monetary Penalty Exceptions

Nov 10, 2014 at 02:54 pm by steve


On October 3, 2014, the Office of Inspector General (“OIG”) issued proposed rules which would add new safe harbors to the Anti-Kickback Statute (“AKS”) and exceptions the Civil Monetary Penalties (“CMP”) law. Some of the proposals are new and some codify statutory changes made in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) and the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (“ACA”). As health care delivery methods change in the United States, the proposal demonstrates recognition that providers need more latitude to deliver care under the new statutory landscape without violating federal law.

The AKS proposals would protect certain arrangements that involve (i) cost-sharing waivers, (ii) Medicare Advantage (“MA”) organizations and federally qualified health centers (“FQHCs”), (iii) drug manufacturer discounts given to patients under the Medicare Coverage Gap Discount Program, and (iv) free or discounted local transportation services. The proposals regarding MA organizations and FQHC arrangements, and drug manufacturer discounts, are codifications of Section 237 of the MMA and Section 3301(d) of the ACA, respectively. The transportation protections would, if finalized, settle long-running confusion on the issue.

Under existing law, providers and suppliers that routinely waive Medicare patient cost-sharing amounts for reasons unrelated to financial hardship may be held liable under the AKS. The supporting rationale is based on the concern that waivers are deemed made to induce referrals to the provider or supplier. Such waivers could even implicate the CMP law if found to be such that would influence the patient’s provider selection.

The OIG’s proposal would protect two types of waiver situations. The first are waivers or reductions by pharmacies of amounts imposed by Medicare Part D, if certain conditions are met. This is a codification of Section 101 of the MMA. The second type of situation is where an ambulance service supplier, which is owned and operated by the State, reduces or waives patient coinsurance or deductibles.

The OIG has separately proposed an AKS safe harbor that would protect eligible entities providing free or discounted local transportation services to federal program patients. Under this new safe harbor, the transportation must be made available only to established patients and in order to obtain medically necessary items and services. Entities that primarily supply health care items (e.g., durable medical equipment suppliers and pharmaceutical companies) would be ineligible for the protection. Laboratories would also be excluded. Other limitations include a prohibition on public advertisement or marketing of the transportation service and a limit of 25 miles.

Despite these limitations, the OIG proposed safe harbor may protect not only transportation for direct medical purposes, but also for other purposes that relate to the patient’s health including, for example, transportation to apply for government benefits, to obtain counseling or to assist a patient with access to food banks and food stores. Medicare Advantage plans have long favored these transportation rules as success is measured by pro-active health management that is complicated if patients cannot access food, pharmacies and benefits.

For CMP proposals, the OIG will amend its regulations to specifically account for statutory exceptions in (i) Section 4523 of the Balanced Budget Act (“BBA”) of 1997, and (ii) Section 6402(d)(2)(B) of the ACA. It would also track the already existing CMP statutory language that prohibits gainsharing (hospital payments to physicians to induce the physician to reduce or limit services).

Section 4523 of the BBA allows hospitals to reduce copayments for covered outpatient department services as long as the reduction is not less than 20% of the Medicare fee schedule amount. Section 6402(d)(2)(B) of the ACA creates four new exceptions for charitable-type programs. The first protects exchange of remuneration where it poses a low risk of harm to patients and promotes access to care. The second involves retailer rewards, where the rewards involve coupons, rebates or similar items, are offered on equal terms to all members of the public, and are not tied to other reimbursable services. The third exception is one where items or services are offered for free or less than fair market value after determining a patient is in financial need. The final exception protects prescription drug plan sponsors and MA organizations that waive copayments for the first fill of a generic drug—again reflecting a support of the Medicare Advantage goals of pro-actively managing patient care.

The OIG has solicited comments on these proposed rules and will accept comments until 5 p.m. EST on December 2, 2014. All comments received before the deadline will be posted for public viewing.




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