“New” AKS Safe Harbors and CMP Provisions – OIG Wants Comments

The Office of the Inspector General (“OIG”) of the Department of Health and Human Services issued a proposed rule on Friday, October 3rd to modify certain existing safe harbors to the Anti-Kickback Statute (“AKS”) and create new safe harbors based upon recent statutory changes. The OIG also proposed a codification of the gainsharing civil monetary penalty (“CMP”) that has been long delayed. In presenting the proposed rules, the OIG included a significant number of questions in order to encourage and direct comments from interested parties.

The desire to receive comments on the proposed safe harbor changes was heavily emphasized by Inspector General Daniel Levinson during his keynote speech during the American Health Lawyers Association’s Fraud and Compliance Forum. As IG Levinson stated, this is an opportunity for interested attorneys and healthcare entities to play a role in shaping the AKS safe harbors. Taking advantage of the opportunity should be seriously considered.

The AKS safe harbor provisions are primarily for the purpose of introducing new protections for certain types of discounts and cost-sharing arrangements.  The new safe harbors were included in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the Patient Protection and Affordable Care Act.  Accordingly, the proposed regulation is not introducing novel safe harbors, but getting around to satisfying statutory requirements.

Of the new safe harbor provisions, the proposal to allow free or discounted local transportation services is the proposal with the lengthiest description and potentially the most areas for non-compliance to arise as described.  The proposed safe harbor exempts free or discounted local transportation offered by an Eligible Entity from the definition of remuneration if the following elements are met:

  • the availability of the free or discounted transportation is not determined in a manner connected to past or anticipated volume or value of referrals;
  • the transportation is not by air, luxury or ambulance level;
  • the transportation services are not marketed nor are any health care items or services marketed during the course of the transport;
  • the transportation is only offered to established patients (or someone who needs to assist such a patient) of the Eligible Entity; and
  • the Eligible Entity offering the transportation fully bears the costs of such transportation without passing it on to any federal, state or private health care payor or individuals.

For purposes of the proposed safe harbor, an Eligible Entity is any entity or individual, except for entities or individuals that primarily supply health care items.

The proposal is limited to the newly defined term of Eligible Entities.  The term is defined to exclude suppliers of health care items, which removes entities such as durable medical equipment companies.  The OIG states a clear fear that DME companies would only offer free or discounted transportation because such companies would be attempting to influence referrals.  However, the OIG is open to receiving comments on whether this view is correct.

Another element of the local transportation safe harbor where the OIG posed a number of questions is how to actually define local.  In the proposal, the OIG defined local as no more than 25 miles.  However, is such a mileage limitation appropriate in a rural setting?  In light of such considerations, the OIG asked whether it may be more appropriate to define “local” in the same way as a geographic area is defined for certain Stark Law exceptions.  Given the OIG’s uncertainty, comments on the definition of local are likely to be fairly influential.

Among the CMP provisions, the gainsharing CMP may be one of the most anticipated.  Under the statute creating the gainsharing CMP, hospitals and critical access hospitals are prohibited from knowingly paying or inducing a physician to reduce or limit services to Medicare or Medicaid beneficiaries.  The gainsharing CMP has had a long and so far unfruitful regulatory process, with the first proposed regulation being introduced in 1994.  However, circumstances are different on a number of fronts now.

Since that time, the OIG has actually issued a number of Advisory Opinions indicating that even though a proposed arrangement would cause concerns under the statute, there was a low risk of harm and no adverse action would be pursued.  Additionally, both Congress and the overall healthcare industry have gone in a direction that may be completely contradictory to the gainsharing CMP.  Specifically, providers are being encouraged to work together in order to reduce costs by more efficiently and conscientously utilizing healthcare services.  The providers are then able to share in the resulting savings.  Such a scenario is directly implicated under the gainsharing CMP.

In light of the changing healthcare world, the OIG questions whether the gainsharing CMP as currently enacted in statute fits.  However, even while putting that idea on the table, the OIG more than hints that its hands are tied.  As such and reading between the lines, it is clear that petitioning the legislature may be necessary to resolve the tension.  In the absence of a legislative change, the OIG poses a lot of questions as to how it may interpret phrases to avoid undercutting the changing healthcare world.

As indicated at the beginning, the OIG is very clearly calling for comments and interested parties should take up that offer.

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About Matt Fisher

Matt is the chair of Mirick O'Connell's Health Law Group and a partner in the firm's Business Group. Matt focuses his practice on health law and all areas of corporate transactions. Matt's health law practice includes advising clients with regulatory, fraud, abuse, and compliance issues. With regard to regulatory matters, Matt advises clients to ensure that contracts, agreements and other business arrangements meet both federal and state statutory and regulatory requirements. Matt's regulatory advice focuses on complying with requirements of the Stark Law, Anti-Kickback Statute, fraud and abuse regulations, licensing requirements and HIPAA. Matt also advises clients on compliance policies to develop appropriate monitoring and oversight of operations.
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