Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty…

Medicare and State Health Care Programs: Fraud and Abuse; Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements

SUMMARY: In this final rule, OIG amends the safe harbors to the anti-kickback statute by adding new safe harbors that protect certain payment practices and business arrangements from sanctions under the anti-kickback statute. The OIG also amends the civil monetary penalty (CMP) rules by codifying revisions to the definition of "remuneration," added by the Balanced Budget Act (BBA) of 1997 and the Patient Protection and Affordable Care Act, Public Law 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010 (ACA). This rule updates the existing safe harbor regulations and enhances flexibility for providers and others to engage in health care business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse.

EFFECTIVE DATE: These regulations are effective on January 6, 2017.

FOR FURTHER INFORMATION CONTACT: Heather L. Westphal, Office of Counsel to the Inspector General, (202) 619-0335.

SUPPLEMENTARY INFORMATION:

Social Security Act............United States Code citation

citation

1128.......................... 42 U.S.C. 1320a-7.

1128A..........................42 U.S.C. 1320a-7a.

1128B..........................42 U.S.C. 1320a-7b.

1860D-14A......................42 U.S.C. 1395w-114A.

1927.......................... 42 U.S.C. 1396r-8.

1102.......................... 42 U.S.C. 1302.

Executive Summary

A. Purpose of the Regulatory Action

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and ACA include exceptions to the anti-kickback statute, and the BBA of 1997 and ACA include exceptions to the definition of "remuneration" under the civil monetary penalties law. The OIG is codifying those changes here. At the same time, OIG is finalizing additional changes to make technical corrections to an existing regulation and to add new safe harbors to the anti-kickback statute to protect certain services that the industry has expressed an interest in offering and that we believe could be, if properly structured and with appropriate safeguards, low risk to Federal health care programs.

B. Summary of the Major Provisions

1. Anti-Kickback Statute and Safe Harbors

In this final rule, we amend 42 CFR 1001.952 by modifying certain existing safe harbors to the anti-kickback statute and by adding safe harbors that provide new protections or codify certain existing statutory protections. These changes include:

* A technical correction to the existing safe harbor for referral services;

* protection for certain cost-sharing waivers, including:

* pharmacy waivers of cost-sharing for financially needy beneficiaries; and

* waivers of cost-sharing for emergency ambulance services furnished by State- or municipality-owned ambulance services;

* protection for certain remuneration between Medicare Advantage (MA) organizations and federally qualified health centers (FQHCs);

* protection for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and

* protection for free or discounted local transportation services that meet specified criteria.

2. Civil Monetary Penalty Authorities

We amend the definition of "remuneration" in the CMP regulations at 42 CFR part 1003 by interpreting and incorporating 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.

In addition, because the original language in the introductory paragraph of the definition of "remuneration" referred only to "coinsurance and deductible amounts," we have added the word "copayment" for consistency with the other text that we proposed and are finalizing.

C. Costs and Benefits

There are no significant costs associated with the regulatory revisions that would impose any mandates on State, local, or tribal governments or on the private sector.

I. Background

A. The Anti-Kickback Statute

Section 1128B(b) of the Social Security Act (the Act), the anti-kickback statute, provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under Federal health care programs, as defined in section 1128B(f) of the Act. The offense is classified as a felony and is punishable by fines of up to $25,000 and imprisonment for up to 5 years. Violations may also result in the imposition of CMPs under section 1128A(a)(7) of the Act, program exclusion under section 1128(b)(7) of the Act, and liability under the False Claims Act (31 U.S.C. 3729-33).

The types of remuneration covered specifically include, 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. In response, Congress enacted section 14 of the Medicare and Medicaid Patient and Program Protection Act of 1987, Public Law 100-93 (section 1128B(b)(3)(E) of the Act), which specifically requires the development and promulgation of regulations, the so-called safe harbor provisions, that would specify various payment and business practices that would not be treated as criminal offenses under the anti-kickback statute, even though they may potentially be capable of inducing referrals of business under Federal health care programs. In authorizing the Department of Health and Human Services (Department or HHS) to protect certain arrangements and payment practices under the anti-kickback statute, Congress intended that the safe harbor regulations be updated periodically to reflect changing business practices and technologies in the health care industry.

Section 205 of the Health Insurance Portability and Accountability Act of 1996, Public Law 104-191, established section 1128D of the Act, which includes criteria for modifying and establishing safe harbors. Specifically, section 1128D(a)(2) of the Act provides that, in modifying and establishing safe harbors, the Secretary of Health and Human Services (Secretary) may consider whether a specified payment practice may result in:

* An increase or decrease in access to health care services;

* an increase or decrease in the quality of health care services;

* an increase or decrease in patient freedom of choice among health care providers;

* an increase or decrease in competition among health care providers;

* an increase or decrease in the ability of health care facilities to provide services in medically underserved areas or to medically underserved populations;

* an increase or decrease in the cost to Federal health care programs;

* an increase or decrease in the potential overutilization of health care services;

* the existence or nonexistence of any potential financial benefit to a health care professional or provider, which benefit may vary depending on whether the health care professional or provider decides to order a health care item or service or arrange for a referral of health care items or services to a particular practitioner or provider;

* any other factors the Secretary deems appropriate in the interest of preventing fraud and abuse in Federal health care programs.

Since July 29, 1991, we have published in the Federal Register a series of final regulations establishing safe harbors in various areas. /1/ These provisions have been developed "to limit the reach of the statute somewhat by permitting certain non-abusive arrangements, while encouraging beneficial or innocuous arrangements." (56 FR 35952, 35958 (July 29, 1991)). Many of the safe harbors create new exemptions, while other safe harbors interpret exceptions already promulgated by statute.

FOOTNOTE 1 56 FR 35952 (July 29, 1991); 61 FR 2122 (Jan. 25, 1996); 64 FR 63518 (Nov. 19, 1999); 64 FR 63504 (Nov. 19, 1999); 66 FR 62979 (Dec. 4, 2001); 71 FR 45110 (Aug. 8, 2006); 72 FR 56632 (Oct. 4, 2007); 78 FR 78751 (Dec. 27, 2013). END FOOTNOTE

--This is a summary of a Federal Register article originally published on the page number listed below--

Final rule.

CFR Part: "42 CFR Parts 1001 and 1003"

RIN Number: "RIN 0936-AA06"

Citation: "81 FR 88368"

Federal Register Page Number: "88368"

"Rules and Regulations"