OIG proposes new AKS safe harbors and expands CMPs


On October 2, 2014, the U.S. Department of Health and Human Services Office of Inspector General (OIG) issued a proposed rule that would add new anti-kickback statute (AKS) safe harbors and expand the civil monetary penalty (CMP) rules. In particular, the proposed rule would codify statutory changes set forth in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), the Patient Protection and Affordable Care Act (ACA), and the Balanced Budget Act of 1997 (BBA).

Proposed New AKS Safe Harbors. Proposed new AKS safe harbors include the following:

However, if the waiver or reduction of cost-sharing is made on behalf of a subsidy-eligible individual, then conditions (2) and (3) above are not required.

  1. Free or Discounted Local Transportation. A proposed new safe harbor would protect free or discounted local transportation made available by “eligible entities” to “established patients” who are federal health care program beneficiaries for the purpose of obtaining medically necessary items and services if:
    • The availability of the transportation service is not determined in a manner related to the past or anticipated volume of federal healthcare program business;
    • The transportation is not air, luxury, or ambulance-level transportation;
    • The transportation is not marketed or advertised, and no marketing of health care items and services occurs during the transportation by drivers or others arranging for the services and such persons are not paid on a per-beneficiary basis;
    • The “eligible entity” furnishes the transportation services only (i) to established patients (and if necessary someone to assist the patient) to obtain medically necessary services; and (ii) within the local area (proposed as within 25 miles) of the health care provider or supplier to which the patient would be transported; and
    • The “eligible entity” bears the costs of the transportation and does not shift the costs to Medicare, a state health care program, other payors or individuals. As proposed, “eligible entity” would not include individuals or entities that primarily supply health care items, such as DME suppliers, pharmaceutical companies, or laboratories, due to the increased risk that these entities may use transportation arrangements to steer patients to providers who order their products or services. The proposed rule solicits comments on the definition of “eligible entity”, as well as potential conditions and restrictions on the transportation services.
  2. Part D Cost-Sharing Waivers by Pharmacies. A proposed new safe harbor would protect a pharmacy waiving Part D cost-sharing if:

    • The waiver or reduction is not advertised as part of a solicitation;
    • The pharmacy does not routinely waive the cost-sharing; and
    • Before waiving the cost-sharing, the pharmacy either determines in good faith that the beneficiary has a financial need or the pharmacy fails to collect the cost-sharing amount after making a reasonable effort to do so.
  3. Cost Sharing Waivers for Emergency Ambulance Services. A proposed new safe harbor would protect an emergency ambulance provider or supplier routinely waiving beneficiary coinsurance or deductibles payable as Medicare fee for service payments if:
    • An ambulance provider or supplier is owned and operated by a State, a political subdivision of a State, or a federally recognized Indian tribe and is the Medicare Part B provider or supplier of the emergency ambulance services;
    • An ambulance provider’s or supplier’s reduction or waiver of coinsurance or deductible amounts is not considered to be the furnishing of services paid for directly or indirectly by a government entity;
    • The ambulance provider or supplier offers the reduction or waiver on a uniform basis, without regard to patient-specific factors; and
    • The ambulance provider or supplier does not later claim the amount reduced or waived as bad debt for payment purposes under Medicare, a state health care program, or shift the payment to another payer, or individuals.
  4. Medicare Coverage Gap Discount Program. A proposed new safe harbor would protect discounts in the price of “applicable drugs” of manufacturers that are furnished to “applicable beneficiaries” under the Medicare Coverage Gap Discount Program, as long as the manufacturer participates in, and is in full compliance with, all requirements of the program.
  5. Federally Qualified Health Centers (FQHCs) and Medicare Advantage Organizations. A proposed new safe harbor would protect remuneration between an FQHC and a Medicare Advantage organization under a written agreement that provides that the proposed Medicare Advantage organization will pay the FQHC no less than the level and amount the plan would pay if the services were furnished by another provider.
  6. Referral Services. A proposed technical correction to the existing safe harbor for referral services would clarify that the safe harbor precludes protection for payments from participants to referral services that are based on the volume or value of referrals, or other business generated by either party to the other party.

Proposed Changes to the Beneficiary Inducement CMP. The proposed rule outlines changes to the Beneficiary Inducement CMP that are intended to protect arrangements that offer beneficiaries incentives to engage in their wellness or treatment regimens or that improve or increase beneficiary access to care, including better care coordination. Specifically, the proposed rule would amend the definition of “remuneration” in the Beneficiary Inducement CMP to codify an exception that was part of the BBA, and also to codify certain amendments enacted in the ACA protecting certain charitable and other programs, as follows:

  1. Promotes Access and Presents Low Risk of Harm. The ACA added a new exception to the definition of “remuneration” for any other remuneration which “promotes access to care” and poses “a low risk of harm” to patients and federal health care programs. The goal of the ACA exception is encouraging better care and better health at lower costs through innovative means, some of which could involve providing incentives to beneficiaries.

    The proposed rule defines the phrase “promotes access to care” to mean that the remuneration improves a particular beneficiary’s ability to obtain medically necessary health care items and services. The OIG is soliciting comments on this proposed definition in light of recent industry movement towards coordinated or integrated care arrangements requiring patient engagement, and also is requesting commenters to offer specific examples of remuneration that would promote access to care.

    The proposed rule also to interprets the phrase “low risk of harm” to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs” to mean that the remuneration (1) is unlikely to interfere with or skew clinical decision-making; (2) is unlikely to increase costs to federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (3) does not raise patient-safety or quality-of-care concerns.

    With these changes, the exception would protect items such as lodging assistance to families, or providing items used by patients to record and report their health data, so long as the receipt of the items is not conditioned on the patient obtaining other items or services from a particular provider or supplier. The OIG is also seeking comments on whether otherwise prohibited incentives for compliance with treatment regimens should be permitted, and if so, what limitations or safeguard should apply. The OIG is also soliciting comments on other types of remuneration to beneficiaries that both “promote access to care” and pose a “low risk of harm” to Medicare and Medicaid beneficiaries and these federal programs.

  2. Retailer Reward Programs. The proposed rule would amend the definition of “remuneration” for purpose of the beneficiary inducement CMP to conform to statutory changes in the ACA that permit rewards under retailer reward programs meeting three criteria.

    Specifically, the regulatory exception would permit the offer or transfer of items or services for free or less than fair market value by a person if (1) the item or services consist of coupons, rebates or other rewards from a retailer; (2) the items or services are offered or transferred on equal terms available to the general public, regardless of health insurance status; and (3) the offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by Medicare or other state health care programs.

    This change would permit, for example, coupons, “buy one get one free” rewards, rebates on store purchases, and free items or services, such as merchandise, gasoline, frequent flyer miles, and similar items offered by retailers, but not hospitals or physicians. Retailers could not target rewards programs to Medicare beneficiaries, however. The OIG also noted that the proposed exception would allow a retailer to mail a coupon for a discount on purchases to the public and to allow customers to apply the coupon to prescriptions.

  3. Financial-Need-Based Exception. A proposed regulatory exception to the definition of “remuneration” would protect the offer or transfer of items or services for free or less than fair market value to a person if (1) the items or services are not offered as part of any advertisement or solicitation; (2) the offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by a governmental health care program; (3) there is a reasonable connection between the items or services and the medical care of the individual; and (4) the person provides the items or services after determining in good faith that the individual is in financial need.

    This exception is designed to help financially needy individuals access items or services related to their care, and is not designed to induce the patient to seek additional care. Items and services that might qualify for this exception could include providing protective helmets and safety gear to hemophiliac children, providing pagers to alert patients with chronic conditions to take drugs, providing free nutritional supplements to malnourished patients with end stage renal disease, and providing air conditioners to asthmatic patients.

  4. Waivers of Cost-Sharing for First Fill of Generic Drugs. A proposed regulatory exception would protect waivers of copayments otherwise owed by enrollees in Medicare Part D or MA-PD plan sponsor’s drug programs for the first fill of a Part D drug that is a generic drug, so long as the waivers are included in the benefit design package submitted to CMS.
  5. Proposed Changes to the Gainsharing CMP and Physician Incentives. In addition, the proposed rule would codify in regulations the “Gainsharing CMP” by interpreting terms in the statute and adding a definition of “hospital” to the regulations. The OIG proposes to codify and interpret the Gainsharing CMP to reflect current health care industry goals to deliver high quality health care at a lower cost. The Gainsharing CMP is a federal statute that prohibits a hospital from knowingly providing incentives to a physician to reduce or limit services provided to Medicare and Medicaid beneficiaries who are under the direct physician’s care.

Historically, the OIG has interpreted the Gainsharing CMP broadly to include any payments to physicians that could cause them to reduce or limit services, even where those reductions or limitations involve elimination of services that are not medically necessary. This broad interpretation including reductions in even medically necessary care has caused concern about implementing programs aimed at reducing inefficiency or unnecessary costs, as well as requiring standard treatment protocols or products.

The OIG has previously approved numerous gainsharing arrangements through its advisory opinion process where the arrangements set out specific actions to be taken and tied remuneration to the actual cost savings attributable to the arrangements and included specific safeguards against patient and program abuse.

The OIG has previously indicated that the following three types of safeguards reduce the risks presented by gainsharing programs: (1) measures that promote accountability; (2) adequate quality controls; and (3) controls on payments that may change referral patterns. However, in light of recent changes in the practice of medicine, including collaborative efforts among providers and practitioners and the rise of widely accepted clinical metrics, the OIG is considering narrowing its prior interpretation of the term “reduce or limit services.” In the proposed rule the OIG acknowledges that as hospitals move towards using quality metrics, a change in practice is not necessarily a limitation or reduction of services, and could be an improvement in care or cost reduction without reducing patient care or quality.

The proposed rule solicits comments on whether the regulation should also include a definition of “reduce or limit services” and requests specific examples of safeguards the OIG should include in the definition to ensure that the Gainsharing CMP would prevent hospitals from paying physicians to discharge patients too soon or taking other action that inappropriately limits a beneficiary’s care.

The proposed rule also seeks comments on other relevant issues including (i) standardizing items, such as surgical instruments, medical devices, or drugs, (ii) relying on standard protocols based on quality metrics, (iii) appropriate monitoring and documentation, (iv) use of thresholds beyond which reductions would be deemed to reduce or limit services; and (v) notifying physicians and/or patients about the program. The OIG seeks to interpret the Gainsharing CMP’s prohibition broadly enough to protect beneficiaries and federal health care programs, but also narrowly enough to allow low risk programs that further the goal of delivering high quality health care at a lower cost.

The proposed rule was published in the Federal Register on October 3, 2014. Comments on the proposed rule are due December 2, 2014.

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