Last week the Department of Health & Human Services ("HHS") issued a proposed rule amending the safe harbor regulations promulgated under the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b). The proposed rule would make one technical correction and add four new protections to the safe harbors.
Under the Anti-Kickback Statute, health care providers and others may not solicit, receive, offer or pay any remuneration which is intended to induce the recommendation, purchase, ordering or lease of a federal health care program covered service or item. Recognizing that the breadth of the Anti-Kickback Statute can impede the establishment of bona fide business relationships, in 1987 Congress instructed HHS to publish "safe harbor" regulations in order to provide the opportunity for parties to enter into certain categories of specifically structured relationships while avoiding the risk of violating the Anti-Kickback Statute. In other words, if the parties' relationship meets the requirements of a specific safe harbor, it would automatically be considered not to violate the Anti-Kickback Statute. Today, the safe harbor regulations are codified at 42 C.F.R. § 1001.952.
The newly proposed regulations would make one technical correction and add four new protections to the safe harbors. Specifically, the regulations would (1) make a technical correction to the existing safe harbor for referral services1; and (2) add protections for (i) certain cost-sharing waivers, including cost-sharing waivers for pharmacy services for financially needy Medicare Part D beneficiaries and cost-sharing waivers for certain emergency state- or municipality-owned ambulance services; (ii) certain remuneration between Medicare Advantage organizations and federally qualified health centers; (iii) manufacturers' discounts on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and (iv) free or discounted local transportation services that meet specified criteria.
In addition to modifying the safe harbors to the Anti-Kickback Statute, the proposed rule also seeks to amend the regulations promulgated under the Civil Monetary Penalties Law ("CMP Law"), 42 U.S.C. § 1320a-7a. The CMP Law authorizes HHS to impose civil monetary penalties and program exclusion for various activities constituting fraud and abuse, including the offering or paying of remuneration to induce the referral of federal health care program business or the soliciting or receiving of remuneration in return for such referrals.
The proposed rule would amend the regulations codified at 42 C.F.R. § 1003 to recognize the statutory exceptions added to the CMP Law by the Affordable Care Act. These amendments would specifically exclude the following activities from the definition of "remuneration" for purposes of the CMP Law: (1) copayment reductions for certain hospital outpatient department services; (2) certain remuneration that poses a low risk of harm and promotes access to care; (3) coupons, rebates, or other retailer reward programs that meet specified requirements; (4) certain remuneration to financially needy individuals; and (5) copayment waivers for the first fill of generic drugs. In other words, these activities would not constitute "remuneration," and therefore would not be in violation of the CMP Law.
Health care entities should review the proposed rule in its entirety and consider submitting comments. The proposed rule is available for review at this link, and comments are due to HHS by December 2, 2014.
1 In 1999, HHS finalized a modification to the language of the safe harbor for referral services to clarify that the safe harbor precludes protection for payments from participants to referral services that are based on the volume or value of referrals to,or business otherwise generated by, either party for the other party. See 64 FR 63518, 63526 (Nov. 19, 1999). During subsequent revisions to the safe harbor, the language was inadvertently changed to “or business otherwise generated by either party for the referral service. . .’’ See 67 FR 11928, 11929 and 11934 (Mar. 18, 2002). Therefore, HHS proposes to make a technical correction and revert to the language in the 1999 final rule.
