On December 7, 2016, the HHS Office of Inspector General (OIG) finalized a set of rules first proposed in 2014 adding new anti-kickback law safe harbors and protecting additional conduct from enforcement under the civil monetary penalties (CMP) law related to beneficiary inducements. The OIG’s stated purpose in adopting the rule is to allow greater flexibility for providers and other stakeholders to address the evolving delivery systems and payment changes resulting from the Affordable Care Act (ACA). The final rule sets forth the OIG’s vision to engage in future rulemaking to encourage efficient care. On the same day, the OIG also adopted rules codifying provisions in the CMP law that expand the scope of conduct that can result in penalties, assessments, and exclusions.

Final Anti-Kickback Safe Harbors

The OIG finalized a new safe harbor that protects certain complimentary local transportation arrangements from enforcement under the anti-kickback law. Such arrangements have been the topic of several advisory opinions and the adoption of the safe harbor gives providers absolute certainty that arrangements meeting the safe harbor requirements will not be subject to enforcement. The safe harbor is limited to free or discounted transportation (excluding air, luxury and ambulance transportation) provided by an eligible entity to established patients for the purpose of obtaining medically-necessary items or services that meet certain requirements. The final rule provides flexibility in the definition of “local,” stating that the patient should not be transported more than 25 miles in urban areas or 50 miles in rural areas.

Durable medical equipment suppliers and pharmaceutical companies are not eligible entities under the final safe harbor. The OIG clarified that “established patients” include new patients who have selected and initiated contact with the provider to schedule an appointment, even though they may not have received services from the provider at the time of the initial transportation. The OIG declined to protect transportation for non-health-related purposes, instead limiting the safe harbor to transportation to obtain-medically-necessary items and services. The final rule permits local transportation arrangements in the form of shuttle services, which are not required to be limited to established patients and health-related purposes. Providers should also be aware of discussion in the final rule allowing accountable care organizations to participate in these transportation arrangements.

The final rule adopted the expansion of the anti-kickback safe harbor for waivers of cost-sharing amounts to incorporate certain waivers or reductions of federal healthcare program cost-sharing amounts offered by pharmacies to financially-needy beneficiaries. The OIG also adopted the proposed new safe harbor protecting drug manufacturers’ discounts for certain beneficiaries under the Medicare Coverage Gap Discount Program.

A new safe harbor protecting waivers of federal healthcare program cost-sharing amounts for emergency ambulance services furnished by ambulance providers owned or operated by a state or a tribal health program was adopted. The safe harbor is limited to emergency ambulance services. The final rule included a correction to the safe harbor for referral services and adopted a new safe harbor codifying the statutory exception for certain remuneration between a federally-qualified health center and a Medicare Advantage organization.

Beneficiary Inducement Exceptions

The OIG’s final rule codifies three new exceptions to the definition of remuneration under the beneficiary inducement provision of the CMP law that were added by the ACA. The first is the statutory provision protecting arrangements that promote access to care and pose a low risk of harm to Medicare and Medicaid beneficiaries. This new exception is limited to benefits that improve a beneficiary’s ability to obtain items and services that are payable by Medicare or a state healthcare program such as Medicaid. Reimbursement of parking expenses and the provision of free child care during appointments were two examples of benefits that may fit within the new regulatory exception. On the other hand, the OIG stated that rewards for compliance with a treatment regimen would not be protected under the exception.

The second statutory exception that was codified protects the offer or transfer of items or services for free or less than fair market value to an individual in financial need if the items and services are not advertised or tied to the provision of other items or services reimbursed by the Medicare or state healthcare programs (including Medicaid) and there is a reasonable connection between the items or services and the medical care of the individual. The OIG’s commentary attempted to clarify how an item can have the required reasonable connection to a patient’s medical care while not being tied to a reimbursable service, stating that the remuneration cannot be conditioned on the purchase of the reimbursable service. Providers should consider this distinction when structuring arrangements to fit within the exception. The guidance states that the phrase “reasonable connection to medical care” can be interpreted broadly to include items “crucial to a patient’s safety,” such as car seats. Finally, the OIG cautioned that remuneration that is disproportionately large would not have a reasonable connection to the patient’s medical care, but declined to identify a value limit.

The final rule adopts the proposal to codify the statutory exception for retailer rewards resulting from the ACA. This exception permits retailers more flexibility to include federal healthcare program beneficiaries in their normal promotions activities so long as the promotion is not directly conditioned on the purchase of goods or services reimbursed by a federal healthcare program. The OIG also codified the statutory exception for waivers by a PDP sponsor of a Part D plan or Medicare Advantage organization of copayments for the first fill of a covered Part D generic drug.

Finally, the OIG’s existing guidance permits non-monetary gifts of nominal value, and this rulemaking increased the nominal value limits to $15 per item and $75 in the aggregate annually per patient. Of note, the OIG stated that a raffle could be of nominal value if the value of the prize divided by the number of participants with an equal chance to win the prize does not exceed the individual nominal value threshold.

Overall, the OIG’s tone in this final rule indicates that it has listened to the feedback from stakeholders who are struggling to meet the demand for efficient, coordinated care resulting from changes to the healthcare system under the ACA, while steering clear of potential non-compliance with the fraud and abuse laws.

New CMP Authority

The OIG’s second rule of the day did not strike such a hopeful tone with providers. The rule incorporates statutory provisions added to the CMP law by the ACA that permit the OIG to impose penalties and exclusion for the following conduct:

• Failure to grant the OIG timely access to records, upon reasonable request;
• Ordering or prescribing while excluded;
• Making false statements, omissions, or misrepresentations in an enrollment or bid application;
• Failure to report and return an overpayment; and
• Making or using a false record or statement that is material to a false or fraudulent claim.

New penalty rules applicable to Medicare Advantage and Part D plans were also finalized.