The federal Anti-Kickback Statute ("AKS") criminalizes the solicitation or payment of remuneration in order to induce business that is reimbursable under the Medicare and/or Medicaid programs, such as kickbacks, bribes, and certain rebates. The U.S. Department of Health and Human Services Office of the Inspector General ("OIG") is also authorized to impose civil monetary penalties ("CMP") for such arrangements. Recognizing the breadth of this statute, which is aimed at targeting quid pro quo agreements, but which unfortunately caught within its swath a number of innocuous and legitimate business arrangements, Congress directed OIG to develop "safe harbor" exemptions for certain beneficial business arrangements that might otherwise implicate the AKS.
On October 2, 2014, OIG requested feedback on a proposed rule
that would redefine the definition of "gainsharing" and
add four new safe harbors. The OIG proposes to create a new safe
harbor for pharmacies that waive Medicare Part D cost-sharing;
however, the safe harbor is limited to cost-sharing waivers that
are not advertised or routine. Additionally, the pharmacy must
determine that the beneficiary has a financial need for the waiver.
Further, in this proposed rule, the OIG has proposed a safe harbor
for cost-sharing waivers for emergency ambulance services. OIG has
proposed that this safe harbor be limited to government-owned and
-operated ambulance providers that are Medicare Part B providers of
emergency ambulance services. This safe harbor is not available for
nonemergency ambulance transportation services. A safe harbor is
also proposed for manufacturer discounts for drugs provided through
the Medicare Coverage Gap Discount Program.
The proposed rule also includes the addition of a safe harbor to
include protection for services that provide free or discounted
local transportation to patients, which essentially codifies recent
favorable OIG advisory opinions on proposed transportation
programs. This is a welcome safe harbor, particularly for providers
in rural or low-income areas who are well aware that lack of access
to affordable transportation often prevents patients from receiving
the care they need. The proposed safe harbor is limited to
transportation for established patients but contemplates the
possibility of transportation for a caregiver. To preclude the safe
harbor from being used to generate business and referrals, OIG
proposes that suppliers such as durable medical equipment companies
or pharmaceutical manufacturers be exempt from this
protection.
Of significant note is the OIG's proposal to narrow its
interpretation of the CMP statute regarding "gainsharing"
to reflect current best practices in medicine, which seek to align
the incentives of hospitals and physicians to provide quality yet
cost-effective care. Gainsharing refers to an arrangement where a
hospital rewards physicians for their efforts to be cost-conscious
by giving the physicians a percentage of whatever reduced patient
care costs are attributable to those efforts. In most arrangements,
in order to receive any payment, the clinical care must not have
been adversely affected as measured by selected quality and
performance measures. In addition, many plans require an
independent consultant determine that the payment represents
"fair market value" for the collective physicians'
efforts. Currently, hospitals are prohibited from using gainsharing
payments to knowingly induce a physician to "reduce or limit
services" to federal program beneficiaries, lest the
hospital's actions implicate the CMP statute.
If the OIG finds that a CMP is warranted, when determining the
amount of the penalty, the OIG considers the following factors: (i)
the nature of the payment designed to reduce or limit services and
the circumstances under which it was made; (ii) the extent to which
the payment encouraged the limiting of medical care or the
premature discharge of the patient; (iii) the extent to which the
payment caused actual or potential harm to program beneficiaries;
and (iv) the financial condition of the hospital (or physician)
involved in the offering (or acceptance) of the payment. After the
issuance of multiple advisory opinions and other guidance on the
gainsharing CMP over the years, the OIG has finally acknowledged
that "not all changes in practice necessarily constitute a
reduction in services." Thus, in its proposed rule, the OIG
seeks comment on a new definition of "reduce or limit
services" with an eye toward narrowing the scope of
inducements that implicate the gainsharing CMP.
Providers who are interested in exploring gainsharing programs as
a way to more closely align hospital and physician incentives may
have a new option on the horizon, particularly if the OIG issues a
final rule that reflects the realities of today's health care
marketplace. Rather than taking a wait-and-see approach, it may be
beneficial for providers across the country to respond to the
OIG's request for comments with practical suggestions for how
gainsharing programs can benefit the Medicare and Medicaid programs
and be instrumental in population health management.
In order to avoid criminal and civil penalties, the OIG appears,
in practice, to be increasingly requiring strict compliance with
the safe harbors. The U.S. Department of Justice
("Department") has made it clear that, when prosecuting
violations of the AKS, it intends to pursue not only organizations
such as health care clinics or hospitals that have entered
potentially unlawful arrangements, but also the specific employees
the Department deems responsible for those arrangements. In light
of the recent pronouncement from the Department's Criminal
Division that it will now be closely reviewing all qui tam
complaints brought under the federal False Claims Act, the
Department has made clear its intention to make health care fraud,
including through holding health care executives accountable for
fraud, one of its highest priorities. It is advisable that any
individual or entity concerned that a business arrangement may
implicate the AKS—even if the entity believes it may be
entitled to protection under a safe harbor—engage properly
trained counsel to review the arrangement and advise whether it
complies with federal law.
OIG is soliciting public comment on the proposed rule until
December 2, 2014. Comments may be submitted electronically through
the Federal eRulemaking Portal. Jones Day will
continue to monitor these developments and is available to provide
assistance to interested parties in providing comment to the OIG on
this matter.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.