United States: Recent OIG Publications Address AKS Safe Harbors, CMP Regulations, And "Nominal Value" Policy

Last Updated: December 19 2016
Article by Laura F. Laemmle-Weidenfeld and Kristen Pollock McDonald

On December 6, 2016, the Office of Inspector General, U.S. Department of Health and Human Services ("HHS-OIG") released several publications affecting the Anti-Kickback Statute ("AKS") and the civil monetary penalty ("CMP") regulations. One final rule expanded the safe harbors to the AKS, adding four new regulatory safe harbors. That rule also established new exceptions to the definition of "remuneration" under the CMP rules and made a technical correction to the existing safe harbor for referral services. Citing Congress's intent that the AKS safe harbors evolve in response to changes in the health care system, HHS-OIG stated its belief that the final rule creates additional flexibility for the health care industry and promotes improved access to care for patients in rural and underserved areas.

In a second final rule published on the same day, HHS-OIG amended the CMP rules to incorporate new authorities implemented by statute into the regulations, clarify existing authorities, and reorganize various regulations for clarity and accessibility. Finally, HHS-OIG also released on December 6, 2016, a policy statement modifying its interpretation of "nominal value" in the context of gifts given to Medicare and Medicaid beneficiaries.

AKS Safe Harbors

The final rule expanding the safe harbors creates new protection for cost-sharing waivers by pharmacies and emergency ambulance suppliers/providers. The final rule also incorporates into the safe harbor regulations three statutory exceptions that previously had been codified by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 and the Patient Protection and Affordable Care Act ("ACA"): certain remuneration between Medicare Advantage Organizations and federally qualified health centers; discounts on drugs for Medicare Coverage Gap Discount Program beneficiaries; and free or discounted local transportation services meeting specific criteria. As with all the other regulatory safe harbors, each sets forth very specific limiting criteria with which compliance is necessary in order to receive protection.

The new safe harbor related to discounts on drugs for Medicare Coverage Gap Discount Program beneficiaries parallels the exception codified by the ACA, with the additional requirement that the manufacturer of the drug "is in compliance with the requirements of" the Program. This language represents a change from the proposed rule, which had required "full compliance with all requirements of" the Program. The words "full" and "all" were eliminated to address commenters' concerns that minor administrative or technical noncompliance with Program requirements could result in liability for manufacturers.

HHS-OIG noted the expanded safe harbors are consistent with the goals of increasing access to care and furthering quality, patient choice, and competition, while still protecting against inappropriate patient-steering, increased costs, and other potential harms. The cost-sharing waiver safe harbor, for example, specifically protects 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. HHS-OIG previously voiced concerns that such waivers could potentially be abused to induce inappropriate referrals, but this final rule now allows for cost-sharing waivers that, in its view, pose a low risk of harm. In order to protect against concerns of abuse, the waived amounts cannot be offered as part of an advertisement or solicitation. With specific exceptions, they also may not be routinely waived or reduced and must be granted only to individuals in financial need or after a pharmacy has failed to collect the cost-sharing amounts following reasonable efforts.

Additionally, HHS-OIG made what it termed a "technical correction" to the existing safe harbor for referral services, clarifying 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."

Updates to CMP Regulations

The revised definition of "remuneration" as used in the CMP rules incorporates exceptions to the beneficiary inducements CMP included in the Balanced Budget Act of 1997 and the ACA. The new exceptions to the CMP in the amended definition include: copayment reductions for certain hospital outpatient department services; items or services that improve a beneficiary's ability to obtain items and services payable by Medicare or Medicaid that pose a low risk of harm to beneficiaries and the programs; coupons, rebates, or other retailer reward programs that meet specified requirements; items or services reasonably connected to the medical care of a recipient in financial need; and copayment waivers by Part D Plan sponsors for the first fill of generic drugs.

Specifically citing the transition from volume-based to value-based care as a factor leading to "new and changing business relationships among health care providers," HHS-OIG stated its intent to continue monitoring changes in the health care industry and to consider further rulemaking in the future to address those changes.

On the same day it released the rule discussed above, HHS-OIG released an additional final rule, also affecting the CMP regulations. The final regulations mainly implement statutory provisions of the ACA, providing for CMPs, assessments, and exclusions for: failure to grant OIG timely access to records; ordering or prescribing while excluded; making false statements, omissions, or misrepresentations in an enrollment 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. In the proposed rule, HHS-OIG had specified a default penalty of up to $10,000 for each day a person failed to report and return an overpayment. In response to numerous comments, HHS-OIG revised the final rule to reflect an overpayment penalty of up to $10,000 for each item or service. This final rule also reorganized the regulations regarding CMPs, assessments, and exclusions in order to "improve readability and clarity."

"Nominal Value" Policy

Finally, HHS-OIG also released new guidance regarding gifts of nominal value to Medicare and Medicaid beneficiaries. In a Policy Statement, HHS-OIG officially adjusted the interpretation of "nominal value" as "having a retail value of no more than $15 per item or $75 in the aggregate per patient on an annual basis." This represents an increase from the previous guidance issued in 2000, which set the limits at no more than $10 per item or $50 in the aggregate per patient on an annual basis. Consistent with the previous interpretation, gifts may not be cash or cash equivalents. HHS-OIG indicated its intent to continue monitoring the thresholds and potentially increase the limits again.

HHS-OIG's expanded safe harbors provide further protection for health care entities seeking to increase access to care through the various cost reduction methods covered by the final rule. Additionally, the final rules seem to suggest that HHS-OIG is monitoring the rapidly changing health care industry and appears to be willing to address those changes through its rulemaking and policy guidance.

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.

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Laura F. Laemmle-Weidenfeld
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