• HHS-OIG Issues Proposed Rule Relating to AKS, Beneficiary Inducement CMP, and Gainsharing CMP
  • November 17, 2014
  • Law Firm: Dentons Canada LLP - Toronto Office
  • The US Department of Health and Human Services, Office of Inspector General ("HHS-OIG") has promulgated a proposed rule that would amend the agency's regulations governing:

    • the federal health care program anti-kickback statute ("AKS"), 42 U.S.C. §1320a-7b(b), which generally prohibits knowingly and willfully paying for the referral of federal health care program patients or business;
    • the federal beneficiary inducement civil monetary penalty statute ("Beneficiary Inducement CMP"), 42 U.S.C. §1320a-7a(a)(5), which generally prohibits giving something of value to an individual if the remuneration is likely to influence that individual's selection of a particular provider, supplier or practitioner for services covered by certain federal health care programs; and
    • the federal services reduction CMP ("Gainsharing CMP"), 42 U.S.C. §1320a-7a(b), which generally prohibits a hospital from knowingly providing incentives to a physician to reduce or limit items or services furnished to certain federal health care program beneficiaries.

    The proposed rulemaking is significant, particularly as it relates to (1) a new AKS safe harbor for local transportation, (2) several potentially broad exceptions to the Beneficiary Inducement CMP, and (3) the possibility of a much more forgiving interpretation of the Gainsharing CMP. In the proposed rule, HHS-OIG invites comment on a series of open issues, the resolution of which will have a substantial impact on providers, suppliers, practitioners and patients. The proposed rule is scheduled to be published in the Federal Register on Friday, October 3, 2014, in which case comments would be due on or before Tuesday, December 2, 2014 .

    Anti-Kickback Statute

    The proposed rule provides for the establishment of five new safe harbors. The first three would simply codify pre-existing (and fairly narrow) statutory exceptions.

    • Part D Cost-Sharing Waivers by Pharmacies. Under the proposed rule, the waiver or reduction by a pharmacy of a Medicare Part D enrollee's cost-sharing amounts would be permitted if the waiver is not offered as part of an advertisement or solicitation and — except for waivers or reductions offered to subsidy-eligible individuals — the pharmacy (1) does not routinely waive cost-sharing amounts, and (2) waives such amounts only after determining in good faith that the individual is in financial need (or after failing to collect the copayment, coinsurance, or deductible after making reasonable collection efforts).
    • FQHCs and MA Organizations. Under the proposed rule, the AKS would not be implicated by "any remuneration between a federally qualified health center (or an entity controlled by such a health center) and a Medicare Advantage organization pursuant to a written agreement described in section 1853(a)(4)" of the Social Security Act (the "Act").
    • Medicare Coverage Gap Discount Program. Under the proposed rule, the AKS would not be implicated by "a discount in the price of a drug when the discount is furnished to a beneficiary under the Medicare Coverage Gap Discount Program established in section 1860D-14A of the Act," provided certain conditions are satisfied (e.g., the manufacturer must be "in full compliance with all requirements of" the Program).

    The other two proposed safe harbors would be new in the sense that they have no pre-existing statutory counterpart.

    • Cost-Sharing Waivers for Emergency Ambulance Services. Under the proposed rule, reductions or waivers of cost-sharing amounts owed to an ambulance provider or supplier for emergency ambulance services (for which Medicare pays under a fee-for-service payment system) would not implicate the AKS provided, among other things, that the ambulance provider or supplier: (1) is "owned and operated by a State, a political subdivision of a State, or a federally recognized Indian tribe," (2) is the "Medicare Part B provider or supplier of the emergency ambulance services," and (3) "offers the reduction or waiver on a uniform basis, without regard to patient-specific factors."
    • Local Transportation. Under the proposed rule, "free or discounted local transportation" made available by an "Eligible Entity" to "established patients" for "the purpose of obtaining medically necessary items or services" would not implicate the AKS provided, among other things: (1) the availability of the services is not determined in a manner related to the past or anticipated volume or value of federal health care program business; (2) the services do not take the form of air, luxury, or ambulance-level transportation; (3) the services are not marketed or advertised, no marketing of health care items and services occurs during the course of the transportation or at any time by drivers who provide the transportation, and drivers or others arranging for the transportation are not paid on a per-beneficiary transported basis; and (4) the Eligible Entity that makes the free or discounted transportation available furnishes the services only to the established patient (and, if needed, a person to assist the patient) to obtain medically necessary items or services, and within the local area of the health care provider or supplier to which the patient would be transported. For purposes of the proposed safe harbor, an “Eligible Entity” is "any individual or entity, except for individuals or entities (or family members or others acting on their behalf) that primarily supply health care items;" and, "if the distance from the patient’s location to the provider or supplier to which the patient would be transported is no more than 25 miles, the transportation is deemed to be local."

    Beneficiary Inducement CMP

    Under the proposed rule, HHS-OIG also would codify four statutory exceptions to the Beneficiary Inducement CMP.

    • Promotes Access/Low Risk of Harm. Congress has created an exception that permits any remuneration that "promotes access to care and poses a low risk of harm to patients and Federal health care programs." Although the proposed rule does not offer any regulatory text for this exception, the agency does propose that the phrase “promotes access to care” means that the remuneration provided "improves a particular beneficiary’s ability to obtain medically necessary health care items and services." The agency further proposes that the phrase “low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs” means 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." According to the agency, this exception might protect giving "items that are necessary for patients to record and report health data, such as blood pressure cuffs or scales, to beneficiaries who could benefit from close monitoring of their blood pressure or weight...as long as receipt of the items is not conditioned on the patient obtaining other items or services from a particular provider or supplier."
    • Financial-Need-Based Exception. Under the proposed rule, the "offer or transfer of items or services for free or less than fair market value" would be permitted if: (1) the "items or services are not offered as part of any advertisement or solicitation," (2) the offer "is not tied to the provision of other items or services reimbursed in whole or in part by" Medicare, Medicaid or any of the other programs covered by the Beneficiary Inducement CMP, (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." With respect to the third requirement, the agency posits that a "reasonable connection exists from a medical perspective when the items or services would benefit or advance identifiable medical care or treatment that the individual patient is receiving." According to the agency, examples of permissible transfers might include (1) distribution of protective helmets and safety gear to hemophiliac children; (2) distribution of pagers to alert patients with chronic medical conditions to take their drugs; (3) provision of free blood pressure checks to hypertensive patients; (4) distribution of free nutritional supplements to malnourished patients with end-stage renal disease (ESRD); and (5) provision of air conditioners to asthmatic patients.
    • Retailer Rewards Programs. Under the proposed rule, the "offer or transfer of items or services for free or less than fair market value" would be permitted if (1) the "items 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, Medicaid or any of the other programs covered by the Beneficiary Inducement CMP. With respect to the third requirement, the agency's proposal and interpretation thereof is somewhat ambiguous and confusing and will likely require clarification. For example, the agency states that "a drugstore program that offered a $20 coupon to customers, including Medicare beneficiaries, who transferred their prescriptions to the drugstore would not meet this criterion because the $20 coupon would be tied to the drugstore’s getting the recipients’ Medicare Part D prescription drug business." On the other hand, "a program that awarded a $20 coupon once a customer spent $1,000 out-of-pocket in the store—even if a portion of that $1,000 included copayments for prescription drugs—would likely meet the criterion."
    • Waivers of Cost-Sharing for the First Fill of a Generic Drug. Finally, under the proposed rule, Part D and MA-PD plan sponsors would be permitted to waive "any copayment for the first fill of a covered Part D drug...that is a generic drug...for individuals enrolled in the Prescription Drug Plan or MA-PD Plan, respectively, as long as such waivers are included in the benefit design package submitted to CMS."

    Gainsharing CMP

    Historically, HHS-OIG has taken the position that the Gainsharing CMP "is broad and prohibits any hospital incentive plan that involves payments to physicians to encourage reductions or limitations in items or services provided to patients under the physicians’ clinical care" and "that the statute does not limit this prohibition to reductions or limitations of medically necessary items or services."

    Over the years, hospitals, physicians and others have complained that by construing the Gainsharing CMP so broadly, HHS-OIG has discouraged the use of incentive plans and performance standards that, while controlling costs also have served to improve patient care. As the proposed rule notes, in recent years HHS-OIG has hinted that its position on this issue may be softening; and the proposed rule itself plainly constitutes a step in that direction. According to the agency, "[h]ealth care payment and delivery systems are changing, with greater emphasis on accountability for providing high quality care at lower costs. We propose to codify the Gainsharing CMP in our regulations and interpret certain provisions in a manner that reflects today’s health care landscape." More specifically, the agency is "considering a narrower interpretation of the term 'reduce or limit services' than we have previously held."

    Toward this end, the proposed rule solicits comments on whether it should include a definition of the term “reduce or limit services” in the Gainsharing CMP and, if so, what safeguards would be necessary to ensure that "the goal of the statute is met: to prevent hospitals from paying physicians to discharge patients too soon or take other action that inappropriately limits a beneficiary’s care." The proposed rule also solicits comments on several areas of concern, including the following examples:

    • "Should a hospital’s decision to standardize certain items (e.g., surgical instruments, medical devices, or drugs) be deemed to constitute reducing or limiting care?" and
    • "Should a hospital’s decision to rely on protocols based on objective quality metrics for certain procedures ever be deemed to constitute reducing or limiting care (e.g., protocols calling for the discontinuance of a prophylactic antibiotic after a specific period of time)?"