On Oct. 3, 2014, the Office of Inspector General (“OIG”) of the Department of Health and Human Services published a proposed rule (the “Proposed Rule”) that would modify certain safe harbors, and add other new ones, under the anti-kickback statute (“AKS”) and that would modify the federal civil monetary penalty regulations (“CMP”) by adding new exceptions to the definition of “remuneration” and by establishing a new gainsharing rule. 

The Proposed Rule would add or amend certain safe harbors under the AKS as follows:

  • Make a technical correction to the existing safe harbor for referral services (eliminating an ambiguity that may have permitted referral services to adjust fees on the basis of referrals made to participants).
  • Add new provisions to the safe harbor for “waiver of beneficiary coinsurance and deductible amounts” that would permit (i) waiver of Medicare Part D cost-sharing under certain conditions and (ii) waiver of cost-sharing for an emergency ambulance service that is owned and operated by a state or political subdivision.
  • Add a new safe harbor protecting certain arrangements authorized under the Medicare Modernization Act between Medicare Advantage plans and federally qualified health centers.
  • Add a new safe harbor to codify a provision of the Affordable Care Act permitting prescription drug manufacturers to provide certain beneficiaries access to discounts on drugs at the point of sale.
  • Add a new safe harbor to protect free or discounted local transportation services provided to certain established federal health care program beneficiaries.

In addition, the Proposed Rule would amend the definition of “remuneration” under the CMP to exclude:

  • Reductions in the copayment amount for certain hospital outpatient department services.
  • Remuneration that promotes access to care and poses a low risk of harm to patients and federal health care programs.
  • Prescription drug retailer rewards programs that consist of coupons, rebates or other rewards from the retailer.
  • Offers or transfers of items or services for free or at a discount for financially needy recipients.
  • Waivers of cost-sharing by Medicare Part D plan sponsors or Medicare Advantage organizations for the first fill of generic drugs.

Finally, the Proposed Rule would add a gainsharing CMP regulation. The CMP statute generally prohibits a hospital from knowingly making a payment, directly or indirectly, to a physician as an inducement to reduce or limit services provided to Medicare or Medicaid beneficiaries. The OIG notes that it has no authority to create an exception to the CMP statute, and the proposed gainsharing CMP rule largely tracks the statute. Specifically, the gainsharing CMP rule would authorize the OIG to impose a penalty where a hospital “knowingly makes a payment, directly or indirectly, overtly or covertly, in cash or in kind, to a physician as an inducement or to reduce or limit services provided to an individual who is eligible for Medicare or Medicaid benefits and who is under the direct care of the physician.” 

Nevertheless, the OIG notes that it has, in a series of advisory opinions, approved 16 different gainsharing arrangements. In recent years, both Congress and HHS have authorized incentive programs that incorporate gainsharing (including the Medicare Shared Savings Program under the Affordable Care Act). Further, the OIG acknowledges that the growth in health information technology, developments in data analytics and quality metrics and the broader use of evidence-based medicine have facilitated both the measurement of quality and health outcomes and the accountability for lowering the costs of care. In recognition of these developments, the OIG states in the Proposed Rule that a change in practice does not necessarily constitute a limitation or reduction of services, but that it “may in fact constitute an improvement in patient care or a reduction in cost without reducing patient care or diminishing its quality.” Thus, the OIG seeks to interpret the statutory CMP prohibition broadly enough to protect beneficiaries and health care programs but narrowly enough to allow low risk programs that further the goal of delivering high quality health care at a lower cost. To this end, the OIG is soliciting specific proposals and safeguards to include in the definition of “reduce or limit services” that would leave room to allow programs to incentivize quality and cost-savings while still preventing hospitals from paying physicians to discharge patients too soon or take other action that inappropriately limits a beneficiary’s care. In particular, the OIG is soliciting comments on the following areas of concern:

  • Whether the prohibition of payments to reduce or limit services should include payments to limit items used in providing services.
  • Whether a hospital’s decision to standardize certain items should be deemed to constitute reducing or limiting care. (And whether the answer would be the same if the physician were simply encouraged — but not required — to choose from the standardized items.)
  • Whether a hospital’s decision to rely on protocols based on objective quality metrics for certain procedures should ever be deemed to constitute reducing or limiting care, and whether a hospital deciding to compensate physicians in connection with the use of such protocols should be required to maintain quality-monitoring procedures to ensure that these protocols do not, even inadvertently, involve reductions in care.
  • Whether a hospital desiring to standardize items or processes should be required to establish certain thresholds based on historical experience or clinical protocols, beyond which participating physicians could not share in cost savings.
  • Whether the regulation should include a requirement that the hospital and/or participating physician notify potentially-affected patients about the program.

Comments on the Proposed Rule are due no later than Dec. 2, 2014.