Earlier this month, the U.S. Office of Inspector General (OIG) finalized two key proposed rules, one related to the Civil Monetary Penalties (CMP) and exclusion statutes and the other amending the safe harbors to the Anti-Kickback Statute (AKS) and the definition of remuneration under the Beneficiary Inducements CMP. We summarize key aspects of each rule below.

A. CMP Final Rule

The Affordable Care Act (ACA) added several new grounds for CMPs, and OIG provided additional guidance around the contours of these new bases for liability.

  • Companies face liability for knowingly making or using, or causing to be made or used, “a false record or statement material to a false or fraudulent claim for payment for items and services furnished under a Federal healthcare program” (FHCP). In the CMP Final Rule, OIG finalized a definition of “material” that mirrors the False Claims Act (FCA) definition, namely, “having a natural tendency to influence” payment.
  • By linking to the FCA concept of materiality, OIG now faces significantly more uncertainty as courts begin to interpret the meaning of materiality under the Supreme Court’s new Escobar standard.
  • Under the CMP Final Rule, companies have CMP exposure for failing to report and return overpayments within 60 days of identification. OIG finalized a penalty of up to $10,000 for each item or service for which a person received an identified overpayment. In so doing, OIG brushed aside complaints from pharmacy organizations that entities submitting a high volume of low-value claims could be subjected to disproportionately punitive penalties.
  • OIG finalized, with slight modification, its proposal for calculating penalties and assessments based on employing or contracting with an excluded person. Where items or services are separately billable, companies will continue to be subject to penalties and assessments based on the value of each separately billable item or service. Where items or services are not separately billable, penalties will range up to $10,000 for each item or service provided by the excluded person. Assessments will be based on the total cost of employing or contracting with the person while he or she was excluded.
  • OIG finalized several proposals relating to the aggravating and mitigating factors it applies when making exclusion decisions.

B. AKS Safe Harbor and Beneficiary Inducements Final Rule

OIG finalized new AKS safe harbors that protect certain services, business arrangements and payment practices, and it also finalized new exceptions to the definition of remuneration under the Beneficiary Inducements CMP.

The new AKS safe harbors include:

  • Cost-sharing Waivers. Two new safe harbors for cost-sharing waivers, one for pharmacies and the other for certain emergency ambulance services.
  • Medicare Advantage Organizations. A safe harbor for certain remuneration between Medicare Advantage (MA) organizations and federally qualified health centers that provide services to patients enrolled in MA plans pursuant to a written agreement.
  • Coverage Gap Discount Program. A safe harbor that protects discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program so long as the manufacturer participates in and is in compliance with the requirements of the Discount Program.
  • Local Transportation. A safe harbor to protect free or discounted local transportation services provided to an “established patient” that meet detailed criteria.

The new regulatory exceptions to the definition of remuneration under the Beneficiary Inducements CMP include:

  • Retailer Coupons, Rebates and Rewards. An exception for items or services provided for free or less than fair market value to beneficiaries if the items or services consist of coupons, rebates or other rewards from retailers and are available on equal terms to the general public regardless of health insurance status.
  • Promoting Access to Care and Low Risk of Harm. An exception for items or services that promote beneficiary access to care and pose a low risk of harm to beneficiaries and the Medicare and Medicaid programs. OIG stated that “promotes access to care” means improving a particular beneficiary’s or beneficiary population’s ability to obtain items and services payable by Medicare or a State healthcare program.
  • Financial-Need Based Exception. OIG finalized an exception for the transfer of items or services for free or less than fair market value to beneficiaries if the items or services are not advertised; the items or services are not tied to the provision of reimbursable items or services; there is a reasonable connection between the items or services and the medical care of the individual; and the person provides the items or services after determining in good faith that the individual is in financial need.

These finalized provisions highlight the OIG’s enforcement perspective in these various areas. We welcome the opportunity to discuss the implications of these new safe harbors and CMPs.