Civil Monetary Penalties Final Rule

Anti-kickback Statute Safe Harbours and Beneficiary Inducements Final Rule

The US Office of Inspector General (OIG) recently finalised two key proposed rules. The first relates to the civil monetary penalties and exclusion statutes, and the second amends the safe harbours to the Anti-kickback Statute and the definition of 'remuneration' under the beneficiary inducements civil monetary penalty.

This update summarises the key aspects of each rule.

Civil Monetary Penalties Final Rule

The Affordable Care Act added several new grounds for civil monetary penalties and the OIG has 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". In the Civil Monetary Penalties Final Rule, the OIG finalises the definition of 'material' – which mirrors the False Claims Act definition as "having a natural tendency to influence" payment.

By linking to the False Claims Act concept of materiality, the 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 Civil Monetary Penalties Final Rule, companies have exposure for failing to report and return overpayments within 60 days of identification. The OIG finalised a penalty of up to $10,000 for each item or service for which a person received an identified overpayment. In so doing, the OIG dismissed complaints from pharmacy organisations that entities submitting a high volume of low-value claims could be subjected to disproportionately punitive penalties.

The OIG finalised, 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.

Further, the OIG has finalised several proposals relating to the aggravating and mitigating factors that it applies when making exclusion decisions.

Anti-kickback Statute Safe Harbours and Beneficiary Inducements Final Rule

The OIG has finalised new Anti-kickback Statute safe harbours that protect certain services, business arrangements and payment practices; it also finalised new exceptions to the definition of 'remuneration' under the beneficiary inducements civil monetary penalty.

The new Anti-kickback Statute safe harbours include the following:

  • Cost-sharing waivers – two new safe harbours for cost-sharing waivers, one for pharmacies and the other for certain emergency ambulance services;
  • Medicare Advantage organisations – a safe harbour for certain remuneration between Medicare Advantage organisations and federally qualified health centres that provide services to patients enrolled in Medicare Advantage plans pursuant to a written agreement;
  • Coverage Gap Discount Programme – a safe harbour that protects discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Programme, so long as the manufacturer participates in and is compliant with the requirements of the discount programme; and
  • Local transportation – a safe harbour 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 civil monetary penalty include the following:

  • 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 programmes. The OIG defines 'promotes access to care' as improving a particular beneficiary's or beneficiary population's ability to obtain items and services payable by Medicare or a state healthcare programme; and
  • Financial-need based exception – 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 finalised provisions highlight the OIG's enforcement perspective in these various areas.

For further information on this topic, please contact William Sarraille or Mark B Langdon at Sidley Austin's Washington DC office by telephone (+1 202 736 8000) or email (wsarraille@sidley.com or mlangdon@sidley.com). Alternatively, contact Meenakshi Datta or Trevor L Wear at Sidley Austin's Chicago office by telephone (+1 312 853 7000) or email (mdatta@sidley.com or twear@sidley.com). The Sidley Austin website can be accessed at www.sidley.com.

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