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HHS OIG Releases Anticipated Proposed Rule For Anti-Kickback Safe Harbor

On Friday, October 3rd, the HHS Office of the Inspector General (OIG) issued a highly anticipated proposed rule (the Proposed Rule) that provides amendments to the Anti-Kickback Statute’s regulatory safe harbors (AKS Safe Harbors) and adds protections for increasingly common payment practices and business arrangements under the Civil Monetary Penalty Law (CMP). These amendments and updates to the AKS and CMP regulations attempt to clarify the OIG’s enforcement position in light of changes due to health reforms,

Beneficiary Inducement Amendments

The beneficiary inducement provisions of the CMP prohibit any person from offering inducements to Medicare or Medicaid beneficiaries that the offeror knows or should know are likely to influence the selection of particular providers, practitioners, or suppliers. The Proposed Rule would amend the definition of “remuneration” in the CMP regulations by codifying certain statutory exceptions:

  1. Copayment Reductions for Certain Hospital Outpatient Department (OPD) ServicesAs part of the Balanced Budget Act of 1997 (BBA), Congress exempted from prosecution under the CMP arrangements involving a reduction in the copayment amount for hospital covered OPD services. The OIG proposes to adopt language identical to the statutory exception language.
  2. Remuneration that Promotes Access to Care and Poses a Low Risk of HarmAs part of the Affordable Care Act (ACA), Congress enacted 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 contain any regulatory text implementing this exception, the OIG does propose specific definitions for “promotes access to care” and “low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs.” The OIG proposes that the phrase “promotes access to care” be defined to mean that “the remuneration provided improves a particular beneficiary’s ability to obtain medically necessary health care items and services.” The OIG further proposes that the phrase “low risk of harm” mean 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.” The OIG is explicitly soliciting comments on the potential expansion of both of these definitions to cover more types of remuneration that could be beneficial to patients and decrease costs of providing health care services to beneficiaries. Of note, the Proposed Rule expressly reiterates the OIG’s long-standing concern that rewards offered by providers or suppliers to patients who comply with a treatment regimen pose a risk of abuse when the rewards are likely to influence the recipients to order or receive items or services from a particular source. But the OIG also recognizes that such programs can promote health and wellness as well as encourage patients to engage in arrangements that lower health care costs. To that end, the OIG is soliciting comments on whether incentives for compliance with treatment regimens should be explicitly permitted under this exception and, if so, what limitations or safeguards should be put in place.
  3. Coupons, Rebates, and Other Retailer Reward ProgramsThe OIG also proposes to codify the ACA exception permitting retailers to offer or transfer coupons, rebates, or other rewards (including store merchandise, gasoline, or frequent flyer miles) for free or less than fair market value if the items or services are available on equal terms to the general public and are not tied to the provision of other items or services reimbursed in whole or in part by Medicare or Medicaid. The OIG notes that “this new exception should increase retailers’ willingness to include Federal health care program beneficiaries in their reward programs in appropriate circumstances,” but the OIG offers somewhat confusing guidance on what the appropriate circumstances would be. For example, the OIG 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 the [exception] because the $20 coupon would be tied to the drugstore’s getting the recipients’ Medicare Part D prescription drug business.” However, “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 [exception].” Although the Proposed Rule explicitly excludes from protection reward programs in which the rewards themselves are items or services reimbursed in whole or in part by a Federal health care program, the example provided by the OIG indicates that rewards can be redeemed on customer’s out-of-pocket costs for federally reimbursable items as long as the rewards can also be redeemed for anything else purchased in the store.
  4. Financial-Need-Based Exception. The third ACA exception that would be codified in the Proposed Rule permits the offer or transfer of items or services for free or less than fair market value if there is a good faith determination of the individual’s financial need, the items or services are not advertised, the offer is not tied to the provision of other items or services reimbursed by Medicare or Medicaid, and there is a “reasonable connection” between the items or services being offered and the medical needs of the individual. The OIG notes 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.” The OIG is soliciting comments on the boundaries of a “reasonable connection” for purposes of this exception.
  5. Waivers of Cost-Sharing for the First Fill of a Generic Drug. The final ACA exception permits Part D and MA-PD plan sponsors to waive enrollee copayments for the first fill of a generic covered Part D drug. The OIG proposes to rely on the definition of “generic drug” set forth in the Part D regulations. Additionally, the Proposed Rule would require sponsors to disclose this incentive program in their benefit plan package submissions to CMS.

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