On October 2, 2014, the Department of Health and Human Services Office of Inspector General (OIG) published proposed rules to add new safe harbors to the federal Anti-Kickback Statute (AKS).

Some of the new safe harbors codify statutory changes set forth in the Medicare Prescription Drug, Improvement and Modernization Act of 2003 and the Patient Protection and Affordable Care Act. All of the new safe harbors would protect certain payment practices and business arrangements from criminal prosecution or civil sanctions.

The proposed rule comes in response to concern over the broad reach of the AKS, which provides criminal penalties to entities that knowingly offer or receive remuneration in order to reward the referral of business reimbursable under federal healthcare programs. The offense is classified as a felony, punishable by fines up to $25,000 and imprisonment up to five years. Since 1991, the OIG has published a series of regulations establishing safe harbors in various areas, in order to encourage “beneficial or innocuous arrangements.”¹

OIG’s proposed amendment includes several new protections and clarifications to existing protections:

• A technical correction to the existing safe harbor for referral services

• Protection for certain cost-sharing waivers, including pharmacy waivers of cost-sharing for financially needy Medicare Part D beneficiaries and waivers of cost-sharing for emergency ambulance services furnished by state- or municipality-owned ambulance services

• Protection for certain remuneration between Medicare Advantage organizations and federally qualified health centers

All of the new safe harbors would protect certain payment practices and business arrangements from criminal prosecution or civil sanctions.

• Protection for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program

• Protection for free or discounted local transportation services that meet specified criteria²

Also proposed is an amendment to the definition of “remuneration” to include exceptions for copayment reductions on certain hospital outpatient department services, arrangements that pose a low risk of harm and promote access to care, coupons or other reward programs that meet certain requirements, remuneration to financially needy individuals and copayment waivers for generic drugs.

Cost-sharing waivers for EMS providers

As part of the proposed rule, Centers for Medicare and Medicaid Services (CMS) recognizes that a state- or government-owned healthcare facility that reduces or waives its charges to patients who are unable to pay, or charges patients only to the extent of their Medicare or other health insurance coverage, does not constitute furnishing free services under AKS and may therefore receive CMS payment. CMS specifically confirms that this provision applies to ambulance service providers that are owned and operated by a state or political subdivision of a state.

In order to take advantage of this safe harbor, however, EMS providers are required to provide the waiver or reduction of charges on a uniform basis, regardless of patient-specific factors. OIG proposes an express prohibition against claiming the amount waved as bad debt for payment purposes under CMS. OIG is currently soliciting comments on whether to include reductions or waivers of cost-sharing amounts owed under Medicaid in the safe harbor.

One notable exception to this proposed safe harbor is if an EMS provider has an agreement with a hospital to provide free transport to certain outpatients in exchange for receiving that hospital’s transports that are payable by Medicare Part B.

References

1. Office of the Federal Register. (July 29, 1991) 56 FR 35952, 35958.

2. Office of the Federal Register. (Oct. 03, 2014) Medicare and state healthcare programs: Fraud and abuse; revisions to safe harbors under the anti-kickback statute, and civil monetary penalty rules regarding beneficiary inducements and gainsharing. Retrieved on Oct. 15, 2014, from federalregister.gov/articles/2014/10/03/2014-23182/ medicare-and-state-health-care-programs-fraud-and-abuse-revisions-to-safe-harbors-under-the#h-15.

---