RSS

OIG signals more lenient view on certain arrangements in proposed rule

November 2014
BY Mary M. Bearden and Allison Shelton, Brown & Fortunato, P.C.

On October 3, 2014, the Office of Inspector General (OIG) published notice of a proposed rule in the Federal Register. Under the proposed rule, the OIG will modify and add safe harbors to the federal anti-kickback statute, add exceptions to the civil monetary penalty (CMP) relating to beneficiary inducements, and codify the statute referred to as the gainsharing CMP.

The gainsharing CMP is a statute that prohibits a hospital from knowingly making a payment to induce a physician to reduce or limit services. The law is broad and applies even if the services are not medically necessary. In the Federal Register, the OIG emphasizes that it does not have the authority to create an exception to the law. However, finding that certain gainsharing arrangements are beneficial, the OIG proposes language signaling a new interpretation of the statute. “We seek to interpret the statutory prohibition broadly enough to protect beneficiaries and [f]ederal health care programs, but narrowly enough to allow low risk programs that further the goal of high quality health care at a lower cost.”

The OIG has proposed the new interpretation because of changes in the health care industry and the benefits of gainsharing arrangements observed by the OIG. In the Federal Register, the OIG highlights certain improvements that enable the development of beneficial gainsharing arrangements. Such improvements cited by the OIG include the use of evidenced-based medicine, the growth of health information technology, and improved data analytics and methods for measuring quality and outcomes. Also, the OIG discusses certain federally funded projects that involve gainsharing arrangements, including the Medicare Shared Savings Program.

In the past, the OIG has issued 16 advisory opinions indicating that it would not bring enforcement actions against certain gainsharing arrangements. The arrangements approved by the OIG generally require the participants to take specific actions and offer payments based on the cost savings arising from the arrangements. Also, the arrangements generally promote accountability, include quality controls, and establish controls on payments that may influence referral patterns. In the Federal Register, the OIG states that it “would be unlikely to bring a case against a hospital or physician for gainsharing arrangements that included patient and program safeguards such as those identified in our advisory opinions.”

The proposed rule signals that the OIG intends to permit hospitals and physicians to participate in low risk gainsharing arrangements. At the same time, the OIG will “ensure that the goal of the statute is met: To prevent hospitals from paying physicians to discharge patients too soon or take other action that inappropriately limits a beneficiary’s care.”

In addition to codifying the gainsharing CMP, the OIG proposes new safe harbors to the federal anti-kickback statute. This statute is broadly written and criminalizes many business arrangements that are acceptable outside the health care industry. Under the anti-kickback statute, health care providers may not “knowingly and willfully offer or pay any remuneration . . . to any person to induce such person . . . to refer” business reimbursable by a federal health care program. Likewise, “whoever . . . receives any remuneration . . . in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item . . . for which payment may be made . . . under a [f]ederal health care program” can be prosecuted for a violation of the statute.

Because of the breadth of the anti-kickback statute, Congress has directed the OIG to develop “safe harbor” regulations which protect certain arrangements that might otherwise violate the statute. When the OIG develops a safe harbor, the OIG considers how the permitted practice will affect various factors, including: (i) access to health care services, (ii) patients’ freedom to choose health care providers, (iii) competition among health care providers, (iv) medically underserved areas and/or populations, (v) the cost to federal health care programs, and (vi) utilization of services. Based on an assessment of these factors, the OIG proposes to extend safe harbor protection to certain cost- sharing waivers and to free and discounted transportation services offered by health care providers.

Under the proposed safe harbor for free and discounted transportation services, hospitals, health systems, physicians, and other “Eligible Entities” will be able to provide transportation to a patient and the patient’s caregiver located within 25 miles of the patient’s destination. The transportation services must be necessary to assist the patient in obtaining medically necessary services. Furthermore, the services may be offered to “established patients” only. As a result, the safe harbor will not protect transportation offered to new patients. To qualify for safe harbor immunity under the proposed rule, the transportation services may not be advertised, drivers may not be paid on a per-patient basis, and health care items and services may not be marketed during transports.

The OIG proposes to add new exceptions to the CMP relating to beneficiary inducements. The CMP prohibits illicit inducements offered to Medicare and Medicaid beneficiaries. Specifically, no one may offer an inducement to such beneficiaries when the offeror knows or should know that it will likely influence the beneficiary’s selection of health care providers. The OIG proposes to provide several exceptions to this prohibition, including an exception for copayment reductions for certain hospital outpatient department services.

Another exception to the beneficiary inducement CMP will permit health care providers to offer valuable items or services that “promote access to care and pose a low risk of harm to patients and federal health care programs.” For example, this exception will apply when a hospital provides free lodging to a patient and the patient’s family so that the patient may obtain appropriate care. Also, the exception will apply when a health care provider gives blood pressure cuffs to patients who could benefit from close monitoring of their blood pressure.

Under a similar proposed exception, health care providers will be able to offer free or discounted items or services to patients who demonstrate a financial need. Such items and services must be reasonably related to the patient’s medical care. In the Federal Register, the OIG lists the following examples of arrangements that would fall within the proposed exception: (i) giving protective helmets to hemophiliac children; (ii) providing pagers that remind patients, who have chronic conditions, to take medications; and (iii) offering free blood pressure checks to hypertensive patients.

The OIG will accept comments on the proposed rule until December 2, 2014.