OIG’s New Safe Harbors, Civil Monetary Penalty Exceptions Set to Take Effect

Safe harbors Stark LawOn January 6, new safe harbors to the federal anti-kickback statute and amendments to the civil monetary penalty rules will take effect. The expansion of existing safe harbors, along with the addition of new ones, were issued by the Department of Health and Human Services Office of the Inspector General on Dec. 7, and are expected to impact providers, drug manufacturers and pharmacies. You can read them here.

The changes add new safe harbors designed to protect certain payment practices and business arrangements from sanctions under the anti-kickback statute. That statute makes it a crime to knowingly and willfully offer, pay, solicit or receive remuneration to induce or reward business reimbursable under federal healthcare programs. Safe harbors, which are updated periodically, are designed to protect certain business arrangements from prosecution if specific elements of the safe harbor are satisfied.

OIG noted that because of the broad reach of the statute, concern was expressed that some “relatively innocuous commercial arrangements” were covered by the statute and therefore, potentially subject to criminal prosecution.

The new rule includes protections for free or discounted local transportation services, waivers that subsidize drug costs for low income patients and waivers of cost-sharing for emergency use of state- or city-owned ambulance services. For example, the safe harbor for transportation allows providers to offer free transportation or shuttle services that meet the new regulatory requirements to established patients within a 25-mile radius of the provider (or 50 miles for patients in rural areas).

The final rule also allows for cost-sharing reductions or waivers for emergency ambulance services. However, this safe harbor applies to emergency ambulance services furnished by a state, city, or federally recognized Indian tribe.

The final rule includes cost-sharing waivers for Medicare Part D and permits pharmacies to reduce or waive cost-sharing amounts imposed under a federal healthcare program if the waivers or reductions are not offered as part of an advertisement or solicitation.

Pharmacies can waive Part D cost-sharing requirements under the following circumstances:

  • The pharmacy does not advertise the waiver or include the waiver as part of a beneficiary solicitation.
  • The pharmacy does not waive beneficiary obligations or reduce beneficiary costs on a routine basis.
  • The pharmacy makes a good faith, individualized determination of the beneficiary’s financial need, or the pharmacy has made reasonable efforts to collect the cost-sharing amounts.

The final rule creates another safe harbor permitting payments to FQHCs for services to patients enrolled in Medicare Advantage plans.

The OIG also added new safe harbor that protects drug manufacturers’ discounts for certain beneficiaries under the Medicare Coverage Gap Discount Program. This program allows prescription drug manufacturers to enter into an agreement with the Secretary of HHS to provide access to discounts on drugs at the point of sale. “Applicable drugs” furnished to “applicable beneficiaries” under the Medicare Coverage Gap Discount Program will not be considered remuneration.

In amending civil monetary penalties, the final rule carves out five new exceptions to the definition of remuneration:

  • Copayment reductions for certain hospital outpatient department services
  • Remuneration that poses a low risk of harm and promotes access to care
  • Coupons, rebates, or other retailer reward programs that meet specified requirements
  • Remuneration to financially needy individuals
  • Copayment waivers for the first fill of generic drugs

OIG noted that “because the original language in the introductory paragraph of the definition of ‘’remuneration’ referred only to ‘coinsurance and deductible amounts,’ we have added the word ‘copayment’ for consistency with the other text that we proposed and are finalizing.”

The final rule provides greater flexibility for providers to provide “efficient well-coordinated, patient-centered care with protections against fraud and abuse risks,” according to OIG.

If you have any questions or concerns about the revisions, contact us for additional information at 305-358-4500 or send us an email to info@vitalehealthlaw.com and let’s discuss how we might be able to assist you.