Five New Safe Harbors to the Fraud and Abuse Statutes: What do they mean for healthcare providers?
Five new safe harbors have been added to the Anti-Kickback Statute (AKS) in the final rule, issued on December 17, 2016 by the Health and Human Services Office of the Inspector General (OIG). In addition, existing safe harbors have been revised to grant further protections to providers from criminal prosecution and civil damages.
What these changes mean for providers: The trend in healthcare is to move from volume-based care to value-based care (as demonstrated by the recent MACRA final rule regarding physician compensation for Medicare services—get the full scoop on MACRA in this series). The OIG recognizes that this focus on quality of care over volume of care “requires new and changing business relationships among health care providers.”
The addition of these safe harbors mean you may be able to participate in programs previously off limits to your practice as you work to increase the quality of individual patient care.
We’ll cover those safe harbors individually later in this article.
What is the Anti-Kickback Statute?
Before we get into the specific safe harbor additions, let’s take a moment to revisit the Anti-Kickback Statute (“AKS”). Broadly speaking, this statute makes it a civil and/or criminal offense to directly or indirectly exchange anything of value with the intent to gain the referral of federal health care business (e.g., Medicaid, Medicare, and other federally-funded healthcare programs). For example, a provider receiving cash in exchange for referrals made to other providers is a violation of the AKS.
Civil penalties for violation are steep, up to $73,588 per kickback in 2016, and don’t include the additional penalty of paying back three times the amount of the kickback. From a criminal perspective, violators face fines, imprisonment, or both.
(Note: Some people confuse the AKS with the Physician Self-Referral Law, also known as the Stark Law. The Stark Law prohibits physicians from making referrals for certain federally-reimbursable health services to an individual or entity when the physician or an immediate family member has an ownership interest in or compensation arrangement with that individual/entity. The two laws are separate, but related. A violation of the AKS is sometimes also a violation of Stark Law.)
5 New Safe Harbors in the Anti-Kickback Statute (AKS)
Below are the 5 new safe harbors for business arrangements involving Medicare or Medicaid beneficiaries, some of which may get your entrepreneurial mind spinning with possibilities of growing your practice or expanding care for your patients.
Below the description you’ll find a recommended “first step” to take advantage of this protection in your practice.
#1: Local transportation safe harbor
This safe harbor allows for free or discounted shuttle service from a patient’s home to a provider within 25 miles (in an urban environment) or 50 miles (in a rural environment). There are limitations to this safe harbor, of course; the vehicle cannot be an airplane, luxury vehicle, or ambulance.
Your First Step: Before you create or participate in a free or discounted local transportation service for patients, consult one of our attorneys to vet your plan in detail. When it comes to compliance with Safe Harbors, the devil is in the details, and an upfront consultation with a healthcare attorney on compliance with this safe harbor will save you time and money (in case you were considering a luxury jet shuttle!)—not to mention the assurance that you aren’t exposing yourself to civil and criminal penalties.
#2: Pharmacy cost-sharing waivers
Pharmacies can now waive or reduce some portions of patient cost (deductible or co-pay) for pharmaceuticals. As above, this safe harbor comes with important details:
The waiver or reduction is not offered as part of an advertisement or solicitation;
The pharmacy does not routinely waive or reduce cost-sharing amounts;
The pharmacy first determines in good faith that the individual is in financial need, OR the pharmacy has failed to collect cost-sharing amounts after reasonable efforts to do so.
Your First Step: Prior to starting a program like this in your pharmacy, our healthcare attorneys can help you develop a vetting system for federal health program beneficiaries in financial need that isn’t too cumbersome so you remain in compliance while providing value to your low-income patients.
#3: Emergency ambulance services cost-sharing waivers
Ambulance providers owned or operated by the State or municipalities may now waive or reduce co-pay and/or deductible amounts for federal health program beneficiaries. This safe harbor must be applied uniformly – meaning, ambulance services cannot exclude any waiver recipients based on age, income, or other “patient-specific factors.” State- and municipality-owned ambulance providers can, however, exclude waiver recipients based on residency. Cost-shifting to private or public entities is not allowed.
Your First Step: To confirm compliance with this safe harbor, ask one of our healthcare attorneys to examine your program in full and resolve any issues before you begin waiving beneficiary costs.
#4: Remuneration between Medicare Advantage (MA) organizations and Federally Qualified Health Centers (FQHCs).
This new safe harbor implements a statutory exception to the AKS for remuneration between an FQHC and a Medicare Advantage in certain categories pursuant to a written agreement between these entities. It does not apply to remuneration outside the scope of that agreement.
Your First Step: Have a written agreement drafted or reviewed by one of our healthcare attorneys to ensure full compliance.
#5: Discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program.
This safe harbor implements a statutory exception to the AKS, allowing pharmaceutical manufacturers to provide discounted drugs for patients who are in the Part D coverage gap (or so-called “donut hole”) via the Medicare Coverage Gap Discount Program. This protection extends to an “applicable drug” in Part D and for an “applicable beneficiary,” so long as the drug manufacturer complies with the regulations in the Medicare Coverage Gap Discount Program.
Your First Step: Consult one of our healthcare attorneys to ensure compliance with the Medicare Coverage Gap Discount Program and develop a plan for implementing this safe harbor.
Exceptions to “remuneration” under the Civil Monetary Penalty Law
The Civil Monetary Penalty Law (“CMP”) is another law related to healthcare patients. It authorizes the government to impose money penalties against an entity for certain acts, including (1) offering or giving remuneration to any beneficiary of a federal health care program likely to influence the receipt by that patient of reimbursable items or services (sometimes referred to as “beneficiary inducement”) and (2) knowingly or willfully soliciting or receiving remuneration for a referral of a federal health care program beneficiary. In addition to the new AKS safe harbors, the Final Rule outlined exceptions to the definition of “remuneration” for purposes of the CMP Law. These exceptions include:
Copayment reductions for certain hospital outpatient department services;
Certain remuneration that poses a low risk of harm and promotes access to care;
Coupons, rebates, or other retailer reward programs that meet specified requirements;
Certain remuneration to financially needy individuals; and
Copayment waivers for the first fill of generic drugs.
These CMP safe harbors apply to things like providing free or reduced cost services and products to beneficiaries in certain circumstances. For example, if you're a medical provider that wants to provide a free app or remote home monitoring device to your patients to help improve care, these new safe harbors have removed the legal barriers that previousl prevented you from being able to do so.
What do the new fraud and abuse safe harbors mean for you?
The OIG states that the Final Rule is intended to “enhance flexibility for providers and others to engage in health care business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse.” These safe harbors are an encouraging sign that the federal government is starting to understand that remving barriers to innovation can have positive effects on healthcare innnovation. That excites us! The new safe harbors can provide a real opportunity to move your healthcare business forward as the industry continues the drive towards value-based care and reimbursement. And we're here to help you along the way!
