Close X

Attorney Spotlight

How does Eli Richardson's past work with the federal government inform his client interactions? Find out more>

Search

Close X

Experience

Search our Experience

Experience Spotlight

In June 2016, AmSurg Corp. and Envision Healthcare Holdings, Inc. (Envision) announced they have signed a definitive merger agreement pursuant to which the companies will combine in an all-stock transaction. Upon completion of the merger, which is expected to be tax-free to the shareholders of both organizations, the combined company will be named Envision Healthcare Corporation and co-headquartered in Nashville, Tennessee and Greenwood Village, Colorado. The company's common stock is expected to trade on the New York Stock Exchange under the ticker symbol: EVHC. Bass, Berry & Sims served as lead counsel on the transaction, led by Jim Jenkins. Read more.

AmSurg logo


Close X

Thought Leadership

Enter your search terms in the relevant box(es) below to search for specific Thought Leadership.
To see a recent listing of Thought Leadership, click the blue Search button below.

Thought Leadership Spotlight

Inside the FCA blogInside the FCA blog features ongoing updates related to the False Claims Act (FCA), including insight on the latest legal decisions, regulatory developments and FCA settlements. The blog provides timely updates for corporate boards, directors, compliance managers, general counsel and other parties interested in the organizational impact and legal developments stemming from issues potentially giving rise to FCA liability.

Read More >

Good News Comes in Threes: OIG Proposes to Expand Anti-Kickback Safe Harbors, Revise Certain Rules under the Civil Monetary Penalties Statute, and Narrow the Scope of the Gainsharing Prohibition

Publications

November 12, 2014

On October 3, 2014, the Department of Health and Human Services Office of Inspector General ("OIG") published in the Federal Register a proposed rule (the "Proposed Rule") that, if finalized as proposed, represents a triple dose of good news for healthcare providers. First the Proposed Rule contains new safe harbors to protect certain business arrangements from criminal prosecution or civil sanctions under the federal Anti-Kickback Statute ("AKS"). Second, the Proposed Rule codifies certain statutory revisions to the federal Civil Monetary Penalties ("CMP") law. And, finally, the Proposed Rule opens the door to narrowing the scope of the gainsharing prohibitions under the CMP law. See 79 Fed. Reg. 59717 (October 3, 2014).

Additional Safe Harbors Would Provide Protection to Certain Business Arrangements

In general, the AKS prohibits knowingly and willfully offering, paying, soliciting, or receiving remuneration in order to induce or reward referrals of business payable by federal healthcare programs. See 42 U.S.C. § 1320a–7b(b). A violation of the AKS is a felony and can result in the imposition of fines and/or imprisonment. Violations of the AKS may also result in the imposition of penalties under the CMP statute, exclusion from participation in federal healthcare programs, and liability under the federal False Claims Act. Recognizing the broad reach of the statute, Congress required the promulgation of regulatory "safe harbors" to protect certain business arrangements from criminal prosecution under the AKS despite potentially generating referrals of federal healthcare program business. See 42 U.S.C. § 1320a–7d. Further, Congress intended for these safe harbor regulations to be periodically reviewed and updated to reflect developments in the healthcare industry and so as not to impede "legitimate and beneficial" activities. See H.R. Rep. No. 100-85 (1987). 

In the Proposed Rule, the OIG proposes to introduce safe harbors that would interpret exceptions to the AKS created by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) and the Patient Protection and Affordable Care Act, Pub. L. 111–148, (ACA). In addition, the OIG seeks comment on additional safe harbors that would shelter certain business practices viewed as posing a low risk of abuse to federal healthcare programs.

The proposed safe harbors include the following:

  • Pharmacy waivers of cost-sharing for financially needy Medicare Part D beneficiaries, provided the waivers meet certain criteria;
  • Cost-sharing waivers for emergency ambulance services furnished by state or municipality-owned ambulance service providers; 
  • Manufacturer discounts for drugs provided through the Medicare Coverage Gap Discount Program;
  • Free or discounted local transportation offered to "established patients" to obtain "medically necessary" items and services, provided certain additional conditions are met; and
  • Remuneration between a federally qualified health center and a Medicare Advantage organization pursuant to a written agreement.

OIG Proposes to Implement Statutory Exceptions to "Remuneration" Prohibited under the CMP Law

The CMP law contains a "beneficiary inducement" provision that prohibits offering remuneration to a Medicare or Medicaid beneficiary that the offeror knows or should know is likely to influence the selection of a particular provider or ordering of any item or service payable by Medicare or Medicaid. 42 U.S.C. § 1320a-7a(a)(5). The ACA created new exceptions to the definition of "remuneration" under the CMP law, recognized by the OIG as being intended to protect "arrangements that offer beneficiaries incentives to engage in their wellness or treatment regimens or that improve or increase beneficiary access to care, including better care coordination." 79 Fed. Reg. 59725. Following the passage of the ACA, the OIG issued several advisory opinions that, while acknowledging that these new exceptions created under the ACA had not yet been implemented by regulation, declined to take any enforcement action against certain arrangements that allow patients to obtain treatment who might otherwise not have access to such care. For example, in Advisory Opinion 11-01 (January 3, 2011), the OIG relied on the statutory exception for "any other remuneration which promotes access to care and poses a low risk of harm to patients and Federal health care programs" to conclude that a free transportation and lodging arrangement offered by a network of nonprofit children's hospitals would not be subject to sanctions under the AKS or the CMP statute.

The Proposed Rule would amend the definition of "remuneration" under the CMP regulations to carve out certain arrangements pursuant to the statutory exceptions under the ACA. These carve-outs include:

  • Copayment reductions for certain hospital outpatient department services;
  • Retailer coupon and rewards programs that meet certain criteria;
  • Certain remuneration offered on the basis of financial need and certain other criteria; and
  • Waivers of copayments for the first fill of generic drugs provided under the Medicare Part D or Medicare Advantage programs.

OIG Solicits Comments on the Definition of "Reduce Items or Services" with respect to Gainsharing

"Gainsharing" refers to arrangements between a hospital and a physician wherein the hospital shares with the physician a percentage of cost savings realized by the hospital due to the physician's cost-containment efforts. The OIG has expressed longstanding concern with gainsharing arrangements. In 1999, the OIG published a Special Advisory Bulletin addressing the "high risk of abuse" posed by such arrangements and expressing concerns that gainsharing would incentivize hospitals to generate additional income for physicians as a reward for referrals of business, while also incentivizing physicians to reduce or limit medical care. Accordingly, the OIG took the position that the gainsharing provision of the CMP law (see 42 U.S.C. § 1320a-7a(b)(1)) prohibits any gainsharing arrangement that involves payments by a hospital to a physician with clinical care responsibilities, directly or indirectly, to induce a reduction or limitation of "services" to Medicare or Medicaid patients. Importantly for the OIG, the literal language of the statute prohibits reduction of any "services," so that it would capture and prohibit even a reduction of medically unnecessary services. 

In recent years, the OIG has issued a number of advisory opinions addressing gainsharing arrangements that, based on certain features analyzed favorably by the OIG, are distinguishable from the types of arrangements found to pose a "high risk of abuse." These factors include transparency in the arrangement, the presence of quality controls through utilizing objective performance measures to evaluate practitioner performance, and controls on payments that could otherwise direct referrals. See Hearing on Gainsharing Before the Subcomm. on Health of the H. Comm. on Ways & Means, 109th Cong. 8 (2005) (statement of Lewis Morris, Chief Counsel to the Office of Inspector Gen., U.S. Dept of Health and Human Services). 

In short, the OIG has recognized that gainsharing can be beneficial. The OIG even states in a footnote to the Proposed Rule that "[p]ending further notice from OIG, gainsharing arrangements are not an enforcement priority for OIG unless the arrangement lacks sufficient patient and program safeguards." 

In considering how to effect regulatory changes to the gainsharing prohibition, the OIG notes in the Proposed Rule that Congress has not amended the CMP law, which still prohibits a reduction of any "services," not just "medically necessary" services. Thus, the OIG believes that it cannot read a "medically necessary" element in to the prohibition. What the OIG believes it can do is consider a more narrow interpretation of the term "reduce or limit" services. Consistent with the OIG's analysis contained in its advisory opinions, the OIG recognizes in the Proposed Rule that the impending shift in healthcare reimbursement towards imposing greater accountability for outcomes, utilizing quality benchmarks and rewarding quality of care "does not necessarily constitute a limitation or reduction of services," but may instead result in the improvement in patient care without unnecessarily limiting care or diminishing the quality of care. 79 Fed. Reg. 59730.

Rather than propose a definition, the OIG solicits comments on whether the term "reduce or limit services" should be defined to include these considerations. The OIG proposes and requests comments regarding additional factors related to gainsharing programs, such as the extent to which quality monitoring procedures should be part of such programs and whether patients must be notified about gainsharing payments.

Conclusion

These additional safe harbors and other revisions could, if implemented, notably increase the flexibility afforded to certain business practices in the evolving "pay for performance" model of healthcare delivery. Providers and other stakeholders in the healthcare industry are encouraged to meet the OIG's requests for comments regarding these proposed revisions and to offer practical suggestions and concerns with regard to implementing these types of arrangements. Comments will be received until December 2, 2014. For additional information regarding the Proposed Rule or related fraud and abuse inquiries, or assistance with providing comments in response to the OIG's requests for feedback, please contact one of the authors listed or a member of our Healthcare Practice Group.


In Case You Missed It:

Related Professionals

Related Services

Notice

Visiting, or interacting with, this website does not constitute an attorney-client relationship. Although we are always interested in hearing from visitors to our website, we cannot accept representation on a new matter from either existing clients or new clients until we know that we do not have a conflict of interest that would prevent us from doing so. Therefore, please do not send us any information about any new matter that may involve a potential legal representation until we have confirmed that a conflict of interest does not exist and we have expressly agreed in writing to the representation. Until there is such an agreement, we will not be deemed to have given you any advice, any information you send may not be deemed privileged and confidential, and we may be able to represent adverse parties.