Expanded protections proposed for AKS and CMP laws

Authors: Frederick Robinson, Selina Coleman, Lidia Niecko-Najjum Publication | October 2014

New safe harbors to the Anti-Kickback Statute (AKS) have been proposed by the Department of Health and Human Services Office of Inspector General (OIG), as well as expansions and clarifications to the conduct exempted from civil monetary penalties (CMPs).

The new safe harbors that the OIG proposed would cover:

  • pharmacy cost-sharing waivers for Medicare Part D beneficiaries with financial need;
  • cost-sharing waivers for emergency ambulance services provided by state or municipal-owned organizations;
  • manufacturer discounts for drugs available through the Medicare Coverage Gap Discount Program; and
  • certain interactions between Medicare Advantage plans and federally qualified health centers.

With respect to conduct exempted from CMPs, the OIG has proposed to amend the definition of “remuneration” related to beneficiary-inducements by (a) adding a self-implementing exception enacted in the Budget Balancing Act (BBA) of 1997 but never codified, which excludes “a reduction in the copayment amount for covered OPD [outpatient department] services” from the definition of remuneration; and (b) by codifying amendments that were enacted in the Affordable Care Act (ACA).

For example, the proposed rule would codify the ACA’s “retailer-rewards” exception, which excludes rewards that: (1) consist of coupons, rebates, or other rewards from a retailer; (2) are offered or transferred on equal terms to the public, regardless of health insurance status; and (3) are not tied to the provision of other items or services reimbursed in whole or in part by Medicare or an applicable state healthcare program.

The OIG has proposed definitions of key terms in the retailer-rewards exception: for instance, it would define a “coupon” as “something authorizing a discount on merchandise or services,” a “rebate” as “a return on part of a payment,” and “other rewards” as “describing free items or services, such as store merchandise, gasoline, frequent flyer miles, etc.” According to the OIG, hospitals and physicians would not qualify as retailers. The OIG has asked for comments on whether entities that primarily sell items that require a prescription (such as medical-equipment stores) should be considered “retailers.”

With respect to the exception’s third requirement that retailer rewards cannot be “tied” to federally payable items and services, the OIG has proposed that there be an “attenuation” between federally payable items and services and a loyalty program’s rewards. But the OIG would not “interpret the prohibition on tying the free or below-market items and services to federally reimbursable services as requiring a complete severance of the offer from the medical care of the individual.” The OIG stressed that earning or redeeming the reward could not require the purchase of goods or services reimbursed in whole or in part by a federal healthcare program. According to the OIG, “a program that offered a $20 coupon to customers, including Medicare beneficiaries, who transferred their prescriptions to the drugstore would not meet this criterion,” but a “program that awarded a $20 coupon once a customer spent $1,000 out-of-pocket in the store – even if a portion of that $1,000 included copayments for prescription drugs” would likely satisfy the criterion. This more relaxed approach to “tying” could enable more programs to qualify for the retailer-rewards exception, but will likely require close analysis to ensure that any proposed arrangement is sufficiently attenuated.

The proposed rule would also codify the gainsharing provision of the CMP Law, as well as other changes from both the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 and the Affordable Care Act.

Read the proposed rule “Medicare and State Health Care Programs: Fraud and Abuse; Revisions to Safe Harbors under the Anti-Kickback Statute, and Civil Monetary Penalty Rules Regarding Beneficiary Inducements and Gainsharing” (RIN 0936-AA06). Comments on the proposed rule, set to be published in the October 3 edition of the Federal Register, are due by December 2.

 


Contacts

Frederick  Robinson

Frederick Robinson

Washington, DC
Selina Coleman

Selina Coleman

Washington, DC
Lidia Niecko-Najjum

Lidia Niecko-Najjum

Washington, DC