Proposed Coordinated Care Revisions to the Anti-Kickback Statute and Civil Monetary Penalties Law

In 2018, the United States Department of Health and Human Services (“HHS”) launched the “Regulatory Sprint to Coordinated Care” initiative to reduce the regulatory burdens that potentially serve as obstacles in the health care industry’s shift toward value-based and coordinated care payment models. As part of this initiative, on August 27, 2018, HHS’s Office of Inspector General (“OIG”) issued a Request for Information (“RFI”) soliciting recommendations from the public.Specifically, OIG sought to identify ways to modify or add new safe harbors to the federal Anti-Kickback Statute (“AKS”), which prohibits health care industry stakeholders from receiving payment in exchange for referrals and from making payment to induce referrals, and to create exceptions to the beneficiary inducements civil monetary penalty law (“CMP Law”) definition of “remuneration.” OIG’s stated goal with these proposals is to “foster arrangements that would promote care coordination and advance the delivery of value-based care, while also protecting against harms caused by fraud and abuse.”

After receiving 359 responses from various stakeholders in response to its RFI, on October 9, 2019, OIG issued a Notice of Proposed Rulemaking, “Revisions to the Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules Regarding Beneficiary Inducements” (the “Proposed Rule”).In the Proposed Rule, OIG set forth safe harbor protections under the AKS for certain coordinated care and value-based arrangements, as well as protections under the AKS and CMP Law regarding incentives offered to beneficiaries to encourage patient engagement that would otherwise be prohibited.OIG also suggested definitions for several key terms used in the proposed safe harbors.

A high-level summary of the most significant proposed safe harbor additions and revisions follows.Note that each of these proposed safe harbors contains significantly more detail than described here, including a substantial number of proposed new definitions.

Value-Based Arrangements (New).OIG proposed three new safe harbors to the AKS for remuneration exchanged between or among eligible participants in a value-based arrangement involving both publicly and privately insured patients.

• A “value-based arrangement” would be “an arrangement for the provision of at least one value-based activity for a target patient population between or among: (A) the value-based enterprise (“VBE”) and one or more of its VBE participants; or (B) VBE participants in the same value-based enterprise.” Such an arrangement must be in writing and be commercially reasonable.
• OIG would define “VBE” as “the network of individuals and entities that collaborate together to achieve one or more value-based purposes.”
• The three proposed safe harbors are:
  • The Care Coordination Arrangements Safe Harbor, 42 C.F.R. § 1001.952(ee), which would cover certain in-kind, non-monetary remuneration, including services and infrastructure, exchanged between qualifying VBE participants with value-based arrangements, to be used primarily to engage in value-based activities.This safe harbor does not necessarily require the parties to assume downside financial risk.
  • The Value-Based Arrangements with Substantial Downside Financial Risk Safe Harbor, 42 C.F.R. § 1001.952(ff), which would cover certain in-kind and monetary arrangements where the VBE is at substantial downside financial risk from a payor.
  • The Value-Based Arrangements with Full Financial Risk Safe Harbor, 42 C.F.R. § 1001.952(gg), which would cover in-kind and monetary arrangements where the VBE is at full downside financial risk from a payor.
• Significantly, “VBE participants” would not include pharmaceutical manufacturers; manufacturers, distributors, or suppliers of durable medical equipment, prosthetics, orthotics, or supplies (“DMEPOS”); or laboratories. OIG is seeking feedback as to whether pharmacies (including compound pharmacies), pharmacy benefit managers, wholesalers, and distributors also should be excluded from participation in value-based arrangements through these safe harbors.

Patient Engagement (New). The Patient Engagement and Support Safe Harbor, 42 C.F.R. § 1001.952(hh), would cover certain in-kind patient engagement tools or support furnished by VBE participants to patients to improve quality, health outcomes, and efficiency.Because a practice permissible under the AKS is also excepted from the CMP Law , this safe harbor also would remove barriers presented by the CMP Law.

• Significantly, OIG is soliciting comments as to whether it should protect patient incentives and supports in the form of cash and cash equivalents in certain circumstances, which it has historically prohibited.
• OIG also is soliciting comments as to whether this safe harbor should include the provision of gift cards to beneficiaries with certain conditions to effectuate behavioral change.

CMS-Sponsored Models (New).This safe harbor, 42 C.F.R. § 1001.952(ii), would cover care delivery and payment arrangements, as well as beneficiary incentives pursuant to certain CMS-sponsored models, including Innovation Center models.This proposal was made in response to commenters’ requests to create uniformity and predictability for parties participating in CMS-sponsored alternative payment models, instead of relying on CMS to issue model-specific waivers.This proposed safe harbor would almost entirety replace OIG’s current model-by-model fraud and abuse waiver process.

Cybersecurity Technology and Services (New).This safe harbor, 42 C.F.R. § 1001.952(jj), would protect non-monetary remuneration in the form of donations of certain cybersecurity technology and related services meeting certain conditions.OIG intends for the safe harbor to be broad enough to include cybersecurity software (but not hardware) and other information technology that is available now or may become available in the future.Similar to the current EHR items and services safe harbor, this safe harbor would require the donor and recipient to enter into a signed, written agreement and would prohibit the cost from being shifted from the donor to a Federal health care program.

Electronic Health Records Items and Services (Existing).The safe harbor for electronic health records items and services, 42 C.F.R. § 1001.952(y), protects certain arrangements involving the donation of interoperable electronic health records software or information technology and training services.Initially scheduled to expire on December 31, 2013, this safe harbor was extended by previous rulemaking through December 31, 2021. OIG now seeks comments on whether to make the safe harbor permanent or to further extend its expiration date.The Proposed Rule also would significantly revise many of the definitions applicable to this safe harbor, such as the definitions of “interoperable” and “electronic health record.”

Outcomes-Based Payments and Part-Time Arrangements (Existing).

• OIG proposes to modify the existing personal services and management contracts safe harbor, 42 C.F.R. § 1001.952(d), to replace the requirement that aggregate compensation under these agreements must be set in advance with a requirement that the methodology for determining compensation be set in advance.
• OIG also would eliminate the current requirement that, if an agreement provides for the services of an agent on a periodic, part-time basis, the contract must specify the schedule, length, and exact charge for such intervals. OIG believes eliminating this requirement would offer parties additional flexibility in designing “bona fide business arrangements, including care coordination and quality-based arrangements, where parties provide legitimate services as needed.”
• The Proposed Rule would also modify the safe harbor to protect certain “outcomes-based payments,” which are “payments from a principal to an agent that: (i) reward the agent for improving (or maintaining improvement in) patient or population health by achieving one or more outcome measures that effectively and efficiently coordinate care across settings; or (ii) achieve one or more outcome measures that appropriately reduce payor costs while improving, or maintaining the improved, quality of care for patients.”Possible examples of such outcome-based payments could include shared savings payments, shared loss payments, gainsharing payments, pay-for-performance payments, and episodic or bundled payments.

Warranties (Existing). OIG proposes to modify the safe harbor for warranties, located at 42 C.F.R. § 1001.952(g), to promote higher-value items covered by such warranties.

• Specifically, OIG suggests revising the safe harbor to: (a) protect warranties for one or more items and related services (i.e., bundled items) upon certain conditions; (b) exclude beneficiaries from the reporting requirements applicable to buyers; and (c) define “warranty” directly (instead of by reference to 15 U.S.C. § 2301(6)).
• The definition of “warranty” would explicitly clarify that the warranties safe harbor applies to FDA-regulated drugs and devices, and it would allow for single-item and bundled warranties.

Local Transportation (Existing).

• Recognizing the important role transportation plays in patient access to care, quality of care, health care outcomes, and effective coordination of care for patients, OIG proposes to modify the existing local transportation safe harbor, 42 C.F.R. § 1001.952(bb) to: (a) expand the distance to which residents of rural areas may be transported from to 50 to 75 miles; and (b) remove any mileage limit on transportation of a patient from a health care facility from which the patient has been discharged to the patients’ residence.
• OIG also seeks public comment on whether it should expand this safe harbor to include transportation for non-medical purposes that may improve or maintain health for certain populations, such as chronically ill patients, or for patients who are being discharged from a hospital or other facility.
• OIG noted that its new proposed safe harbor for patient engagement tools and support provided by VBE participants (42 C.F.R. § 1001.952(hh)) could include transportation for health-related, non-medical purposes.
• Although it does not believe the existing safe harbor prohibits the use of ride-sharing services so long as all elements of the safe harbor are met, OIG solicits comment as to whether the safe harbor should be amended to explicitly protect transportation through such ride-sharing programs.

Accountable Care Organization (“ACO”) Beneficiary Incentive Programs (New).The Budget Act of 2018 added sections to the Social Security Act (the “Act”) that allow ACOs to apply to operate ACO Beneficiary Incentive Programs, and the Act states that “illegal remuneration” under the AKS does not include incentive payments made to Medicare fee-for-service beneficiaries by an ACO under an ACO Beneficiary Program.OIG proposed to codify this statutory exception at 42 C.F.R. § 1001.952(kk), clarifying that an ACO may furnish incentive payments only to assigned beneficiaries, so long as the payment is made in accordance with the requirements set forth in Section 1899(m) of the Act.

Telehealth for In-Home Dialysis (Existing).OIG proposed to modify the beneficiary inducements CMP Law exception found at 42 C.F.R. § 1003.110.

The Proposed Rule would add an exception to the definition of “remuneration” for the provision of certain telehealth technologies related to in-home dialysis services.This exception would only be available for technologies furnished by the provider of services or the renal dialysis facility that is currently providing the in-home dialysis, telehealth visits, or other end-stage renal disease services to the patient.

The intent of applying the revision only to current providers of such services is to “prevent arrangements where providers and suppliers offer telehealth technologies to patients with whom they do not have a prior clinical relationship in an attempt to steer patients to a particular provider or supplier.”

Notably, although OIG tried to “strike the right balance between flexibility for beneficial innovation and safeguards to protect patients and Federal health care programs,” it is not yet clear that these proposals achieve such a balance.Therefore, it is premature to suggest that “the arrangements in the proposals are, or should be, exempt from liability under the AKS,” and OIG specifically solicits public comment as to whether the arrangements in the proposed safe harbors should be protected from criminal liability under the AKS.OIG also advised that any final safe harbors would provide only prospective protection.

OIG also seeks comments on various definitions for “device manufacturers,” a term currently not defined in the Medicare program.How the term ultimately is defined could greatly impact the applicability of the above-described safe harbors to those entities falling within this definition.

OIG will accept public comments on the Proposed Rule for 75 days after its publication in the Federal Register. OIG considers the public comments and recommendations when preparing the final rule. In addition to submitting comments by mail or hand delivery, commenters may submit their public comments via the internet at https://www.regulations.gov/.

At over 380 pages, the Proposed Rule introduces amendments to the AKS and the CMP Law regulations, including revisions to existing regulatory safe harbors.Nelson Mullins attorneys will be exploring the Proposed Rule in depth and providing more analysis and context regarding the specific proposals identified above.