HHS Proposes New Anti-Kickback Safe Harbors

On October 3, 2014 the U.S. Department of Health and Human Services Office of the Inspector General (“OIG”) published a proposed rule (“PR”) entitled: 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.  This PR proposes to make technical changes to existing federal regulations and add new safe harbors to the Federal anti-kickback statute (“AKS”). The good news is that these changes would protect health care providers from criminal liability and civil monetary penalties for certain conduct that might otherwise violate the AKS.

The AKS establishes criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under Federal health care programs. An offense is a felony, punishable by fines of up to $25,000 and imprisonment for up to five years. Violations may also result in imposition of civil monetary penalties. Compliance with a safe harbor, however, insulates an individual or an entity from AKS liability and civil monetary penalties. Conduct that does not fall within a safe harbor is subject to a facts and circumstances analysis to determine whether it violates the AKS. In addition to technical corrections, the PR proposes to amend the AKS to include:
• Protection for certain cost-sharing waivers, including
• Pharmacy waivers of cost-sharing for financially needy Medicare Part D beneficiaries; and
• Waivers of cost-sharing for emergency ambulance services furnished by State- or municipality-owned ambulance services
• Protection for certain remuneration between Medicare Advantage organizations and federally qualified health centers
• Protection for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and
• Protection for free or discounted local transportation services that meet specified criteria.

The PR also proposes to add exceptions to civil monetary penalties in these areas:
• 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.

Comments on the PR may be submitted to http://www.regulations.gov. Once the comment period is closed, the OIG will review the comments to determine whether to issue a final rule. Although these proposed regulations are not in effect, they signal the OIG’s recognition that additional safe harbors are needed to protect certain activities that pose a low risk to Federal health care programs.

New Qui Tam Procedures at Justice

In remarks at the Taxpayers Against Fraud Education Fund Conference on September 17, 2014 in Washington, D.C., Assistant Attorney General for the Criminal Division, Leslie R. Caldwell, announced that through its Fraud Section, the Department of Justice’s Criminal Division will be committing more resources to combat violations of the False Claims Act.

She announced a new procedure whereby all new qui tam complaints filed with the Civil Division will be shared with the Criminal Division as soon as the cases are filed.  She explained that experienced prosecutors in the Fraud Section are immediately reviewing the qui tam cases when they receive them to determine whether to open a parallel criminal investigation. This new policy will surely result in an increase in the number of qui tam cases prosecuted by the Department of Justice’s Fraud Section.

Read the comments.