On December 7, 2016, the Department of Health and Human Services Office of Inspector General (“OIG”) published a final rule (“Final Rule”) clarifying several exceptions to the Civil Monetary Penalties law (“CMP”) dealing with beneficiary inducements. OIG has finalized all of the beneficiary inducement CMP exceptions proposed in the October 2014 proposed rule (“Proposed Rule”).1 OIG declined to finalize the proposed regulations regarding the gainsharing CMP as subsequent legislative updates have made the proposed regulations unnecessary.
This article will focus on CMP exceptions set forth in the Final Rule. Future Hall Render articles will focus on the finalization of the proposed anti-kickback safe harbors and the Final Rule’s impact on pharmacies.
Background of the Civil Monetary Penalties
The CMP prohibits the offer of remuneration that the offeror knows or should know is likely to influence another individual to choose a certain provider, practitioner or supplier. It is important to note that the CMP only prohibits inducements to Medicare and state health care program beneficiaries.
Affordable Care Act Exceptions
The Final Rule codified four amendments to the CMP that were enacted by the Affordable Care Act (“ACA”). The ACA amended the definition of “remuneration” by allowing exceptions for certain beneficiary inducements prohibited by the CMP. The Proposed Rule elaborated on the ACA language and set forth additional interpretations and requirements for these CMP remuneration exceptions. The four ACA exceptions are:
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Any remuneration that promotes access to care and poses a low risk of harm to patients and federal health care programs;
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The offer or transfer of coupons, rebates or other rewards from a retailer if the program meets certain requirements;
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The transfer of items or services by a person that are not offered as part of an advertisement or solicitation, that are not tied to the provision of other items or services reimbursed under a federal health care program, for which there is a reasonable connection between the items or services and the medical care of the individual, and for which the person providing the items or services determines in good faith that the individual is in financial need; and
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Waivers of cost-sharing for the first fill of a generic drug for Medicare Part D beneficiaries.
OIG Commentary and Guidance
Promotes Access to Care and Poses a Low Risk of Harm. OIG discussed that anyone asserting this exception as a defense will have the burden to prove that sufficient facts and analysis exist for OIG to determine that the arrangement promoted access to care and posed a low risk of harm. OIG noted that there are other exceptions to the beneficiary inducements CMP, as well as Anti-Kickback Statute safe harbors, that may cover activities that could be argued to “promote access to care and pose a low risk of harm to patients and federal health care programs.” These other exceptions and safe harbors addressing such activities will be benchmarked in order to determine whether the activities pose a low risk under this exception.
Access to Care
When conducting these analyses, whether the arrangement promotes access to care and is a low risk of harm to patients and federal health care program beneficiaries is the threshold issue. The Proposed Rule proposed to define the term “care” as medically necessary health care items and services. While OIG solicited comments regarding an expanded interpretation of the term “care” to include nonclinical items such as social services, the Final Rule did not contain this expanded definition. Instead, the Final Rule defines “care” as items and services that are payable by Medicare or a state health care program for the beneficiaries who receive them. Note that this may create a scenario in which different conduct is allowed from state to state based upon the services provided to Medicaid beneficiaries in that particular state.
In the Proposed Rule, OIG proposed that this exception would only include remuneration that improves a particular beneficiary’s ability to obtain medically necessary items and services. Items and services that support or help individual patients, as well as defined beneficiary populations, are deemed to promote access to care. For example, a primary care physician group may make a web-based food and activity tracker application available to its diabetic patients in order to help patients access improved care planning by their physicians.
While OIG approves of items or services provided to patients in order to assist with the compliance of a treatment plan, OIG made clear in the Final Rule that rewards for receiving care are not permitted. Along this line, rewards for compliance with treatment do not “promote access to care” and are not protected by this exception.
Low Risk of Harm
OIG finalized that “low risk of harm to Medicare and Medicaid beneficiaries and programs” be interpreted to mean that the remuneration must be unlikely to skew clinical decision making, be unlikely to increase costs to federal health care programs and beneficiaries through overutilization and/or inappropriate utilization and not raise patient safety or quality of care concerns.
OIG clarified that entities can still encourage beneficiaries to access non-reimbursable care without implicating the CMP restrictions. For example, entities may provide educational or informational services to patients without implicating the CMP. Further, OIG increased the threshold for nominal value items and services (which are exempt from the beneficiary inducement restrictions) to $15 per occurrence and $75 annual aggregate.2
OIG indicated that it would continue to monitor the changing payment and health care delivery landscape for possible future exceptions.
Retailer Rewards. In the Final Rule, OIG finalized the language as proposed to allow for retailer rewards programs, including coupons, rebates or other rewards, that meet certain criteria. OIG clarified that hospitals and physicians are not considered “retailers” unless the entity provides a separate retail element, such as a convenience store or pharmacy. Rewards provided by the retailers cannot be tied to the provision of other reimbursable items or services. Note that this exception allows for “other rewards,” which OIG determined may be health care items or services.
Financial Need-Based Exception. OIG proposed and finalized regulatory text that mirrors the language set forth in the ACA. The ACA, as well as the Final Rule, stated that the item or service being offered must not be tied to the provision of other services that may be reimbursed by Medicare or a state health care program. Specifically, OIG addressed programs that offer lodging or transportation that is conditioned on the patient’s receipt of a particular service and concluded that these programs would not be protected by this exception. Further, any items or services that are provided pursuant to this exception must be reasonably related to the patient’s medical care. This standard includes a reasonableness evaluation of the value of the items or services provided to the beneficiary in relation to the harm the incentive is designed to prevent. OIG indicated that providers do not need to provide documentation of the actual determination of need for each patient; however, providers or suppliers using this exception as a defense would need to be able to prove they complied with the standards of their own financial needs policy.
First Fill of a Generic Drug. Because the Final Rule was published after the deadline for submission to CMS of benefit plan packages, this exception will not take effect until coverage years beginning on or after January 1, 2018.
Reductions in Copayments
The Proposed Rule set forth a statutory exception to the CMP that would permit hospitals to provide reductions in copayment amounts for certain outpatient department services. The statutory citation to “covered outpatient department services” was outdated, and OIG proposed to use the current statutory reference of section 1833(t)(8). OIG received no comments on this proposal, and the modification will be finalized as proposed.
Practical Takeaways
Due to the additional guidance provided by OIG, particularly as it relates to items or services that promote access to care but pose a low risk of harm, it is recommended that providers, practitioners and suppliers review all current incentives provided to beneficiaries to ensure compliance with the finalized regulations. Any incentives involving the provision of transportation, lodging or rewards for seeking health care services should be reviewed with caution to ensure that the incentive is still permitted and/or that the associated risk profile has not been elevated.
Written documentation of the incentive program’s compliance with the requirements of the exception is recommended. Because providers, practitioners and suppliers must defend their compliance with the applicable exception, it is recommended that such compliance be documented in writing. This allows for the entity to quickly provide documentation to OIG in the event any of the entity’s incentive programs are scrutinized.
In addition, providers, practitioners and suppliers should review their state’s Medicaid covered services in order to determine the types of services that may be considered “care” in that particular state.
If you have any questions or would like additional information about this topic, please contact:
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Your regular Hall Render attorney.
1 To view Hall Render’s summary of the Proposed Rule, click here.
2 Hall Render’s article regarding the Final Rule’s impact on nominal value increases can be found here.
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