Proposed Revisions to the Anti-Kickback Statute: An Overview

On October 3, 2019, the Department of Health and Human Services, Office of Inspector General (HHS-OIG) issued its proposed amendments to specific provisions of the Anti-Kickback Statute (AKS), 42 CFR §§ 1001 and 1003. These proposed amendments modify existing safe harbors, add new safe harbors that provide new protections and codify existing statutory protections.

The proposed rules are part of the HHS-OIG’s Regulatory Sprint to Coordinated Care, which “seeks to promote value-based care by examining federal regulations that impede efforts among providers to better coordinate care for patients.” In formulating the proposed revisions to the AKS, the HHS-OIG sought to design safe harbors that both (1) allows for “beneficial innovations” in healthcare and (2) promote optimal coordination and management for patients across the continuum of care. The proposed rules are designed to ease the patients’ burdens in coordinating their own care, thus allowing greater patient engagement during their healthcare journey.

The proposed amendments include:

Three proposed new safe harbors for remuneration paid or exchanged pursuant to a “value-based arrangement.” The proposed modifications govern arrangements based on a “value-based purpose,” which is defined as (1) the coordination and management of a target population; (2) the improvement in the quality of care for a target population; (3) the reduction of costs to payors without reducing the quality of care, or (4) the transition from a healthcare delivery and payment mechanisms based on volume of items and services provided (i.e., fee-for-service) to mechanisms based on the quality of care and control of costs of care for the target population. The three safe harbors provide greater flexibility to the parties as they assume more downside financial risk for the cost and quality of care. The three “tier” structure is intended to support arrangements that involve higher levels of risk and to curb incentives in the fee-for-service model to order medically unnecessary items and services. Two of the safe harbors address value-based arrangements with substantial downside financial risk, while two address value-based arrangements at full financial risk.

A proposed new safe harbor for “patient engagement tools or supports” furnished under patient engagement and support arrangements to improve quality, health outcomes, and efficiency. A “patient engagement tool or support” includes health-related technology, patient monitoring tools, or supports and services recommended by the patient’s licensed healthcare provider. The tool or support must advance one of the following goals: (1) adherence to a treatment regime; (2) adherence to a drug regime; (3) adherence to a follow-up plan; (4) management of a disease or condition; (5) improvement in measurable evidence-based outcomes, or (6) ensuring patient safety. Such tools or supports cannot include gift cards, cash, or cash equivalents, or anything used for patient recruitment/marketing.

A proposed new safe harbor for remuneration provided in connection with a CMS-sponsored model, which would reduce the need for OIG to issue separate and distinct fraud and abuse waivers for new CMS-sponsored models.

A proposed new safe harbor for a donation of cybersecurity technology and services. Under the proposed safe harbor, the donation of such services must not take into account the volume or value of referrals or other business generated between the parties, and the donor does not shift the cost of the technology or services to a federal health care provider. The donation must be in writing and properly describe the technology and services provided.

Proposed modifications to the existing safe harbor for nonmonetary remuneration for electronic health records items and services. The modifications (1) specifically include cybersecurity software and services; (2) provide a definition of “interoperable” software, and (3) require that the donor does not engage in “information blocking.”

Proposed modifications to the existing safe harbor for personal services and management contracts, to add flexibility with respect to outcomes-based payments and part-time arrangements. “Outcome-based payments” are allowed when made between parties who are collaborating to (1) measurably improve the quality of patient care, or (2) appropriately reduce costs to payors while maintaining or improving quality of care. The proposed modifications set out specific criteria regarding such proposed contracts, and require that the outcomes are monitored during the agreement and any deficiency identified. Payments to pharmaceutical manufacturers, DMEPOS manufacturers/distributors/suppliers, and laboratories are specifically excluded from this safe harbor.

Proposed modifications for the existing safe harbors for “warranties.” The proposed amendments include technical modifications regarding the definition of “warranty,” and expand safe harbor protection for bundled warranties for one or more items or related services where certain requirements and conditions are met.

Proposed modifications to the existing safe harbor for local transportation. The increase on the protection for transportation in rural areas is increased from 50 miles to 75 miles. The distance limit set forth in the regulation is eliminated for discharged patients. The comments also note that the HHS-OIG will “consider an amendment to the safe harbor to explicitly protect transportation through ride-sharing services” (i.e., UBER of Lyft) if commenters explain how the statutory language could be construed to exclude such services.

Codification of the statutory exception to the definition of “remuneration” related to the ACO Beneficiary Incentive Programs for the Medicare Shared Savings Program.

Telehealth for In-Home Dialysis. The proposed amendment to the statutory definition of “remuneration” in the Civil Monetary Penalty Rules interpreting and incorporating a statutory exception to the prohibition on beneficiary inducements for “telehealth technologies” furnished to certain in-home dialysis patients.

In the context of hospitals, what do these proposed amendments provide? According to HHS-OIG, hospitals and physicians can enter into agreements to coordinate care for patients being discharged from a hospital to ensure better follow up care, data analytic systems to ensure that the patients are achieving better health outcomes, and remote monitoring technology to alert physicians or caregivers to a needed healthcare intervention. A hospital could donate cybersecurity software to each physician that refers to the hospital to minimize the risk of cybersecurity attack. Hospitals and physicians can provide items to patients (such as a pillbox that automatically alerts the physician/caregiver when a patient misses a dose) that further aid patient engagement and reduce the chance of readmission. Further, the potential for hospital collaborations with physicians for achieving specific health care goals and/or cost reduction, depending on the final version of the proposed rules, is greatly enhanced.

It bears noting that the HHS-OIG has recognized that no final determination has been made as to whether the proposed amendments strike the appropriate balance between “flexibility for beneficial innovation” and “safeguards to protect patients.” Thus, the proposed safe harbors, if adopted as written, would provide only prospective protection. While it might be helpful at this point to begin to review current business agreements or contemplated business arrangements for compliance with the proposed safe harbors, such agreements or arrangements should not be implemented until the final passage of the amendments.

Written By: Catherine M. Maraist

Maraist, Catherine

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