Morris Manning & Martin, LLP

Important Updates to Anti-Kickback Statute and Safe Harbors

12.21.2020

At the end of November 2020, the Office of Inspector General (OIG) released the long awaited Final Rule (the Rule) updating the safe harbors to the federal Anti-Kickback Statute (AKS). According to the U.S. Department of Health and Human Services (HHS), the Rule represents an effort to address the concerns of providers and other stakeholders that the overarching reach of AKS quells initiatives, such as the shift to value-based care arrangements, which benefit the U.S. health care system. As recognized by OIG, the provisions of the Rule are part of the HHS Regulatory Sprint to Coordinated Care, which the Department believes will reduce unnecessary regulatory barriers to coordinated care and transformation of the U.S. health care system.

The Rule includes several new safe harbors to the AKS, as well as modifications to several existing safe harbors.

In keeping with the stated purposes of the reform, three of the new safe harbors directly relate to value-based arrangements. The new safe harbors listed below are part of a tiered structure that the OIG believes supports the transformation of payment systems in the health care industry and recognizes payment systems that involve higher levels of downside risk:  

  • Care Coordination Arrangements to Improve Quality, Health Outcomes and Efficiency (42 C.F.R. § 1001.952(ee)).
  • Value-Based Arrangements with Substantial Downside Financial Risk (42 C.F.R. § 1001.952(ff)).
  • Value-Based Arrangements with Full Financial Risk (42 C.F.R. § 1001.952(gg)).

Each of the value-based arrangements listed above have specific requirements, including requirements regarding the type of remuneration that may be exchanged (either in-kind or monetary), the level of financial risk assumed by the parties to the relationship, and other specific safeguards.

The Rule clarifies that certain entities and individuals are not eligible to use the value-based safe harbors. Ineligible entities include pharmaceutical manufacturers, distributors and wholesalers; pharmacy benefit managers; laboratory companies; pharmacies that primarily engage in compounding drugs or primarily dispense compounded drugs; manufacturers of devices and medical supplies; entities that sale or rent durable medical equipment, prosthetics and orthotics and supplies (other than certain individuals or entities that primarily furnish services); and medical device distributors and wholesalers.

Other safe harbors added by the Rule include the following:

  • Patient Engagement and Support (42 C.F.R. § 1001.952(hh)). This safe harbor provides protection for certain in-kind tools or support given to patients to advance one or more treatment, adherence or safety goals.
  • CMS-Sponsored Models (42 C.F.R. § 1001.952(ii)). This safe harbor protects remuneration paid in connection with models sponsored by the Centers for Medicare and Medicaid Services (CMS).
  • Cybersecurity Technology and Services (42 C.F.R. § 1001.952(jj)). This safe harbor allows for the donation of certain cybersecurity technology and services.

Similar to all other AKS safe harbors, each new safe harbor contains detailed requirements that must be met in order to claim the benefit of the safe harbor.

As noted above, in addition to finalizing new safe harbor protections, the Rule also implements several modifications to existing safe harbors, including:

  • Outcomes-Based Payment. The Rule modifies the safe harbor for personal services and management contracts to allow payments made for the achievement of measurable outcomes that improve the quality of patient care or reduce payor costs. Under the terms of the modification, parties to an outcome-based payment arrangement must regularly monitor and assess the performance of services, including the impact of the outcome-based measures on patient care and periodically assess and, as necessary, revise applicable benchmarks and payment terms to ensure they are consistent with fair market value. The modification also requires the principal contracting for the services to implement policies and procedures to address and correct deficiencies in the quality of care resulting from the outcome-based payment arrangement. In addition, the modification adds flexibility for certain part-time arrangements by no longer requiring parties to specify an exact schedule of the part-time services.
  • Expansion of Local Transportation Safe Harbor. The Rule expands the mileage limitation for local transportation in rural areas (expanding the mileage limitation from 50 to 75 miles) and removes certain mileage limitations for transportation following discharge from inpatient or observation status.
  • Warranties. The Rule expands protection for warranties covering a bundle of one or more items and related services.
  • Electronic Health Records Items and Services. The Rule modifies the existing safe harbor to allow nonmonetary remuneration consisting of cybersecurity related technology and updates for interoperability.  

If you have any questions about this legal update, please contact a member of the MMM healthcare group.