Federal Register: October 11, 2005 (Volume 70, Number 195)
DOCID: FR Doc 05-20315
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Inspector General Office, Health and Human Services Department
NOTICE: PROPOSED RULES
ACTION: Medicare and State health care programs; fraud and abuse:
DOCUMENT ACTION: Proposed Rule.
SUBJECT CATEGORY:
Office of Inspector General
DATES: To assure consideration, public comments must be delivered to the address provided below by no later than 5 p.m. on December 12, 2005.
DOCUMENT SUMMARY:
As required by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), Public Law 108173, this proposed rule would establish a new safe harbor under the Federal antikickback statute for certain arrangements involving the provision of electronic prescribing technology. Specifically, the safe harbor would protect certain arrangements involving hospitals, group practices, and prescription drug plan (PDP) sponsors and Medicare Advantage (MA) organizations that provide to specified recipients certain nonmonetary remuneration in the form of hardware, software, or information technology and training services necessary and used solely to receive and transmit electronic prescription drug information. In addition, using our separate legal authority under section 1128B(b)(3)(E) of the Social Security Act (the ``Act''), we are also proposing separate safe harbor protection for certain electronic health records software and directly related training services. These exceptions are consistent with the President's goal of achieving widespread adoption of interoperable electronic health records for the purpose of improving the quality and efficiency of health care, while maintaining the levels of security and privacy that consumers expect.
SUMMARY:
Electronic prescribing arrangements; safe harbor under Federal anti-kickback statute,
DOCUMENT BODY 2:
42 CFR Part 1001
RIN 0991AB39
Medicare and State Health Care Programs: Fraud and Abuse; Safe
Harbor for Certain Electronic Prescribing Arrangements Under the Anti
Kickback Statute
SUPPLEMENTAL INFORMATION
[[Page 59016]]
I. Background
A. The AntiKickback Statute and Safe Harbors
Section 1128B(b) of the Act (42 U.S.C. 1320a7b(b), the anti kickback statute) provides 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 any of the Federal health care programs, as defined in section 1128B(f) of the Act. The offense is classified as a felony and is punishable by fines of up to $25,000 and imprisonment for up to five years. Violations of the antikickback statute may also result in the imposition of civil money penalties (CMPs) under section 1128A(a)(7) of the Act (42 U.S.C. 1320a7a(a)(7)), program exclusion under section 1128(b)(7) of the Act (42 U.S.C. 1320a7(b)(7)), and liability under the False Claims Act, (31 U.S.C. 372933).
The types of remuneration covered specifically include, without limitation, kickbacks, bribes, and rebates, whether made directly or indirectly, overtly or covertly, in cash or in kind. In addition, prohibited conduct includes not only the payment of remuneration intended to induce or reward referrals of patients, but also the payment of remuneration intended to induce or reward the purchasing, leasing, or ordering of, or arranging for or recommending the purchasing, leasing, or ordering of, any good, facility, service, or item reimbursable by any Federal health care program.
Because of the broad reach of the statute, concern was expressed
that some relatively innocuous commercial arrangements were covered by
the statute and, therefore, potentially subject to criminal
prosecution. In response, Congress enacted section 14 of the Medicare
and Medicaid Patient and Program Protection Act of 1987, Public Law
10093 (section 1128B(b)(3)(E) of the Act), which specifically required
the development and promulgation of regulations, the socalled ``safe
harbor'' provisions, that would specify various payment and business
practices that would not be treated as criminal offenses under the
antikickback statute, even though they may potentially be capable of
inducing referrals of business under the Federal health care programs.
Since July 29, 1991, we have published in the Federal Register a series
of final regulations establishing ``safe harbors'' in various areas.\1\
These OIG safe harbor provisions have been developed ``to limit the
reach of the statute somewhat by permitting certain nonabusive
arrangements, while encouraging beneficial or innocuous arrangements.'' (56 FR 35952, 35958; July 21, 1991).
\1\ 56 FR 35952 (July 29, 1991); 61 FR 2122 (January 25, 1996);
64 FR 63518 (November 19, 1999); 64 FR 63504 (November 19, 1999); and 66 FR 62979 (December 4, 2001).
Health care providers and others may voluntarily seek to comply with safe harbors so that they have the assurance that their business practices will not be subject to any enforcement action under the anti kickback statute, the CMP provision for antikickback violations, or the program exclusion authority related to kickbacks. In giving the Department of Health and Human Services the authority to protect certain arrangements and payment practices under the antikickback statute, Congress intended the safe harbor regulations to be evolving rules that would be updated periodically to reflect changing business practices and technologies in the health care industry.
B. Section 101 of MMA
Section 101 of the MMA added a new section 1860D to the Act, establishing a Part D prescription drug benefit in the Medicare program. As part of the new statutory provision, Congress, through section 1860D4(e) of the Act, directed the Secretary to create standards for electronic prescribing in connection with the new prescription drug benefit, with the objective of improving patient safety, quality of care, and efficiency in the delivery of care.\2\ Section 1860D4(e)(6) of the Act directs the Secretary, in consultation with the Attorney General, to create a safe harbor to the antikickback statute that would protect certain arrangements involving the provision of nonmonetary remuneration (consisting of items and services in the form of hardware, software, or information technology or training services) that is necessary and used solely to receive and transmit electronic prescription drug information in accordance with electronic prescribing standards promulgated by the Secretary under section 1860D 4(e)(4) of the Act. Specifically, the safe harbor would set forth conditions under which the provision of such remuneration by hospitals, group practices, and PDP sponsors and MA organizations (collectively, for purposes of this preamble discussion, ``Donors'') to prescribing health care professionals, pharmacies, and pharmacists (collectively, for purposes of this preamble discussion, ``Recipients'') would be protected.
\2\ See H.R. Conf. Rep. No. 108391, 495 (2003).
The OIG has a longstanding concern about the provision of free or reduced price goods or services to an existing or potential referral source. There is a substantial risk that free or reduced price goods or services may be used as a vehicle to disguise or confer an unlawful payment for referrals of Federal health care program business. Financial incentives offered, paid, solicited, or received in exchange for generating Federal health care business increase the risks of, among other problems: (i) Overutilization of health care items or services; (ii) increased Federal program costs; (iii) corruption of medical decision making; and (iv) unfair competition. Consistent with the structure and purpose of the antikickback statute and the regulatory authority at section 1128B(b)(3)(E) of the Act, we believe any safe harbor for electronic prescribing arrangements should protect innocuous or beneficial arrangements that would eliminate perceived barriers to the adoption of electronic prescribing without creating undue risk that the arrangement might be used to induce or reward the generation of Federal health care program business.
We do not believe Congress, in enacting section 1860D4(e)(6) of the Act, intended to suggest that a new safe harbor is needed for all or even most arrangements involving the provision of electronic prescribing items and services. In general, fair market value arrangements that are arm'slength and do not take into account the volume or value of Federal health care program referrals, or arrangements that do not have as one purpose the generation of business payable by a Federal health care program, should not raise concerns under the antikickback statute. Simply put, absent the requisite intent, the antikickback statute is not violated. In addition, many arrangements can be structured to fit in existing safe harbors, including the safe harbors for discounts (42 CFR 1001.952(h)) and for remuneration offered to employees (42 CFR 1001.952(i)). Finally, parties may use the OIG advisory opinion process (42 CFR part 1008; http://oig.hhs.gov/fraud/advisoryopinions.html) to determine whether their particular arrangements would be subject to OIG sanctions.
In addition to the new safe harbor under the antikickback statute,
section 1860D4(e)(6) of the Act directs the Secretary to create a
corresponding exception to section 1877 of the Act, commonly known as the physician selfreferral law. That exception is being
[[Page 59017]]
promulgated through a separate rulemaking by the Centers for Medicare &
Medicaid Services (CMS), the agency that administers the physician
selfreferral law. We have endeavored to ensure as much consistency as
possible between our proposed safe harbor and the corresponding
exception proposed by CMS, given the differences in the respective
underlying statutes. We intend the final rules to be similarly
consistent. One significant difference in the statutory schemes is that
fitting in an exception under section 1877 is mandatory, whereas
complying with a safe harbor under the antikickback statute is
voluntary. In other words, arrangements that do not comply with the
electronic prescribing safe harbor will not necessarily be illegal
under the antikickback statute. Rather, they will be subject to the
customary casebycase review under the statute. Another difference is
that section 1877 applies only to referrals from physicians, while the antikickback statute applies more broadly.
In certain respects, we are considering safe harbor standards that might impose stricter conditions than the corresponding exception to section 1877. In part, this reflects the separate purposes of the anti kickback statute and section 1877, as well as the serious nature of the felony violation described by the antikickback statute. In essence, section 1877 of the Act sets a minimum standard for acceptable financial arrangements; the antikickback statute addresses residual risk that may be posed by arrangements that otherwise comply with a physician selfreferral exception. As explained in the Phase I final physician selfreferral rule promulgated by CMS, ``many relationships that may not merit blanket prohibition under section 1877 of the Act can, in some circumstances and given necessary intent, violate the antikickback statute.'' (66 FR 856, 863; January 4, 2001).
II. Provisions of the Proposed Rule
This proposed rule would add a new paragraph (x) to the existing
safe harbor regulations at 42 CFR 1001.952. This new paragraph (x)
would describe more specifically the items and services protected by
the new safe harbor for prescribing drugs electronically; the
individuals and entities that may provide the protected items and
services; and the conditions under which providing the items and
services to prescribing health care professionals, pharmacies, and
pharmacists would be protected. In addition, using our separate legal
authority at Sec. 1128B(b)(3)(E) of the Act, as discussed below, we
are proposing separate safe harbor protection for certain electronic
health records software not covered by the MMA mandated safe harbor for
electronic prescribing. These proposed safe harbors would, if
promulgated, create separate and independent grounds for protection
under the antikickback statute. For the convenience of the public, we
are providing the following chart that lays out schematically the
overall structure and approach of these proposals, details of which are
provided below in Sections II. A and B. Readers are cautioned that the
proposals contain additional conditions and information not summarized here.
MMAmandated Post
electronic Preinteroperability interoperability
prescribing safe electronic health electronic health
harbor records safe harbor records safe harbor
Authority for Proposed Exception.............. Section 101 of the Section Section
Medicare 1128B(b)(3)(E) of 1128B(b)(3)(E) of
Prescription Drug, the Social Security Social Security
Improvement, and Act. Act.
Modernization Act of 2003.
Covered Technology............................ Proposed: Proposed: Proposed:
Selection of Recipients....................... Proposed: Proposed: Proposed:
FOR FURTHER INFORMATION CONTACT
Catherine Martin, Office of Counsel to the Inspector General, (202) 6190335.