Life Science Compliance Update

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January 30, 2013

HHS OIG Solicits Input on Safe Harbor Provisions

Safe harbor 2
The Office of the Inspector General (OIG) for the Department of Health and Human Services (HHS) recently released a Notice in the Federal Register of it intent to develop regulations for new Safe Harbor provisions under the Federal anti-kickback statute (section 1128B(b) of the Social Security Act, as well as developing new OIG Special Fraud Alerts

Comments are due no later than February 26, 2013 and should reference OIG–121–N 


Section 1128B(b) of the Social Security Act (the Act) (42 U.S.C. 1320a–7b(b)) provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration to induce or reward business reimbursable under the Federal health care programs.  The offense is classified as a felony and is punishable by fines of up to $25,000 and imprisonment for up to 5 years. 

OIG may also impose civil money penalties, in accordance with section 1128A(a)(7) of the Act (42 U.S.C. 1320a–7a(a)(7)), or exclusion from the Federal health care programs, in accordance with section 1128(b)(7) of the Act (42 U.S.C. 1320a– 7(b)(7)). 

“Since the statute on its face is so broad,” OIG wrote, concern has been expressed for many years that some relatively innocuous commercial arrangements may be subject to criminal prosecution or administrative sanction. In response to the above concern, section 14 of the Medicare and Medicaid Patient and Program Protection Act of 1987, specifically required the development and promulgation of regulations, the so-called “safe harbor” provisions, specifying various payment and business practices that, although potentially capable of inducing referrals of business reimbursable under the Federal health care programs, would not be treated as criminal offenses under the anti-kickback statute and would not serve as a basis for administrative sanctions.  

OIG safe harbor provisions have been developed “to limit the reach of the statute somewhat by permitting certain non-abusive arrangements, while encouraging beneficial and innocuous arrangements” (56 FR 35952, July 29, 1991). Health care providers and others may voluntarily seek to comply with these provisions so that they have the assurance that their business practices will not be subject to liability under the anti-kickback statute or related administrative authorities.  The OIG safe harbor regulations are found at 42 CFR part 1001. 

OIG Special Fraud Alerts 

OIG has also periodically issued Special Fraud Alerts to give continuing guidance to health care providers with respect to practices OIG finds potentially fraudulent or abusive.  The Special Fraud Alerts encourage industry compliance by giving providers

guidance that can be applied to their own practices.  OIG Special Fraud Alerts are intended for extensive distribution directly to the health care provider community, as well as to those charged with administering the Federal health care programs.

In developing Special Fraud Alerts, OIG has relied on a number of sources and has consulted directly with experts in the subject field, including those within OIG, other agencies of the Department, other Federal and State agencies, and those in the health care industry. 

Section 205 of the Health Insurance Portability and Accountability Act of 1996 

Section 205 of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), requires the Department to develop and publish an annual notice in the Federal Register formally soliciting proposals for modifying existing safe harbors to the anti-kickback statute and for developing new safe harbors and Special Fraud Alerts. 

In developing safe harbors for a criminal statute, OIG is required to engage in a thorough review of the range of factual circumstances that may fall within the proposed safe harbor subject area so as to uncover potential opportunities for fraud and abuse. Only then can OIG determine, in consultation with the Department of Justice, whether it can effectively develop regulatory limitations and controls that will permit beneficial and innocuous arrangements within a subject area while, at the same time, protecting the Federal health care programs and their beneficiaries from abusive practices. 

Solicitation of Additional New Recommendations and Proposals 

In accordance with the requirements of section 205 of HIPAA, OIG last published a Federal Register solicitation notice for developing new safe harbors and Special Fraud Alerts on December 29, 2011 (76 FR 89104).  OIG is not seeking additional public comment on the proposals listed in Appendix F at this time.  

Rather, this notice seeks additional recommendations regarding the development of new or modified safe harbor regulations and new Special Fraud Alerts beyond those summarized in Appendix F.  A detailed explanation of justifications for, or empirical data supporting, a suggestion for a safe harbor or Special Fraud Alert would be helpful and should, if possible, be included in any response to this solicitation. 

A. Criteria for Modifying and Establishing Safe Harbor Provisions 

In accordance with section 205 of HIPAA, OIG will consider a number of factors in reviewing proposals for new or modified safe harbor provisions, such as the extent to which the proposals would affect an increase or decrease in: 

  • Access to health care services,
  • The quality of health care services,
  • Patient freedom of choice among health care providers,
  • Competition among health care providers,
  • The cost to Federal health care programs,
  • The potential overutilization of health care services, and
  • The ability of health care facilities to provide services in medically underserved areas or to medically underserved populations. 

In addition, OIG will also take into consideration other factors, including, for example, the existence (or nonexistence) of any potential financial benefit to health care professionals or providers that may take into account their decisions whether to (1) order a health care item or service or (2) arrange for a referral of health care items or services to a particular practitioner or provider. 

B. Criteria for Developing Special Fraud Alerts 

In determining whether to issue additional Special Fraud Alerts, OIG will consider whether, and to what extent, the practices that would be identified in a new Special Fraud Alert may result in any of the consequences set forth above, as well as the volume and frequency of the conduct that would be identified in the Special Fraud Alert. 

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