New Final Regulations Provide Overdue Guidance on Permissible Arrangements Between Providers, Financial Relief for Patients

The OIG finalized all of the AKS safe harbors it proposed in October of 2014, including protections that allow for: 

• certain cost-sharing waivers provided by pharmacies to Medicare Part D beneficiaries who demonstrate financial need;
• cost-sharing waivers provided for emergency ambulance services furnished by state or municipality-owned ambulance services;
• protection of certain remuneration between Medicare Advantage organizations and federally-qualified health centers;
• discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and
• protection of free or discounted local transportation services that meet certain qualifications

The safe harbors for cost-sharing waivers provided for certain ambulance services and for free or discounted local transportation are entirely new safe harbors issued under the OIG’s authority to develop or modify safe harbors that specify payment and business practices that would not be treated as criminal offences. The OIG also recognized in this final rule other safe harbors for practices which were already statutory exceptions to the AKS under the Affordable Care Act (ACA) and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. In addition, a technical correction to the existing safe harbor for referral services became final.

The OIG also finalized all five new exceptions to the definition of remuneration, in the CMP rule as it relates to the prohibition of offering such remuneration to Medicare and Medicaid beneficiaries as inducements. These new exceptions allow for:

• copayment reductions for certain hospital outpatient department services;
• certain types of remuneration that pose a low risk of harm and promotes access to care;
• coupons, rebates, or other retailer reward programs that meet specified requirements;
• certain types of remuneration to financially needy individuals; and
• copayment waivers for the first fill of generic drugs

Except for the first exception related to copayment reductions, the other exceptions were included in the ACA when it was enacted in 2010. 

One part of the October 2014 proposed rule was excluded from the final rule. In order to address what payments “to reduce or limit services” were prohibited under the part of the CMP law applicable to gainsharing arrangements (Gainsharing CMP), the OIG essentially restated the Gainsharing CMP law in a new proposed regulation with the addition of a definition for “hospital” and “critical access hospital.” In the proposed rule, the OIG also solicited public comments on whether to consider a definition for “reduce or limit services.” Congress subsequently amended the Gainsharing CMP law in 2015 to narrow the prohibited payments to those which may reduce or limit medically necessary services. As this legislative change addressed the issue, the OIG determined that the law was self-implementing and that no regulation was now necessary. 

Many in the health care industry have been critical of the slow pace at which the OIG has considered regulatory changes in light of significant changes in the payment and delivery of health care services. Most of the regulatory changes now adopted were already provided for in more recent legislation. Admitting that the final rule “does not specifically address many emerging arrangements,” the OIG stated in the final rule preamble: “We intend to continue to monitor changes in the industry, technology, and clinical care and consider whether additional rulemaking is needed to foster high-quality, efficient, patient-centered care.”

Stay tuned to see whether Congressional law making or Department rulemaking will be faster in implementing future changes to the safe harbor and CMP rules.