By: Julie A. Simer, Esq.

On October 3, 2013 the U.S. Department of Health and Human Services Office of the Inspector General (“OIG”) published a proposed rule (“PR”) entitled:

Medicare and State Health Care Programs: Fraud and Abuse; Revisions to Safe Harbors under the Anti-Kickback Statute, and Civil Monetary Penalty Rules Regarding Beneficiary Inducements and Gainsharing

This PR proposes to make technical changes to existing federal regulations and add new safe harbors to the Federal anti kickback statute (“AKS”1). The good news is that these changes would protect health care providers from criminal liability and civil monetary penalties for certain conduct that might otherwise violate the AKS.

The AKS establishes 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 Federal health care programs. An offense is a felony, punishable by fines of up to $25,000 and imprisonment for up to five years. Violations may also result in imposition of civil monetary penalties.2 Compliance with a safe harbor, however, insulates an individual or an entity from AKS liability and civil monetary penalties. Conduct that does not fall within a safe harbor is subject to a facts and circumstances analysis to determine whether it violates the AKS.

In addition to technical corrections, the PR proposes to amend the AKS to include:

  • Protection for certain cost-sharing waivers, including
    • Pharmacy waivers of cost-sharing for financially needy Medicare Part D beneficiaries; and
    • Waivers of cost-sharing for emergency ambulance services furnished by State- or municipality-owned ambulance services
  • Protection for certain remuneration between Medicare Advantage organizations and federally qualified health centers
  • Protection for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and
  • Protection for free or discounted local transportation services that meet specified criteria

The PR also proposes to add exceptions to civil monetary penalties in these areas:

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

Comments on the PR may be submitted to Once the comment period is closed, the OIG will review the comments to determine whether to issue a final rule. Although these proposed regulations are not in effect, they signal the OIG’s recognition that additional safe harbors are needed to protect certain activities that pose a low risk to Federal health care programs.

1 142 U.S.C. §1320a-7b(b).

2 242 U.S.C. §1320a-7a(a)(7).