Updates by Reed Smith on U.S. legislative & regulatory developments affecting the health care industry
On February 28, 2023, the Department of Health and Human Services’ Office of Inspector General (“OIG”) issued a favorable advisory opinion regarding an arrangement through which a pharmaceutical company provides free enzyme replacement therapy (“ERT”) medication to patients who satisfy certain eligibility requirements where the patients’ insurer is delayed in making a coverage determination.
The…
On December 28, 2022, the Department of Health and Human Services’ Office of Inspector General (OIG) issued a favorable advisory opinion on a proposal by a drug manufacturer to enter into an arrangement with certain hospitals to provide up to a specified number of free samples of a long-acting antipsychotic drug for inpatient use.
The OIG indicated it would not impose administrative sanctions, despite the fact that there is no safe harbor available under the federal Anti-Kickback Statute (AKS) to protect the proposed arrangement.…
Continue Reading OIG approves arrangement involving free drug samples for inpatient hospital use
The U.S. Court of Appeals for the Eighth Circuit recently weighed in on the causation standard for False Claims Act (“FCA”) cases premised on Anti-Kickback Statute (“AKS”) violations. United States ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828 (8th Cir. 2022). The panel adopted a strict interpretation, finding that the government or whistleblowers must show a “but-for” causal relationship between kickbacks and claims for payment to establish the requisite link in the FCA liability chain, creating a circuit split on an issue that courts have struggled with for years.
The decision is notable for FCA defendants as it offers support for a defense they have long asserted, and that courts have been reluctant to condone, including an opinion from the U.S. Court of Appeals for the Third Circuit that refused to require a direct causal link between an AKS violation and a false claim.…
Continue Reading Eighth Circuit Finds “But-For” Causation Standard for AKS-Premised FCA Cases
After a long line of opinions scrutinizing the use of rewards programs offered by providers, the Department of Health and Human Services’ Office of Inspector General (“OIG”) issued Advisory Opinion 22-16 on August 19, 2022– a favorable opinion for the provision of gift cards to Medicare Advantage (“MA’) plan enrollees who complete educational modules as part of an online surgical treatment learning tool.
The opinion adds flexibility to existing opinions on gift cards and patient engagement programs and, while binding only on the requestor, provides insight into the OIG’s evolving view of these programs.…
Continue Reading OIG Approves Rewards Program for Medicare Advantage Organizations
The Department of Health and Human Services’ Office of Inspector General (“OIG”) recently issued a favorable advisory opinion to a digital health company that offers direct monetary incentives to patients as part of a technology-enabled contingency management program for patients with substance use disorders.
Contingency management, also known as motivational incentives, is a treatment approach that utilizes tangible rewards to reinforce positive behaviors (e.g., abstinence from opioids) and to motivate and sustain behavioral health efforts (e.g., treatment adherence) in patients who suffer from substance use disorders. Because these monetary incentives are an integral part of the protocol-driven and evidenced-based program, the OIG concluded that it would not impose sanctions under the federal Anti-Kickback Statute (“AKS”) or the Beneficiary Inducements Civil Monetary Penalty (“CMP”) provision, notwithstanding the involvement of federal health care program beneficiaries, providers/suppliers, and reimbursable services.
Nevertheless, the mitigating facts that motivated the OIG’s favorable treatment of the program here—namely, the clinical nature and independence of the program—could likely trigger compliance with other federal and state regulatory frameworks.
Continue Reading OIG blesses digital health substance use disorder treatment program paid for by providers and suppliers
In a March 11 advisory opinion the Department of Health and Human Services’ Office of Inspector General (“OIG”) permitted a medical device manufacturer to pay Medicare-reimbursable costs for subjects enrolled in a clinical trial sponsored by the manufacturer and involving the manufacturer’s therapy.
The OIG indicated it would not impose administrative sanctions, despite the fact…
On March 18, 2022, the Advanced Medical Technology Association (AdvaMed) – the world’s largest trade organization representing medical technology manufacturers – announced revisions to its Code of Ethics on Interactions with Health Care Professionals (AdvaMed Code). The effective date of the revised AdvaMed Code is June 1, 2022.
The AdvaMed Code was updated to address…
In its February 14, 2022 advisory opinion the Department of Health and Human Services Office of Inspector General (OIG) allowed a Home Health Agency (HHA), that predominantly serves Medicaid eligible children, to pay the nurse certification program tuition costs for new employees seeking to work as certified nurse aides (CNAs). According to OIG, the tuition payments are permissible under the bona fide employee safe harbor.
The Anti-Kickback statute prohibits a person from knowingly and willfully offering, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in exchange for or to induce the referral of any item or services covered by a federal health care program. However, the statute includes exemptions for certain situations, one of which involves certain payments to bona fide employees.
In this case, the OIG stated that it would not seek enforcement under the federal Anti-Kickback Statute or the Beneficiary Inducements Civil Monetary Penalty Statute as the arrangement to pay the tuition costs would not be deemed prohibited remuneration under either law. However, the advisory opinion was warranted as the tuition program had the added wrinkle of potentially being a benefit to the relatives of medically fragile children using the HHA’s services and charging those services to Medicaid.
Continue Reading OIG permits home health agency to pay nurse aide certification tuition costs
On February 4, 2022, the Department of Health and Human Services’ Office of Inspector General (“OIG”) issued a favorable advisory opinion on a proposal by a nonprofit children’s hospital to enter into an arrangement with two individual donors, who intend on making a testamentary gift to the hospital that would be used to reduce and subsidize costs incurred by patients.
The OIG indicated it would not impose administrative sanctions, despite the fact that the proposed arrangement would not fall squarely within any safe harbor under the federal Anti-Kickback Statute (“AKS”) or exception to the definition of “remuneration” for purposes of the beneficiary inducement prohibition (“Beneficiary Inducement CMP”).
Arrangement created restricted endowment fund
Under the proposed arrangement, the hospital would be the beneficiary to a restricted endowment fund established through a testamentary gift from two donors. The fund would be used to subsidize bills for families with children who have an established care relationship with the hospital’s physicians and who receive services provided by the hospital’s programs.…
The Department of Health and Human Services’ Office of Inspector General (OIG) will be lifting its long-standing refusal to accept requests for advisory opinions if the request describes a course of action that is “the same or substantially the same” as a course of action that is either under investigation by OIG, or is the subject of a proceeding involving a governmental agency. As of February 10, 2022, a new final rule issued by the OIG will do away with that restriction and allow entities to request an advisory opinion, even if the requested course of action is the same or substantially the same as one under investigation or is the subject of a proceeding involving a governmental agency. Previously, the OIG’s policy deliberately left unsettled many fraud-and-abuse issues implicated by pending investigations or litigation.
As the final rule points out, however, seeking clarity during a pending investigation or litigation will carry risk: the mere fact that a course of action is the subject of a qui tam case or under investigation “will weigh against the issuance of a favorable advisory opinion because such circumstances generally indicate that the arrangement does not present a sufficiently low risk of fraud and abuse.”
This warning seems to assume that all investigations and litigation have equal merit, which is certainly not the case with matters initiated by self-appointed whistle-blowers under the False Claims Act, who often bring cases with very little merit. Nevertheless, the new rule provides flexibility, and provides opportunities for the OIG to provide guidance to health care companies seeking to develop business opportunities that, for example, a long-pending and/or declined qui tam case may have stymied.…
Continue Reading Pending investigations/cases no longer prevent OIG advisory opinions
In November 2020, four months after the Trump Administration issued a series of Executive Orders reiterating its policy goals on reducing the costs to consumers for prescription drugs and directing the Department of Health and Human Services, Office of Inspector General (“HHS-OIG”) to implement those policy objectives, HHS-OIG issued a Final Rule to amend certain provisions in the safe harbor regulations under the Federal Anti-Kickback Statute (“AKS”). The Final Rule included three key provisions:
The Final Rule imposed a January 1, 2022, effective date for the Rebate Rule. However, in January 2021, two months after issuance of the Final Rule and in connection to a lawsuit brought by the Pharmaceutical Care Management Association challenging the Rebate Rule, the Biden Administration agreed to delay the Rebate Rule’s effective date to January 1, 2023, as reflected in an Order by the United States District Court for the District of Columbia.
In the intervening time though, Congress passed the Infrastructure Investment and Jobs Act (the “Infrastructure Act”). That law, signed by President Biden on November 15, 2021, further delayed implementation of the Rebate Rule to January 2026. Thus the rule, which many thought would be eliminated as part of paying for the cost of the infrastructure bill, was still alive, if only delayed until the middle of the next presidential term.…
Continue Reading Future of discount safe harbor for prescription drugs remains uncertain
Andrew and Quynh are law clerks at the firm and their work is supervised by licensed attorneys. Their admission to – respectively – the Washington, D.C. and California bar is pending.
On October 4, 2021, the Department of Health and Human Services Office of Inspector General (OIG) issued a favorable advisory opinion on a proposal by a chiropractic clinic operator to extend an existing discount program to federal health plan beneficiaries.
The requesting clinics initially offered various discount programs to their privately insured or self-paid patients, but not to Federal health care program beneficiaries. Many healthcare providers are hesitant to give federal beneficiaries access to certain discount programs because of concern that doing so would run afoul Federal anti-kickback and beneficiary inducement statutes. Specifically, the concern is that if the beneficiaries receive discounts, clinics would provide patients with something of value—a discount on self-paid services—in exchange for the option to seek federally reimbursed services through a specific provider.
To address these concerns, the chiropractic clinic operator requested an advisory opinion from OIG on a new discount model that would extend discount programs to Federal health care program beneficiaries. While OIG found that the proposed discount program could result in prohibited compensation to patients, it also stated that it would not pursue an enforcement action based on the nature of the requesting clinics’ specific discount model.
Although only the requesting chiropractic clinic operator may rely on this opinion, OIG’s analysis implies that equalizing discount rates across federally reimbursable and non-reimbursable chiropractic services reduces legal risk under anti-kickback and beneficiary inducement statutes. Providers offering similar discount programs should take note to inform their compliance strategies.
Continue Reading HHS-OIG approves uniform chiropractic discount program for federal beneficiaries
On August 1, 2021, the Senate released the legislative text of the bipartisan infrastructure bill, the “Infrastructure Investment and Jobs Act,” H.R. 3684. The Senate is expected to vote this week, before a month-long recess beginning on August 9, 2021. The 2,702 page legislation contains several relevant health care-related provisions, including a delay of the implementation of the rule eliminating the Anti-Kickback Statute (“AKS”) safe harbor protection for Medicare Part D rebates.
Rebate for Discarded Amounts of Medicare Part B Single-Dose Container or Single-Use Package Drugs
First, the legislation requires manufacturers of single-dose container or single-use package drugs payable under Medicare Part B to provide a rebate to the government for any discarded portion of that drug. The rebates will be charged each quarter, beginning with the first quarter of 2023, and must be paid in regular intervals, as determined appropriate by the Secretary of the U.S. Department of Health and Human Services (“HHS”). The legislation provides that, in order to enforce this provision, HHS will conduct periodic audits of both drug manufacturers and providers who submit claims. For violations of this provision, HHS will impose Civil Monetary Penalties in amounts equal to the sum of the amount that the manufacturer would have paid and twenty-five percent of such amount.…
Continue Reading Health Care Provisions in the Infrastructure Investment and Jobs Act
The Department of Health and Human Services (HHS) released complementary rules this past Friday, November 20, 2020, to modernize and clarify the regulations that interpret the Physician Self-Referral Law (the Stark Law) and the federal Anti-Kickback Statute.
As we wrote when the proposed rules were released last autumn (see client alerts here and here),…
The HHS Office of Inspector General (OIG) has issued its annual solicitation of recommendations for new or revised Anti-kickback Statute (AKS) safe harbors and new Special Fraud Alerts. In reviewing proposed safe harbor changes, the OIG will consider the extent to which the proposals would increase or decrease:
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As previously reported, the Department of Health and Human Services has published highly anticipated proposed changes to align the regulations under the Physician Self-Referral Law, the federal Anti-Kickback Statute, and the Civil Monetary Penalties Law with value-based health care arrangements. Reed Smith is providing a series of client alerts and teleseminars that analyze key…
Today, the Department of Health and Human Services (HHS) announced proposed changes to modernize the regulations that interpret the Physician Self-Referral Law (the Stark Law) and the Federal Anti-Kickback Statute. In a press release, HHS states these proposed rules are intended to “provide greater certainty for healthcare providers participating in value-based arrangements and providing coordinated care for patients . . . while maintaining strong safeguards to protect patients and programs from fraud and abuse.”
Over the last 30 years, HHS has issued a series of final regulations establishing exceptions and safe harbors that limit the reach of the Stark Law’s strict liability civil penalties and the Anti-Kickback Statute’s criminal penalties to protect from enforcement certain non-abusive and beneficial arrangements. These final regulations have not, however, reflected the significant shift in recent years in health care delivery and payment systems from a fee-for-service model to models based on improving value and quality of care provided to patients. As a result, many in the health care industry identify these laws, as well as the Civil Monetary Penalty (CMP) Law, as barriers to more effective care coordination and management that can deliver value-based care to improve quality of care, health outcomes, and efficiency. In response, on June 25, 2018, the Centers for Medicare & Medicaid Services (CMS) published a Request for Information seeking input on how it could address existing Stark Law barriers to these emerging value-based payment and delivery systems. Similarly, on August 27, 2018, the Office of Inspector General (OIG) published a Request for Information seeking feedback on how OIG could modify or add new safe harbors addressing these barriers. CMS and OIG received more than 350 comments each, which HHS has considered in publishing these proposed rules.
CMS and OIG Coordinated Proposals
The proposed rules, which span hundreds of pages, reflect close coordination between CMS and OIG, which tried to align the regulations, where appropriate, and the proposals are significant. More specifically, the coordinated proposals include:
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Continue Reading Proposed Rules to Modernize Stark Law and Anti-Kickback Statute Released Today
Seeking to “eliminate any confusion,” the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) has formally withdrawn proposed civil money penalty (CMP) and anti-kickback (AKS) safe harbor regulations that it no longer intends to finalize. Specifically, the OIG is withdrawing:
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The Trump Administration has decided against finalizing a controversial proposed Office of Inspector General (OIG) regulation that would have modified Federal Anti-Kickback Statute safe harbor protection for certain prescription drug rebates to health plans and pharmacy benefit managers (PBMs). As we previously reported, the proposed rule would have (i) removed safe harbor protection for …
The White House Office of Management and Budget (OMB) is reviewing a long-awaited Trump Administration proposed rule to amend the safe harbors to the Anti-Kickback Statute (AKS) and exceptions to the beneficiary inducement provisions of the Civil Monetary Penalty (CMP) statute to better support coordinated care. The proposed rule presumably builds on the related request…
