Enforcement Trends: The OIG’s Recent Safe Harbor Changes

On February 26, the OIG will wrap up public comments on changes to the federal Anti-Kickback Statute (AKS) current safe harbor rules. While such review takes place every year, 2018 could be a year of big changes designed to expand safe harbor protection and promote more active deal making between providers and their referral sources.

While the current political mandate to cut regulation is one factor, the OIG’s efforts to loosen AKS restrictions actually date back to the previous administration. Exhibit A: The Safe Harbor and Civil Monetary Penalty (CMP) Revisions Final Rule that took effect on December 7, 2016, six weeks before the current President was sworn in. Here’s a quick overview of the five changes affecting labs.

1. New Free Transportation Safe Harbor

The change with the most direct impact on labs was the new safe harbor covering “free or discounted local transportation services provided to” federal program beneficiaries. The new safe harbor covers both:

• Actual transportation to and from a patient’s home so as to provide the patient access to a provider or supplier; and
• Transportation vouchers.

Of course, safe harbors always come with strings attached. Key limitations of the new safe harbor:

• Transportation may only be offered to established patients, which is defined as including new patients who contact the provider to schedule an appointment—once the initial appointment is made, those patients are deemed established patients;
• It covers only certain types of transportation, including luxury, air and ambulance level service;
• The lab may not advertise or use as a marketing tool the fact that it provides free or discounted transportation;
• Health care services or items may not be advertised or marketed during the transportation or at any time by drivers;
• Drivers and others involved in arranging the transportation may not be compensated on a “per-beneficiary-transported basis”;
• Transportation must be for the purpose of accessing medically necessary items and services;
• The entity making the transport possible must bear the cost of transport and may not shift those costs to federal programs or other payers or individuals; and
• The maximum distance of transportation to the lab is 25 miles in urban areas and 50 miles in rural areas, measured “as the crow flies” within a radius of that mileage.

It is important to stress that the OIG was considering excluding lab and home health services from the safe harbor due to concerns that transportation offered by these providers would be more likely to induce referrals. But after soliciting comments, the OIG ultimately decided not to omit labs and home health providers from the Final Rule.

2. Technical Correction to “Referral Services” Safe Harbor

One current AKS safe harbor allows participants to make payments to a referral service as long as the payment is:

• Assessed equally against and collected equally from all participants, e.g., not just Medicare participants; and
• Based solely on the costs of operating the referral service and not on the volume or value of referrals to or business generated “by either party for the referral service” for which payment may be made under Medicare.

The Final Rule makes a technical change by eliminating the phrase “by either party for the referral service” and substituting “by either party for the other party.” The change was made to eliminate the ambiguity in the current language that could be interpreted as meaning referral services may adjust their fees on the basis of volumes of referrals made to participants, the OIG explains.

3. New Safe Harbor for Pharmacy Cost-Sharing Waivers

A new safe harbors allows providers to waive or reduce Medicare/Medicaid beneficiary coinsurance/deductible amounts, including waivers or reductions by pharmacies of cost-sharing obligations under Medicare Part D and other federal health care programs, e.g., physician copayments for Part B drugs, as long as:

• The waiver/reduction is not advertised or used for marketing;
• The pharmacy does not routinely waive cost-sharing; and
• The pharmacy either:
  • Determines in good faith that the beneficiary has a financial need; or
  • Fails to collect cost-sharing amounts after making reasonable efforts to do so.

  4. New Safe Harbor for Emergency Ambulance Cost-Sharing Waivers

  Another new safe harbor permits waiver or reduction Medicare/Medicaid beneficiary coinsurance/deductible amounts for “emergency ambulance services” furnished by a Part B ambulance provider or supplier owned or operated by a state or its political subdivision (or a tribal health program), provided that:

  • Providers offer the waiver or reduction on a uniform basis;
  • Waivers and reductions are not based on patient-specific factors other than residency; and
  • Providers do not claim the waiver or deduction amount as bad debt.

  5. Revisions to “Nominal Value” Thresholds

  On the same day the Final Rule was published, the OIG issued a new Policy Statement adjusting its thresholds for “nominal value,” i.e., gifts or items that do not constitute “remuneration” banned by the AKS because their value is so low:

  • Previous thresholds: $10 per item and $50 in the aggregate (per patient per year);
  • Updated thresholds: $15 per item and $75 in the aggregate.