Health Law and Compliance Alert Update: Recent OIG Final Rules Affect CMP Authorities and Impact Patient Access to Care

January 13, 2017

The team at Spengler Nathanson issued a previous Alert on the passage of two new final rules by the Office of Inspector General (“OIG”) in December 2016. These rules can be found at 81 Fed. Reg. 88334 and 81 Fed. Reg. 88368. This is an update to that previous alert. The regulations set forth in the Rules became effective January 6, 2017. The team at Spengler Nathanson will continually monitor the new administration’s recent executive actions, as well as future executive or related agency actions, for possible effects on these, and other, rules and regulations.

Changes to CMP Authorities (81 Fed. Reg. 88334)

Pursuant to this rule, the OIG reorganized the regulatory structure at 42 CFR Part 1003, and added a list of mitigating and aggravating factors that it will consider on a “case-by-case” basis when determining the amount of penalties and assessments along with the period of exclusion. 81 Fed. Reg. 88334, 88337. The OIG also codified Civil Monetary Penalty (“CMP”) authorities from the current Affordable Care Act (“ACA”). Notably, under the ACA, the OIG may impose penalties, assessments, and exclusions for:

1. Failure to grant OIG timely access to records.
2. Ordering or prescribing while excluded.
3. Making false statements, omissions or misrepresentations in an enrollment application.
4. Failure to report and return an overpayment.
5. Making or using a false record or statement that is material to a false or fraudulent claim.

Further, this rule finalized an alternative method for calculating penalties and assessments for employing excluded individuals where the individuals do not directly bill the Federal program for the furnishing of items or services. Where the item is “non-separately billable” (e.g. nursing or clerical services associated with a physician office visit), the assessments are based on the total costs of the excluded person to the employer or contractor, and the penalties will be based on the number of items or services provided by the excluded person. Id. at 88341.

Finally, this rule adjusted penalties for violations of the Emergency Medical Treatment & Labor Act (“EMTALA”) while removing certain mitigating factors for such violations; and clarified liability guidelines for drug price reporting.

Impacting Patient Access to Care (81 Fed. Reg. 88368)

The Federal Anti-Kickback Statute (“FAKS”)

Among other things, the rule published at 81 Fed. Reg. 88368 modified or added to the FAKS safe harbors. This rule provides:

1. A technical correction to the existing safe harbor for referral services.
2. Protection for certain cost-sharing waivers.
3. Protection for certain remuneration between Medicare Advantage organizations and federally qualified health centers.
4. Protection for discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program.
5. Protection for free or discounted local transportation services to Federal health care program beneficiaries to obtain medically necessary items and services.

The safe harbor for local transportation services will be listed at 42 CFR 1001.952(bb) (referred to herein as the “Local Transportation Safe Harbor”) and could prove useful for improving patient access to care. It may have implications for Accountable Care Organizations and their affiliates too. The OIG notes that “an ACO or similar entity may assist its affiliates in providing transportation”; and, alternatively, ACOs in the MSSP may use waivers to cover some transportation services. Id. at 88382-83.

If the local transportation services meet the safe harbor, they will not be included as “remuneration” under Section 1128B of the Social Security Act. There are many pieces to the Local Transportation Safe Harbor. Id. at 88408. Only an “eligible entity” may take advantage of this safe harbor. Id. An “eligible entity” does not include “individuals or entities (or their family members or others acting on their behalf) that primarily supply health care items.” Id. at 88409 (emphasis added). Eligible entities may make the local transportation services available only to “established patients” and must keep the services within certain geographic limits, Id. at 88408; except that the “established patient” requirement does not apply to shuttle services protected under the safe harbor. Id. at 88382, 88386, and 88408-09. Moreover, the availability of the free or discounted non-shuttle local transportation must be set forth in a policy that is applied uniformly and consistently, and must not be determined in a manner related to past or anticipated volume or value of Federal health care program business. Id. at 88408. Further, the shuttle or non-shuttle services cannot take the form of air, luxury, or ambulance-level transportation, and the eligible entity must abide by certain marketing restrictions for each. Id.

The OIG believes that the protections in the Local Transportation Safe Harbor will limit the risk of fraud and abuse that could otherwise result from offering free or discounted transportation services. It has not mandated a list of specific transportation programs or scenarios that the safe harbor will cover. Id. at 88379. Eligible entities may tailor their transportation programs to the needs of their specific patient populations and communities; yet, they may not do so in a way that is linked to a patient’s Federal health care program beneficiary status. Id. at 88386.

Civil Monetary Penalty Provisions

The OIG also amended the definition of “remuneration” by interpreting and incorporating several statutory exceptions mandated by the ACA, including one to except “certain remuneration that poses a low risk of harm and promotes access to care.” 81 Fed. Reg. at 88368. The exception defines “care” to mean items and services payable by Medicare or a State health care program. Id. at 88391, 88409. Thus “care” may contemplate services that are not strictly medical.”Promoting access to care” refers to an item or service that “improves a particular beneficiary’s ability to obtain items or services payable by Medicare or Medicaid.” Id. at 88392, 88409.

This exception further requires that the item or service “pose a low risk of harm.” This standard seems to garner meaning from other exceptions and safe harbors. An activity is “low risk” if the activity is addressed by another beneficiary inducements CMP exception or a safe harbor and it meets those respective elements. Id. at 88391. For example, if transportation services meet the Local Transportation Safe Harbor discussed above, then they are “low risk” under this CMP exception. Id.

If you have questions about the content of this Alert, please contact Karl Strauss at or (419) 252-6250.