OIG Increases Monetary Thresholds for Gifts of “Nominal Value” to Beneficiaries — and Issues Final Rules Amending CMP Regulations and Adding FAKS Safe Harbors

December 7, 2016

OIG Increases Monetary Thresholds for Gifts of “Nominal Value” to Beneficiaries

As of December 7, 2016, the Office of Inspector General (“OIG”) has increased the amounts for the items or services it interprets to be “inexpensive” or of “nominal value” for purposes of Section 1128(A)(a)(5) of the Social Security Act (the “Act”). The increase was announced in the Department of Health and Human Services, OIG December 7, 2016 Policy Statement Regarding Gifts of Nominal Value to Medicare and Medicaid Beneficiaries. (You can find the Policy Statement here.) Accordingly, the Act permits offering items or services to Medicare and Medicaid beneficiaries that have a retail value of no more than $15.00 per item or $75.00 in the aggregate per patient on an annual basis. Previous thresholds were $10.00 and $50.00, respectively. OIG, Policy Statement (December 7, 2016). The “items” may still not be in the form of cash or cash equivalents. Id.

Section 1128(A)(a)(5) of the Act prohibits the offer or transfer to a Medicare or Medicaid beneficiary of any remuneration that the person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of Medicare or Medicaid payable items or services. A person who violates the above prohibition may be liable for civil monetary penalties for each wrongful act. Section 1128(A)(a) of the Act. The amount of these penalties was also recently increased by the Department of Health and Human Services in its September 6, 2016 Interim Final Rule published at 81 Fed. Reg. 61538.

The OIG interprets the prohibition to exclude offers of inexpensive items or services, and no specific exception for such items or services is required. OIG, Policy Statement(December 7, 2016); OIG, Special Advisory Bulletin: Offering Gifts and Other Inducements to Beneficiaries (August 2002). Per the Policy Statement, if the items (except cash or cash equivalents, which are prohibited) or services do not exceed the increased thresholds, then the offering is permitted and there is no need to fit it into an exception to Section 1128(A)(a)(5) of the Act. If these thresholds are exceeded, then the person offering the items or services may risk violating the Act.

OIG Issues Final Rules Amending CMP Regulations and Adding FAKS Safe Harbors

Also on December 7, 2016, the OIG issued two final rules at 81 Fed. Reg. 88334 and 81 Fed. Reg. 88368. The regulations will be effective on January 6, 2017.

There are a few items to highlight initially. The rule at 81 Fed. Reg. 88334 implements or codifies Civil Monetary Penalty (“CMP”) authorities under the Affordable Care Act; and the rule at 81 Fed. Reg. 88368 adds safe harbors to the Federal Anti-Kickback Statute that protect certain payment practices and business arrangements from sanctions, and revises the definition of “remuneration” for purposes of the CMP rules on offering inducements to federal health care program beneficiaries. The team at Spengler Nathanson will review these final rules more closely and will follow up in more detail.

Should you have any questions regarding this Alert, please feel free to contact Karl E. Strauss at kstrauss@snlaw.com or at (419) 252-6250.