Compliance Officers Take Note: CMS and OIG Propose New Rules Relating to Anti-Kickback Regulations

On October 9, 2019, the Department of Health and Human Services (HHS) announced proposed rule changes designed to modernize the federal Anti-Kickback Statute (AKS) by creating new safe-harbor exceptions for value-based patient care arrangements. Recognizing the value of such arrangements, the proposed rule seeks to reduce barriers to the provision of coordinated care by allowing remuneration for such services that fall into one of the newly designated safe harbors.

The OIG’s proposed new safe harbors apply to the following activities:

• Value-based care coordination arrangements, including in-kind remuneration for services or infrastructure
• Value-based arrangements with either substantial downside risk or full financial risk
• Provisioning of in-kind patient engagement tools and support to patients
• Cybersecurity donations
• EHR donations for which donated items and services must be interoperable
• Local transportation
• Personal services
• Management contracts

Notably, however, these new safe harbors would explicitly exclude from protection: pharmaceutical manufacturers; durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) manufacturers, suppliers, and distributors; and laboratories. The OIG was transparent in its reasoning behind this decision, citing concerns that value-based arrangements involving pharmaceutical and medical device manufacturers may unfairly encourage the use of a certain product. It remains to be seen how the Final Rule will define what constitutes a ‘Device Manufacturer’ for purposes of applying the proposed safe harbors and whether such definition will be based on an entity versus activity basis.

The Advanced Medical Technology Association (AdvaMed) applauded the proposed rule changes for helping the US healthcare system to “achieve better clinical outcomes, lower costs, and [improve] patient experience.”

Comments to the proposed rule changes must be submitted by December 31, 2019. Given the limited scope of the proposed rules, pharmaceutical and medical device companies will have to adopt a wait-and-see approach before addressing the new exceptions in their interactions with providers. Until the finalization of the rules, the manner in which manufacturers will be able to contribute to care coordination remains an open question. On the other hand, these proposed safe harbors, if finalized, will enable providers to better navigate the heavily regulated domain of value-based interactions.

BRG professionals have significant experience advising healthcare providers and manufacturers on compliance with federal laws, regulations, and guidance documents promulgated by government entities. Our team can advise companies across various sectors regarding the implementation and improvement of effective compliance programs, the development and review of policies and procedures, and the detection and mitigation of risks.

For further information, please contact Edward J. Buthusiem at ebuthusiem@thinkbrg.com.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group, LLC or its other employees and affiliates.