OIG Final Rule Expands Protections for Patient Engagement and Assistance Initiatives

Authored Article


As governmental health programs and commercial payors have moved away from predominantly fee-for-service reimbursement systems and toward those that reward quality of care and efficient use of health care resources, the tools needed for providers and payors to succeed under new payment systems have changed. Under these value-based reimbursement methods, the ability of payors and providers to (i) coordinate patients’ care with other providers, (ii) actively manage and intervene in patient care regimens, and (iii) engage patients to follow prescribed treatment regimens and undertake other healthy behavior has become more important.

Health care industry participants have designed a range of innovative programs in recent years with the potential to improve patient care and control health care spending, but have struggled to find clear protection for these programs under the federal Anti-Kickback Statute (AKS) and beneficiary inducement prohibition of the Civil Monetary Penalties (CMP) law. The clearest evidence of the disconnect between value-based payment models and existing law has been the need for the government to issue program-specific waivers to the AKS and CMP law in order to implement key projects such as the Medicare Shared Savings Program, the Bundled Payments for Care Improvement Initiative, and the Comprehensive Care for Joint Replacement model.

On December 7, 2016, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) published a final rule creating new AKS safe harbors and exceptions to the CMP law beneficiary inducement prohibition (the “Final Rule”). The Final Rule follows several years of incremental guidance and indications of the OIG's receptiveness to providing greater latitude for patient engagement incentives.

The health care industry has generally welcomed the flexibility the Final Rule offers in creating patient engagement and assistance initiatives, although many industry participants would have preferred even further relaxed regulations. This article provides an overview of the key provisions of the Final Rule related to patient benefits and places the new rules in the context of the OIG's prior guidance.

I. Precursors to the Final Rule

The AKS and beneficiary inducement prohibition of the CMP law are creatures of a fee-for-service reimbursement world, intended in part to avoid overutilization and improper increases in federal health care program costs. In the context of patient engagement and assistance initiatives, these laws generally prohibit the provision of remuneration, in cash or in kind, to patients for the purpose of inducing the patients to select a particular provider.

Over the past several years, lawmakers and regulators have taken a number of actions to adapt the AKS and CMP law to new, value-based reimbursement models. In particular, the Affordable Care Act provided the HHS with authority to waive fraud and abuse laws, including the AKS and CMP law, for certain demonstrations, pilot programs, and other alternative payment models. Pursuant to this authority, the OIG and the Centers for Medicare and Medicaid Services (CMS) have issued a number of waivers for innovative payment and service delivery models, such as the Medicare Shared Savings Program, the Bundled Payment for Care Improvement models, the Comprehensive ESRD Care model, and the Comprehensive Care for Joint Replacement model. Although these waivers provide participants with significant flexibility to pursue innovative patient benefit arrangements, they have no application outside of the particular payment model. This patchwork approach fails to resolve the tension between the broader shift toward to value-based reimbursement and the existing fraud and abuse framework.

The Affordable Care Act also added several new statutory exceptions to the definition of “remuneration” as used in the CMP beneficiary inducement provision.

The Affordable Care Act also added several new statutory exceptions to the definition of “remuneration” as used in the CMP beneficiary inducement provision. Included among these exceptions was an exception for “any other remuneration which promotes access to care and poses a low risk of harm to patients and Federal health care programs” (the “Access to Care Exception”) (codified at 42 U.S.C. §1320a-7a(i)(6)(F)). Yet, prior to the issuance of the Final Rule, health care providers had little direction as to how the OIG intended to implement the exception. The health care industry has anxiously awaited finalization of the OIG's proposed rule of October 2014, which clearly signaled a more permissive approach to patient engagement and assistance initiatives.

II. The Final Rule

On December 7, 2016, more than two years after publishing its proposals, the OIG released the Final Rule. What follows is a brief overview of two major components of the Final Rule: (i) the creation of a safe harbor to the AKS for patient transportation programs, and (ii) the implementation of the Access to Care Exception to the beneficiary inducement provision of the CMP law.

A. Patient Transportation Safe Harbor to AKS

Prior to the adoption of AKS safe harbor for free or discounted local transportation in the Final Rule (the “Transportation Safe Harbor”), the OIG had developed a fairly consistent set of principles for analyzing patient transportation programs. Most of these principles, developed through advisory opinions, have been incorporated as elements of the Transportation Safe Harbor. Notably, however, the Transportation Safe Harbor does not require individualized determinations of patient need for transportation assistance, such as through verification of the unavailability of other transportation options or a demonstrated financial need. In this respect, the Transportation Safe Harbor offers more flexibility than pre-Final Rule guidance may have suggested.

1. Eligible Entities

Only “eligible entities” may take advantage of the Transportation Safe Harbor. In general, any individual or entity, except individuals or entities that primarily supply health care items, may provide free or discounted local transportation to established patients, as long as all of the other conditions of the Transportation Safe Harbor are met. The OIG distinguished suppliers of items from suppliers of services, stating that suppliers of items generally do not play a role in ensuring that patients have access to other providers and suppliers. Therefore, suppliers of items (including, but not limited to, durable medical equipment suppliers or pharmaceutical companies) are excluded from the definition. Most suppliers of services (e.g., physicians) are considered “eligible entities” for purposes of the Transportation Safe Harbor. The OIG also clarified that entities primarily providing services, but that also provide items, may offer transportation to their established patients to and from their own locations for items and services provided by the entity. For example, a hospital that has an on-site pharmacy may offer transportation to its established patients who receive items and services at the hospital, including the hospital's pharmacy, and still benefit from the protection of the Transportation Safe Harbor if the other requirements are met.

2. Established Patients

The OIG stated that the purpose of limiting the local transportation offers to established patients is to offer flexibility to improve patient care, while at the same time limiting the risk of the transportation being used as a recruiting tool. The OIG first proposed that a patient would be considered “established” once he or she had selected a provider or supplier and attended at least one appointment with that provider or supplier. In other words, under the OIG's proposed definition of “established patient,” the Transportation Safe Harbor could not be used to protect transportation offered to new patients.

Although commenters generally supported the OIG's efforts to prevent eligible entities from using free transportation as a recruiting tool, several raised concerns about the practical implications of this definition. As a result, the OIG expanded the definition of “established patients” so that a patient can be “established” after he or she selects and initiates contact with a provider or supplier to schedule an appointment. Practically, this means that eligible entities may offer free or discounted local transportation to new patients who have reached out to the provider or supplier to make an appointment.

Eligible entities are free to impose certain limits on their transportation policies, including limitations on distance, as long as they do not limit patient choice or steer patients to particular providers or suppliers. In addition, when one eligible entity provides a patient transportation to another provider or supplier, there must be an established patient relationship between the eligible entity that provides the transportation and the patient, as well as an established patient relationship between the patient and the entity to which he or she is being transported (and all other requirements of the Transportation Safe Harbor must be satisfied).

3. Purpose of Transportation

In the Final Rule, the OIG finalized its proposal that protected transportation be for the purpose of obtaining medically necessary items or services. In adopting its initial proposal, the OIG noted that any transportation program offered by a provider or supplier poses an inherent risk of both (i) inducing patients to obtain items or services that they might not have otherwise obtained and (ii) selecting a particular provider or supplier for those items or services. For medically necessary items and services, the OIG believes this risk is acceptably low.

While eligible entities may limit transportation offers in certain ways, limiting transportation offers to patients referred by particular providers or suppliers is prohibited. If an eligible entity limits transportation offers, it must be determined in a manner that is unrelated to the volume or value of federal health care program business. Thus, if an eligible entity limited its offer of transportation to federal health care program beneficiaries only, it would likely not meet the requirements of the Transportation Safe Harbor. However, an eligible entity may take into account a patient's need for transportation, even if the determination on a case-by-case basis resulted in transportation being disproportionately made available to elderly or low-income patients who are more likely to be beneficiaries of the federal health care programs. The key is that the transportation may not be limited based on insurance type.

Ensuring that patients have a free choice among providers and suppliers is a paramount consideration.

Importantly, the OIG finalized its proposal that an eligible entity can transport patients to another provider or supplier that is a referral source, as long as the transportation offer is not contingent on the patient selecting that referral source. Ensuring that patients have a free choice among providers and suppliers is a paramount consideration. For example, a hospital could offer transportation to an established patient diagnosed with cancer who requires the services of an oncologist. The hospital must provide transportation to whichever oncologist the patient chooses (within the hospital's predetermined distance requirements)—not just an oncologist who is a referral source to the hospital.

4. Need for Transportation and Limitations on the Mode of Transportation

Eligible entities must have a set policy regarding the availability of transportation assistance. The OIG did not mandate any parameters for eligible entities’ policies (other than complying with all the other requirements of the Transportation Safe Harbor). Instead, the OIG simply advised that the policy must be applied consistently and uniformly. Eligible entities are not required to maintain individualized documentation for each patient receiving transportation, but the OIG notes that it would be a best practice. Air, luxury, and ambulance-level transportation is not protected by the Transportation Safe Harbor.

5. Marketing

Consistent with its position throughout the Final Rule, the OIG stated that it is willing to protect transportation that helps patients obtain needed care, but it is not willing to protect transportation used as a sales tool. To this end, eligible entities may not publicly advertise or market transportation assistance to patients or others who are potential referral sources, and no marketing of health care items or services to patients may occur during the course of the transportation. In addition, drivers or others who are involved in the transportation may not be paid based on the number of beneficiaries transported.

However, the OIG clarified that eligible entities may inform patients that transportation is available, as long as it is done in a targeted manner. For example, providers and suppliers may ask a patient if he or she has a reliable mode of transportation if the patient requires a follow-up appointment or schedules a procedure that might require a safe ride home. As discussed in more detail below, the rule is slightly different for shuttle services.

6. Local Transportation

In the Final Rule, the OIG defines “local transportation” differently for urban and rural areas. In urban areas, transportation is deemed “local” if it is within a 25-mile radius of the provider or supplier providing the transportation. In rural areas, a 50-mile radius applies. The distances are measured by a straight line (i.e., “as the crow flies”). According to the OIG, the distance limitation balances the need for patients to have access to local transportation for health care services and the certainty of a bright-line rule.

7. Shuttle Transportation

One of the most welcome additions to the Transportation Safe Harbor is the clear and express protection of a shuttle service—that is, a vehicle that runs on a set route and on a set schedule—offered by a health care provider or supplier. The OIG did not place limits on where a shuttle may stop, other than requiring that the route remain “local” under the Transportation Safe Harbor guidelines.

Notably, the “established patient” requirement does not apply to shuttle services, and while the marketing requirements of the Transportation Safe Harbor generally apply to shuttles, a health care provider or supplier operating a shuttle service may post a schedule of the stops. Otherwise, all of the other safeguards in the Transportation Safe Harbor apply.

B. Access to Care Exception to CMP Law

The statutory Access to Care Exception has been available since the enactment of the Affordable Care Act, but the OIG has only relied on this exception to reach a conclusion in one advisory opinion since that time (OIG Advisory Opinion 11-01), leaving health care industry participants with scant guidance on the scope of this exception. The regulatory Access to Care Exception closely tracks selected long-standing principles used by the OIG to evaluate advisory opinion requests. Specifically, the exception protects items or services that will not distort clinical decision-making, result in inappropriate costs or overutilization of federal health care program resources, or adversely affect patient care.

In the Final Rule, the OIG organized its discussion of the Access to Care Exception into three categories: (i) what constitutes “care”; (ii) what it means to “promote access” to care; and (iii) what type of remuneration poses a low risk of harm to patients and federal health care programs.

1. What constitutes “care?”

The OIG originally proposed to define “care” as “medically necessary health care items and services,” but modified it in the Final Rule to include items and services that are payable by Medicare or a state health care program—with no reference to medical necessity—because some state health care programs (e.g., Medicaid) cover services that are not strictly medical. In the Final Rule, therefore, “access to care” refers to access to items and services that are payable by Medicare or a state health care program for the beneficiaries who receive them.

Importantly, providers and suppliers can still encourage beneficiaries to access non-reimbursable care without implicating the beneficiary inducement limitation. In fact, the OIG repeatedly emphasized that if remuneration is not likely to induce a patient to select a particular provider, practitioner, or supplier, no exception is needed with respect to the beneficiary inducement provision of the CMP law. For example, a physician may provide his or her patients with objective information, like educational materials, about community resources to facilitate their access to nonclinical items or services (e.g., housing assistance, food, or certain types of counseling). Since those items and services are not reimbursable, the beneficiary inducement limitation would not be triggered. The CMP law would only be triggered if the physician knew or should have known that the educational materials (i.e., the remuneration) were likely to influence a program beneficiary to receive reimbursable services from a certain provider.

2. What does it mean to “promote access” to care?

In the Final Rule, the OIG finalized its proposal that the Access to Care Exception includes only remuneration that “improves a particular beneficiary's ability to obtain medically necessary items and services.” The form of the remuneration does not matter, as long as it is an item or service, and not cash, the equivalent of cash, or a copayment waiver. However, the remuneration must comply with the other requirements of the Access to Care Exception. That is, the remuneration must promote access to items or services that are payable by Medicare or a state health care program and pose a low risk of harm to patients and federal health care programs.

Notably, the OIG believes that its definition of “promotes access” is broad enough to facilitate coordinated or integrated care. If remuneration provided to a patient in connection with a coordinated care arrangement meets the requirements of being low risk and helps the patient to access care, it could fit into the Access to Care Exception. However, inducements or rewards given to patients to incentivize compliance with treatment plans do not “promote access to care” and are not protected by the exception, although remuneration that helps a patient comply with a treatment plan (i.e., removes an impediment or facilitates compliance with the treatment plan) could be considered to promote access to care and fit within the Access to Care Exception if the other requirements are met.

Some commenters questioned whether risk-bearing providers should be allowed to provide incentives for compliance with a treatment plan, given that they are not rewarded for volume like fee-for-service providers, but instead are rewarded on the basis of results. The OIG agreed that the incentives for risk-bearing providers are different than fee-for-service providers, but noted that those characteristics should make it easier for those entities to meet the requirements of the Access to Care Exception. The OIG reasoned that if risk-bearing providers are accountable for cost and quality, it is more likely that the remuneration would be low risk.

3. What type of remuneration poses a low risk of harm to patients and federal health care programs?

To be considered a “low risk of harm to Medicare and Medicaid beneficiaries and Medicare and Medicaid programs,” the remuneration must: (i) be unlikely to interfere with, or skew, clinical decision-making; (ii) be unlikely to increase costs to federal health care programs or beneficiaries through overutilization or inappropriate utilization; and (iii) not raise patient safety or quality of care concerns. With respect to the second prong of the definition, the OIG noted that the point is to avoid an overall increase in health care costs, and not, for example, a specific part of the Medicare program.

C. Other Patient Benefits Provisions

The Final Rule also includes a number of other provisions that will assist providers in structuring patient engagement and assistance programs in accordance with the AKS and the beneficiary inducement provision of the CMP law. In particular, the Final Rule also added additional new safe harbors for certain cost-sharing waivers; waivers of cost-sharing for emergency ambulance services furnished by state- or municipality-owned ambulance providers; certain remuneration between Medicare Advantage organizations and FQHCs; and discounts by manufacturers on drugs furnished under the Medicare Coverage Gap Discount Program. In addition, the Final Rule addresses other exceptions to the definition of “remuneration” under the CMP law, including copayment reductions for certain hospital outpatient department services; coupons, rebates, and other reward programs that meet certain conditions; copayment waivers for the first fill of generic drugs; and certain remuneration provided to individuals with financial need.

III. Key Takeaways

The Final Rule lowers several barriers that have restrained providers and other health care industry participants from implementing patient engagement and assistance incentives that can benefit patients, providers, and also, given the economic incentives inherent in value-based reimbursement systems, federal health care programs.

As government and commercial health plans tie a higher proportion of reimbursement to quality outcomes and efficiency, providers should consider reviewing:

· Existing compliance policies related to patient benefits and inducements to determine whether they may be modified to accommodate arrangements that were previously outside of existing AKS safe harbors or CMP law exceptions; and

· Payor reimbursement arrangements, particularly any federal health care program reimbursement systems with which payment is linked to quality metrics or cost containment, to identify patient engagement or assistance opportunities presented by the Final Rule that could move the needle on quality or financial performance.

While tension remains between evolving reimbursement systems and the fraud and abuse laws, the Final Rule represents a significant step in affording providers the flexibility needed to drive change in improving patient care and reducing costs.

Reproduced with permission from ©2017 The Bureau of National Affairs, Inc. (800-372-1033) www.bna.com. This article was first published on Bloomberg BNA on January 13, 2017. (login required)