Apr 16, 2010
Authors: Robert D. Belfort | Emily Lee
Significant attention has been focused on provisions of the recently enacted Patient Protection and Affordable Care Act, H.R. 3590 (“PPACA”) that expand the definition of fraud and abuse and enhance the government’s ability to prosecute health care providers.
Less attention has been given to provisions of the PPACA that offer greater flexibility to providers for “certain charitable and other innocuous programs” under the beneficiary anti-inducement provisions of the federal Civil Monetary Penalties Law (“CMPL”). These changes clarify some of the regulatory uncertainty surrounding certain types of patient incentive programs and create opportunities for expanding those programs without running the risk of violating the CMPL.
Anti-Inducement Prohibitions Under the CMPL and the Anti-Kickback Statute (“AKS”)
The offer or provision of items or services for free or below fair market value (“FMV”) to federal health care program beneficiaries potentially implicates both the CMPL and the federal Anti-Kickback Statute (“AKS”). The CMPL makes it illegal for any person to offer or transfer remuneration to any individual covered by a federal health care program “that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part . . . ” under such program. 42 U.S.C. § 1320a-7a(a)(5). Remuneration includes, among other things, waivers of copayments and deductible amounts and transfers of items or services for free or for other than FMV. 42 U.S.C. § 1320a-7a(i)(6). A violation of the CMPL is punishable by civil monetary penalties as well as exclusion from federal health care programs.
The AKS makes it illegal for, among other things, any person to knowingly and willfully offer or pay anything of value, in cash or in kind, in return for the purchase of an item or service covered by a federal health care program such as Medicare or Medicaid. 42 U.S.C. § 1320a-7b. Violations of the AKS may be punishable as a felony, through exclusion from participation in federal health care programs or by the imposition of civil monetary penalties of up to three times the amount of the illegal kickback.
Existing CMPL Exceptions
Prior to enactment of the PPACA, there were a limited number of exceptions to the inducement prohibition under the CMPL set forth in the statute or in regulations issued by the U.S. Department of Health and Human Services (“DHHS”) Office of Inspector General (“OIG”):
While health care providers and plans have been assured that they would not be subject to prosecution for business practices meeting all the requirements of an exception, they have faced some risk for arrangements that are seemingly innocuous but do not fit precisely within an exception. The OIG’s advisory opinions provided some insight into the OIG’s position on such borderline arrangements but were limited to the specific facts addressed in each opinion.
New Anti-Inducement Exceptions
Section 6402(d) of the PPACA creates new CMPL exceptions for certain “charitable and innocuous” arrangements. Unless otherwise specified, the new exceptions are effective as of March 23, 2010, the date of enactment of the PPACA.
Notably, the legislation does not establish parallel safe harbors under the AKS. While any activities protected under the AKS safe harbors are permitted under the CMPL, the converse is not true. However, it is generally assumed that, absent unusual circumstances, arrangements that fit within a CMPL exception will not be prosecuted under the AKS. Therefore, while there is still no absolute certainty about the compliance of the types of arrangements described above with the AKS, most health care organizations are likely to feel comfortable implementing arrangements that satisfy one of the new CMPL exceptions.
back to top
Robert D. Belfort Mr. Belfort has extensive experience representing healthcare organizations on regulatory compliance and transactional matters. His clients include hospitals, community health centers, mental health providers, pharmacy chains, health insurers, IPAs, pharmaceutical manufacturers, pharmacy benefit managers, information technology vendors and a variety of other businesses in the healthcare industry. He has also worked extensively with healthcare industry trade associations.
Emily Lee Ms. Lee’s practice focuses on a wide variety of healthcare regulatory and transactional issues.
Helen R. PfisterPartner
© 2014 Manatt, Phelps & Phillips, LLP. All rights reserved.