New Safe Harbor Rules around Referrals Established

December 22, 2016

More insight and important takeaways for physicians with regards to the final rule around safe harbors for the Anti-Kickback Statute.

On Dec. 7, the U.S. Department of Health and Human Services' Office of the Inspector General (HHS-OIG) issued a final rule, which becomes effective on Jan. 6, 2017. "This rule updates the existing safe harbor regulations and enhances flexibility for providers and others to engage in health care business arrangements to improve efficiency and access to quality care while protecting programs and patients from fraud and abuse." For physicians, this may mean positive news as existing safe harbors were curtailed and new protections were added.

As a general rule, the Anti-Kickback Statute (AKS) is a statute that provides for civil and criminal penalties for persons that "knowingly and willfully offer, pay, solicit, or receive remuneration in order to induce or reward the referral of business reimbursable under Federal health care programs." Many States also have their own versions of an anti-kickback statute, which may be broader than the Federal AKS.  The safe harbors are important because they take certain situations physicians may find themselves in and put them under the umbrella of "protection." This means that the government will not take any action on a physician, as long as the conduct fits squarely within one or more of the safe harbor provisions. It is also important to read the Stark Law closely, because the Stark Law's exceptions differ from the AKS.

One of the most important changes in the new rule is a correction to the existing safe harbor for referral services. In 1999, the HHS-OIG issued a clarification that precluded protecting "payments from participants to referral services that are based on the volume of referrals to, or business otherwise generated by, either party for the other party." In March 2002, the language was changed to "…or business otherwise generated by either party for the referral service." The technical correction, which has been adopted, reverts the language back to the 1999 version that appears in the beginning of this paragraph. What this means for physicians is that they should appreciate online referral sources fall under the purview of this language.

Another change that relates to the Part D Cost-Sharing Waivers is equally as important. This is because the safe harbor is applicable only to pharmacies and "does not protect, for example, waivers by physicians for copayments for Part B drugs." Pharmacies need to appreciate that these waivers cannot be advertised.

In sum, this is one final rule that every healthcare provider should read. Failure to do so may result in violations that could potentially carry both civil and criminal penalties.

Check out Ericka Adler's blog on this subject as well.