Solicitation of New Safe Harbors and Modifications to Existing Safe Harbors

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Part 1001

Solicitation of New Safe Harbors and Modifications to Existing

Safe Harbors

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Notice of intent to develop regulations.

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SUMMARY: In accordance with section 205 of the Health Insurance

Portability and Accountability Act of 1996, this notice solicits

proposals and recommendations for developing new and modifying existing

safe harbor provisions under the Medicare and State health care

programs' anti-kickback statute, as well as developing new OIG Special

Fraud Alerts.

DATES: To assure consideration, public comments must be delivered to

the address provided below by no later than 5 p.m. on March 3, 1997.

ADDRESSES: Please mail or deliver your written comments to the

following

address: Office of Inspector General, Department of Health and Human

Services, Attention: OIG-11-N, Room 5246, Cohen Building, 330

Independence Avenue, S.W. Washington, DC 20201.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commencing, please refer

to file code OIG-11-N. Comments received timely will be available for

public inspection as they are received, generally beginning

approximately 3 weeks after publication of a document, in Room 5541 of

the Office of Inspector General at 330 Independence Avenue, S.W.,

Washington, D.C., on Monday through Friday of each week from 8:00 a.m.

to 4:30 p.m.

FOR FURTHER INFORMATION CONTACT: Joel Schaer, (202) 619-0089, OIG

Regulations Officer.

SUPPLEMENTARY INFORMATION:

I. Background

A. The OIG Safe Harbor Provisions

ginning

approximately 3 weeks after publication of a document, in Room 5541 of

the Office of Inspector General at 330 Independence Avenue, S.W.,

Washington, D.C., on Monday through Friday of each week from 8:00 a.m.

to 4:30 p.m.

FOR FURTHER INFORMATION CONTACT: Joel Schaer, (202) 619-0089, OIG

Regulations Officer.

SUPPLEMENTARY INFORMATION:

I. Background

A. The OIG Safe Harbor Provisions

Section 1128B(b) of the Social Security Act (42 U.S.C. 1320a-7b(b))

provides criminal penalties for individuals or entities that knowingly

and willfully offer, pay, solicit or relieve remuneration in order to

induce business reimbursed under the Medicare or State health care

programs. The offense is classified as a felony, and is punishable by

fines of up to $25,000 and imprisonment for up to 5 years.

The types of remuneration covered specifically include kickbacks,

bribes, and rebates, whether made directly or indirectly, overtly or

covertly, or in cash or in kind. In addition, prohibited conduct

includes not only remuneration intended to induce referrals of

patients, but remuneration intended to induce the purchasing, leasing,

ordering, or arranging for any good, facility, service, or item paid

for by Medicare or State health care programs.

Since the statute on its face is so broad, concern has been

expressed for many years that some relatively innocuous commercial

arrangements are technically covered by the statute and are, therefore,

subject to criminal prosecution

ion intended to induce the purchasing, leasing,

ordering, or arranging for any good, facility, service, or item paid

for by Medicare or State health care programs.

Since the statute on its face is so broad, concern has been

expressed for many years that some relatively innocuous commercial

arrangements are technically covered by the statute and are, therefore,

subject to criminal prosecution. As a response to the above concern,

the Medicare and Medicaid Patient and Program Protection Act of 1987,

section 14 of Public Law 100-93, specifically required the development

and promulgation of regulations, the so-called ``safe harbor''

provisions, designed to specify various payment and business practices

which, although potentially capable of inducing referrals of business

under the Medicare and State health care programs, would not be treated

as criminal offenses under the anti-kickback statute (section 1128B(b)

of the Social Security Act; 42 U.S.C. 1320a-7b(b)) and would not serve

as a basis for a program exclusion under section 1128(b)(7) of the

Social Security Act; 42 U.S.C. 1320a-7(b)(7). The OIG safe harbor

provisions have been developed ``to limit the reach of the statute

somewhat by permitting certain non-abusive arrangements, while

encouraging beneficial and innocuous arrangements'' (56 FR 35952, July

29, 1991). Health care providers and others may voluntarily seek to

comply with these provisions so that they have the assurance that their

business practices are not subject to any enforcement action under the

anti-kickback statute or program exclusion authority.

To date, the OIG has developed and codified in 42 CFR 1001.952 a

total of 13 final safe harbors that describe practices that are

sheltered from liability, and is continuing to finalize 8 additional

safe harbor provisions (see the OIG notice of proposed rulemaking at 58

FR 49008, September 21, 1993).

B. OIG Special Fraud Alerts

under the

anti-kickback statute or program exclusion authority.

To date, the OIG has developed and codified in 42 CFR 1001.952 a

total of 13 final safe harbors that describe practices that are

sheltered from liability, and is continuing to finalize 8 additional

safe harbor provisions (see the OIG notice of proposed rulemaking at 58

FR 49008, September 21, 1993).

B. OIG Special Fraud Alerts

In addition, the OIG has also periodically issued Special Fraud

Alerts to give continuing guidance to health care providers with

respect to practices the OIG regards as unlawful. These Special Fraud

Alerts provide the OIG with a means of notifying the health care

industry that we have become aware of certain abusive practices which

we plan to pursue and prosecute, or bring civil and administrative

action, as appropriate. The Special Fraud Alerts also serve as a tool

to encourage industry compliance by giving providers an opportunity to

examine their own practices. The OIG Special Fraud Alerts are intended

for extensive distribution directly to the health care provider

community, as well as those charged with administering the Medicare and

Medicaid programs.

In developing these Special Fraud Alerts, the OIG has relied on a

number of sources and has consulted directly with experts in the

subject field, including those within the OIG, other agencies of the

Department, other Federal and State agencies, and from those in the

health care industry. To date, eight individual Special Fraud Alerts

have been issued by the OIG and subsequently reprinted in the Federal

Register on December 19, 1994 (59 FR 65372), August 10, 1995 (60 FR

40847) and June 17, 1996 (61 FR 30623)

II. Section 205 of Public Law 104-191

ly, in accordance with the

statute, the OIG will formally begin accepting requests for advisory

opinions on February 21, 1997. Regulations establishing the procedures

and a process for accepting and issuing advisory opinions are being

prepared for separate publication in the Federal Register and will be

issued in the near future.

Criteria for Modifying and Establishing Safe Harbor Provisions

In accordance with the statute, we will consider a number of

factors in considering proposals for new or modified safe harbor

provisions, such as the extent to which the proposals would affect an

increase or decrease in--

Access to health care services;

The quality of health care services;

Patient freedom of choice among health care providers;

Competition among health care providers;

The cost to Federal health care programs;

The potential overutilization of the health care services;

and

The ability of health care facilities to provide services

in medically underserved areas or to medically underserved populations.

In addition, we will also take into consideration the existence (or

nonexistence) of any potential financial benefit to a health care

professional or provider that may vary based on their decisions of

whether to (1) order a health care item or service, or (2) arrange for

a referral of health care items or services to a particular

practitioner or provider.

Criteria for Developing Special Fraud Alerts

In determining whether to issue additional Special Fraud Alerts, we

will also consider whether, and to what extent, those practices that

would be identified in new Fraud Alerts may result in any of the

consequences set forth above, and the volume and frequency of the

conduct that would be identified in these Special Fraud Alerts.

III. Solicitation of Public Comments

ing Special Fraud Alerts

In determining whether to issue additional Special Fraud Alerts, we

will also consider whether, and to what extent, those practices that

would be identified in new Fraud Alerts may result in any of the

consequences set forth above, and the volume and frequency of the

conduct that would be identified in these Special Fraud Alerts.

III. Solicitation of Public Comments

In order to address the requirements of section 205 of Public Law

104-191, we are requesting public comments from affected provider,

practitioner, supplier and beneficiary representatives regarding the

development of proposed or modified safe harbor regulations and new

Special Fraud Alerts. A detailed explanation of justification or

empirical data supporting the suggestion would prove helpful in our

considering and drafting new or modified safe harbor regulations and

Special Fraud Alerts.

Dated: December 20, 1996.

June Gibbs Brown,

Inspector General, Department of Health and Human Services.

Approved: December 20, 1996.

Donna E. Shalala,

Secretary.

[FR Doc. 96-33277 Filed 12-30-96; 8:45 am]

BILLING CODE 4150-04-M