On December 6, 2016 the U.S. Department of Health & Human Services, Office of Inspector General (HHS-OIG) issued two final rules relating to the Anti-Kickback Statute (AKS) and Civil Monetary Penalties (CMP).  These rules affect a wide variety of health care companies and also impact False Claims Act investigations and litigation.

The first rule “amends the civil monetary penalty (CMP or penalty) rules … to incorporate new CMP authorities, clarify existing authorities, and reorganize regulations on civil money penalties, assessments, and exclusions to improve readability and clarity.”  The final rule largely implements provisions of the Affordable Care Act of 2010 (a.k.a. the Patient Protection and Affordable Care Act) that authorizes a CMP for:

• failure to grant OIG timely access to records;

• ordering or prescribing while excluded;

• making false statements, omissions, or misrepresentations in an enrollment application;

• failure to report and return an overpayment; and

• making or using a false record or statement that is material to a false or fraudulent claim.

HHS OIG’s 2014 proposed rule included a default penalty of up to $10,000 per-day for failure to report and return an overpayment.  In response to comments, and after what it characterized as “careful consideration,” HHS OIG’s final rule adopted a per-item/service method.  This method is more consistent with the text of the Affordable Care Act and reduces, but certainly does not eliminate, the possibility of large penalties that may be incommensurate with the value of the underlying overpayment.

The second rule “amends the safe harbors to the anti-kickback statute by adding new safe harbors that protect certain payment practices and business arrangements from sanctions under the anti-kickback statute” and “amends the civil monetary penalty (CMP) rules by codifying revisions to the definition of ‘remuneration.’”  HHS OIG changed the AKS safe harbor protections for:

• certain cost-sharing waivers, including 1) pharmacy waivers of cost-sharing for financially needy beneficiaries; and 2) waivers of cost-sharing for emergency ambulance services furnished by State- or municipality-owned ambulance services;

• certain remuneration between Medicare Advantage (MA) organizations and federally qualified health centers (FQHCs);

• discounts by manufacturers on drugs furnished to beneficiaries under the Medicare Coverage Gap Discount Program; and

• free or discounted local transportation services that meet specified criteria.

HHS OIG also changed the definition of “remuneration” in the CMP regulations to provide statutory exceptions for:

• copayment reductions for certain hospital outpatient department services;

• certain remuneration that poses a low risk of harm and promotes access to care;

• coupons, rebates, or other retailer reward programs that meet specified requirements;

• certain remuneration to financially needy individuals; and

• copayment waivers for the first fill of generic drugs.