Update (Feb. 22, 2021): The final rules discussed in the alert below were given a Jan. 19, 2021, effective date. Since publication, however, ambiguity with respect to their effective status were created by two regulatory actions: (1) the Government Accountability Office concluded that the final rules did not have a required 60-day delay in their effective date and (2) on Jan. 20, 2021, the Biden administration paused final rules from taking effect from the Trump administration. According to an industry publication, CMS has now clarified its view that the regulations finalized in the final rule are effective. McGuireWoods will continue to review further guidance from the new administration to understand if the policies in this final review are otherwise modified or retracted.
As discussed in a previous McGuireWoods alert, the U.S. Department of Health and Human Services (HHS) published final rules expected to be effective Jan. 19, 2021, that significantly amend the Physician Self-Referral Law (Stark Law), the federal Anti-Kickback Statute (AKS) and the Civil Monetary Penalties (CMP) Law. This client alert, the first in McGuireWoods’ summary series on these final rules, focuses on three key revisions to the AKS and the CMP Law related to patient inducement and patient kickback policies.
These policy changes include (1) a new safe harbor for patient engagement and support for participants in value-based arrangements, (2) expansion around patient transportation protections and (3) incorporation of the statutory exception for furnishing telehealth technologies to certain in-home dialysis patients. By implementing these changes, the Office of the Inspector General (OIG) is allowing more flexibility around beneficiary inducement and patient engagement tools that could be deemed to violate the AKS, which prohibits remuneration with the intent to induce or reward referrals, or the CMP Law, which imposes penalties against any person offering or transferring remuneration to a federal healthcare program beneficiary that is likely to influence the beneficiary’s selection of a particular provider. Importantly, these changes affect the types of additional services that may be provided to patients, such as transportation and telehealth, the need for which has become only more critical during the COVID-19 pandemic.
The final rules include several amendments related to the AKS safe harbors, which protect providers under both the AKS and the CMP Law, as well as the beneficiary inducement CMPs. Notably, the final rules do not include most of the optional conditions that OIG had asked commenters to consider in its proposed rule, discussed in a Oct. 29, 2019, McGuireWoods alert. Rather, the final rule generally tracks the conditions as proposed, with certain key changes to the proposals discussed below.
1. New Patient Engagement and Support Safe Harbor
In the final rules, OIG finalized a new safe harbor at 42 CFR § 1001.952(hh) to protect “patient engagement tools and supports furnished by a participant in a value-based enterprise [(VBE)] to a patient in a target patient population.” This new safe harbor is intended to help providers keep patients involved in their care and to help patients take steps to make informed healthcare decisions and maintain or improve their health, without AKS and beneficiary inducements CMP barriers. Although these changes broaden the support services that can be provided to members of the target population, it remains important to comply with the rules for VBEs, which are complex and designed to ensure two or more providers collaborate to achieve certain enumerated provisions, as will be further discussed in a forthcoming alert on value-based arrangements.
Specifically, under the new safe harbor, “remuneration” will not include a “patient engagement tool or support furnished by a VBE participant to a patient in the target patient population of a value-based arrangement to which the VBE participant is a party” if the safe harbor elements are satisfied. Some of the key requirements with respect to the engagement tool or support are that the retail value of the per-patient engagement tool or support cannot exceed $500 (to be adjusted annually), and the tool or support must: (i) be an in-kind item, good or service; (ii) have a “direct connection” to the coordination and management of the target patient population’s care; (iii) not be cash or a cash equivalent; (iv) not “result in medically unnecessary or inappropriate items or services reimbursed” by government healthcare programs; (v) constitute something that was recommended by the patient’s healthcare professional; and (vi) advance one or more VBE goals. While OIG removed certain barriers and did not incorporate optional safeguards that had been proposed, such as returning the tool at the end of care or the VBE, the OIG did add that the patient’s insurance coverage could not be considered in determining whether to provide the tool or support if it would receive safe harbor protection.
However, there are limitations on who can offer these patient engagement tools or supports. Certain entities are ineligible for safe harbor protection. The safe harbor uses the same ineligible entities list as the value-based safe harbors — including, for example, pharmaceutical manufacturers, wholesalers and distributors; PBMs; laboratory companies; compounding pharmacies; and DMEPOS suppliers — but notably includes a pathway for manufacturers of devices or medical supplies that provide digital health technology. Further, OIG revised language in the final rule to clarify that a provider’s agent could provide the tool or support (e.g., contracting with a vendor to install shower handle bars to prevent patient injury from falls) if certain conditions are met.
2. Modifications to Patient Transportation Safe Harbor
OIG has acknowledged that transportation plays a significant role in patients’ “access to care, quality of care, healthcare outcomes, and effective coordination of care for patients, particularly for patients who lack their own transportation or who live in ‘transportation deserts.’” In the new rules, OIG finalized several modifications to the existing safe harbor for local transportation at 42 CFR § 1001.952(bb), which include expanding mileage limits for rural areas (up to 75 miles instead of 50 miles) and eliminating mileage limits on the transportation of a patient “discharged from an inpatient facility following an inpatient admission or released from a hospital” after the patient was under observation status for at least 24 hours to the patient’s place of residence (which is broadly defined). In the final rules, OIG points out that the safe harbor is available for transportation provided through rideshare arrangements, if that is how an eligible entity desires to make transportation available. These modifications should allow more use of the safe harbor protection to the AKS and CMP Law than the previous version discussed in a Jan. 11, 2017, McGuireWoods alert.
3. Protection for Telehealth Technologies for In-Home Dialysis Patients
The final rule amends 42 CFR §1003.110 to formally implement the Budget Act of 2018 amendments to the beneficiary inducements CMP definition of “remuneration,” allowing certain telehealth technologies to be provided to at-home dialysis patients. Specifically, these changes allow Medicare Part B beneficiaries with end-stage renal disease (ESRD) to receive certain telehealth technologies from their providers to furnish at-home dialysis if the following conditions are met:
- The telehealth technologies are furnished to the individual by the provider of services that is currently providing care to the patient, or has been selected by the individual to provide services. This is a change from the proposed rule where OIG was planning to require care to have begun (and not just selected).
- The telehealth technologies “are not offered as part of any advertisement or solicitation.”
- The telehealth technologies “are provided for the purpose of furnishing telehealth services related to the individual’s [ESRD].”
In addition, for purposes of this protection, OIG revised its proposed definition of telehealth technologies to: “hardware, software, and services that support distant or remote communication between the patient and provider, physician, or renal dialysis facility for diagnosis, intervention, or ongoing care management.” Notably, this revised definition is technology agnostic and would not require that there be two-way, real-time interaction as the proposed rule suggested. This means, for example, fax machines theoretically could qualify, but the provider would have to determine that the technology meets all applicable conditions, including that the technology was provided to furnish telehealth services for the patient’s ESRD.
OIG declined to impose certain proposed conditions that would have significantly limited the protection’s practical use by providers for their patients. Proposed conditions not adopted in the final rule included, among others, requirements that the donated technology “contribute substantially” to the provision of ESRD-related telehealth services, that the technology not be of “excessive value,” and that it not be duplicative of technology the patient already owns. This increased flexibility may reflect the growing role telehealth plays in the context of the COVID-19 pandemic. Further, OIG recognized that there could be practical reasons why a provider would furnish duplicate technology, such as a single platform for all patients or situations in which a patient’s existing technology has some, but not all, of the capabilities necessary for services.
To take advantage of this new exception to the definition of remuneration in the beneficiary inducements CMP, the ESRD patient must have received the telehealth technology on or after Jan. 1, 2019.
With the implementation of these final rules, OIG seeks to remove specific AKS and CMP Law burdens on providers in engaging with their patients, without creating substantial risk of increased fraud or abuse. While some of these patient tools are not getting the same focus as the value-based arrangement changes, the changes could have similarly large impacts in allowing more care coordination and reducing overall costs to the healthcare system.
Contact a McGuireWoods attorney or one of the authors of this alert for more information regarding these final rules. Given the significance of these changes, McGuireWoods plans to provide additional analysis and summaries leading up to the anticipated Jan. 19, 2021, effective date.
To review additional guidance on the final rules, see the following McGuireWoods legal alerts:
- Part V: Easing Stark Law Compliance (Feb. 16, 2021)
- Part IV: Final Changes to Existing and New Anti-Kickback Statute Safe Harbors (Feb. 3, 2021)
- Part III: New Value-Based Arrangement Protections (Jan. 20, 2021)
- Part II: Amended EHR and New Cybersecurity Donation Safe Harbors and Exceptions (Jan. 12, 2021)
- Private Equity Healthcare Affiliations (Jan. 7, 2021)
- Summary of the final rules (Nov. 23, 2020)