The U.S. Department of Health & Human Services, Office of Inspector General ("OIG") just released a proposed rule (“Proposed Rule”) that provides long awaited guidance on patient transportation services, relaxes the prohibition on inducements to beneficiaries, and signals the agency’s intention to give hospitals more flexibility to compensate physicians for embracing product standardization, adhering to clinical protocols, or implementing cost savings measures. The Proposed Rule suggests that the government may be initiating an effort to reconcile the provisions of the Affordable Care Act that encourage the alignment of incentives with existing laws and regulations designed to silo industry participants. The Proposed Rule is not a cure-all for our industry’s byzantine regulatory environment, but it is a step in the right direction.

Local transportation
For years it has been difficult to provide clear advice on the circumstances under which a provider could furnish transportation to government program patients. The available guidance was muddled as to when such services constituted an illegal inducement under the federal anti-kickback statute (“AKS”). The Proposed Rule is a positive development, even if some observers believe the OIG should have taken a more permissive tact. Under the Proposed Rule, "free or discounted local transportation" provided by an "Eligible Entity" to "established patients" for the purpose of obtaining medically necessary items or services is deemed not to implicate the AKS provided: (1) the availability of the transportation services is not determined in a manner related to historical or anticipated volume or value of federal health care program business; (2) the services do not involve air travel, luxury vehicles, or ambulance-level transportation; (3) the services are not marketed, no marketing of health care items or services occurs during the course of the transportation or at any time by drivers, and drivers or others arranging for the transportation are not paid on a per-patient basis; and (4) the Eligible Entity that makes the transportation available furnishes the services only to established patients and, if necessary, someone to assist the patient, to obtain medically necessary services, within the Eligible Entity’s local service area. The OIG indicates that the definition of “Eligible Entity” would exclude persons or companies that primarily supply health care items such as suppliers of durable medical equipment and pharmaceutical companies. The OIG indicated that it also may exclude clinical laboratories from the definition of Eligible Entity.

Beneficiary inducements
The civil monetary penalty (CMP) statute generally prohibits giving something of value to a government program beneficiary if the remuneration is likely to influence that individual's selection of a particular provider, supplier or practitioner for services covered by certain federal health care programs. This Beneficiary Inducement CMP has been criticized for impeding the ability of providers to engage patients and encourage healthy behaviors. The Proposed Rule provides needed guidance as to how providers may attempt to engage patients and influence their behavior in compliance with four statutory exceptions to the Beneficiary Inducement CMP.

• Promotes access/low risk of harm. The Affordable Care Act includes an exception to the Beneficiary Inducement CMP that permits remuneration that "promotes access to care and poses a low risk of harm to patients and Federal health care programs." Although the Proposed Rule stops short of offering regulatory text for this exception, it proposes defining “promotes access to care” to mean that the remuneration provided "improves a particular beneficiary’s ability to obtain medically necessary health care items and services." The OIG requests public comment on this proposal and asks for specific examples of remuneration that would meet this broader definition.
  
  The OIG also proposes to interpret the phrase “low risk of harm to Medicare and Medicaid beneficiaries and the Medicare and Medicaid programs” to mean that the remuneration:
  • "Is unlikely to interfere with, or skew, clinical decision-making,"
  • "Is unlikely to increase costs to Federal health care programs or beneficiaries through overutilization or inappropriate utilization," and
  • "Does not raise patient-safety or quality-of-care concerns."

According to the OIG, this exception might protect giving items that are necessary for patients to record and report health data—for example, blood pressure cuffs or scales—if the patient’s condition indicated that such monitoring would be beneficial. However, the receipt of the blood pressure cuff or scales may not be conditioned on the patient obtaining other items or services from a particular provider. The OIG also solicited comments on programs that offer incentives to patients either to engage in healthy behaviors or to adhere to treatment regimens.

• Financial-need-based exception. Under the Proposed Rule, the "offer or transfer of items or services for free or less than fair market value" would be permitted if: (1) the "items or services are not offered as part of any advertisement or solicitation," (2) the offer "is not tied to the provision of other items or services reimbursed in whole or in part by" government health care programs, (3) there "is a reasonable connection between the items or services and the medical care of the individual," and (4) the "person provides the items or services after determining in good faith that the individual is in financial need."
  
  According to the OIG, examples of permissible gifts or benefits might include:
  • Distribution of protective helmets and safety gear to hemophiliac children
  • Distribution of pagers to alert patients with chronic medical conditions to take their drugs
  • Provision of free blood pressure checks to hypertensive patients
  • Distribution of free nutritional supplements to malnourished patients with end-stage renal disease
  • Provision of air conditioners to asthmatic patients
• Retailer rewards programs. Under the Proposed Rule, the "offer or transfer of items or services for free or less than fair market value" would be permitted if (1) the "items or services consist of coupons, rebates, or other rewards from a retailer, (2) the "items or services are offered or transferred on equal terms available to the general public, regardless of health insurance status, and (3) the "offer or transfer of the items or services is not tied to the provision of other items or services reimbursed in whole or in part by" federal government healthcare programs.

• Waivers of cost-sharing for the first fill of generics. Finally, under the proposed rule, Part D and MA-PD plan sponsors would be permitted to waive "any copayment for the first fill of a covered Part D drug…that is a generic drug…for individuals enrolled in the Prescription Drug Plan or MA-PD Plan, respectively, as long as such waivers are included in the benefit design package submitted to CMS."

Physician incentives
The CMP statute generally prohibits a hospital from knowingly providing incentives to a physician to reduce or limit services furnished to federal health care program beneficiaries. This prohibition is sometimes referred to as the Gainsharing CMP. Historically, the OIG broadly interpreted the Gainsharing CMP suggesting that it applied to any payments to physicians to encourage the reduction or limitation of services, even if the reductions or limitations targeted medically unnecessary items or services. This expansive interpretation of the Gainsharing CMP has hindered the adoption of payment systems designed to incent efficiency or promote adherence to treatment protocols.

The Proposed Rule does not announce any immediate changes to the Gainsharing CMP but it does suggest that the OIG is carefully considering the benefits of changing the rules governing incentive payments. As the OIG notes, "[h]ealth care payment and delivery systems are changing, with greater emphasis on accountability for providing high quality care at lower costs.” To promote those goals the agency is considering a narrower interpretation of the Gainsharing CMP. The OIG stated:  “We seek to interpret the statutory prohibition broadly enough to protect beneficiaries and Federal health care programs, but narrowly enough to allow low risk programs that further the goal of delivering high quality health care at lower costs.”

The Proposed Rule solicits comments on whether the Gainsharing CMP should include a definition of “reduce or limit services” and, if so, what safeguards should be adopted to ensure that "the goal of the statute is met: to prevent hospitals from paying physicians to discharge patients too soon or take other action that inappropriately limits a beneficiary’s care." The Proposed Rule solicits comments on several specific issues, including:

• "Should a hospital’s decision to standardize certain items (e.g., surgical instruments, medical devices, or drugs) be deemed to constitute reducing or limiting care?"
• "Should a hospital’s decision to rely on protocols based on objective quality metrics for certain procedures ever be deemed to constitute reducing or limiting care (e.g., protocols calling for the discontinuance of a prophylactic antibiotic after a specific period of time)?"
• “[S]hould the regulation include a requirement that the hospital and/or physician participating in a gainsharing program notify potentially affected patients about the program?”

The Proposed Rule was published in the Federal Register on Oct. 3, 2014.