Late last week, the Department of Health and Human Services Office of the Inspector General (“OIG”) posted Advisory Opinion No. 23-07 affirming the broad protection available for compensation to employed physicians under the bona fide employee exception and safe harbor to the federal Anti-Kickback Statute (the “AKS”). The opinion highlights flexibility for healthcare providers seeking to compensate employees in ways that align incentives with their employers, and particularly for physician practices to align employed physicians with use of the practices’ ambulatory surgery center (“ASC”) capabilities.Continue Reading OIG Confirms the Broad Protection of Employee Safe Harbor

In our November 25, 2000 Healthcare Law Blog article, “Big Changes for Health Care Fraud and Abuse: HHS Gifts Providers Updates to the Stark Law and the AKS, Just in Time for the Holidays,”  we discussed the advanced publication of two significant final rules intended to “modernize” and “clarify” regulations regarding the Physician Self-Referral Law (“Stark Law Final Rule”) and the Anti-Kickback Statute (“AKS Final Rule”) – both formally published on December 2, 2020 by the Centers for Medicare and Medicaid Services (“CMS”) and the Department of Health and Human Services, Office of Inspector General (“OIG”), respectively.
Continue Reading Analysis of OIG’s New and Revised Regulatory Safe Harbors to the Federal Health Care Program Anti-Kickback Statute and Beneficiary Inducement Prohibition

On November 30, 2020, the United States Department of Health and Human Services (“HHS”) Office of Inspector General (“OIG”) issued a final rule (“Final Rule”) that makes significant changes to the federal Antikickback Statute (“AKS”) safe harbor regulations as such regulations relate to the cost of prescription drugs as covered by the Medicare and Medicaid programs.  More specifically, the Final Rule amends the AKS discount safe harbor (“Discount Safe Harbor”) at 42 C.F.R. §1001.952(h) to eliminate safe harbor protection for drug discounts and rebates offered by pharmaceutical manufacturers to pharmacy benefit managers (“PBMs”) and  Medicare Part D prescription drug plan (“Medicare Part D”) sponsors.  In addition to making significant changes to the Discount Safe Harbor, the Final Rule creates two new pharmaceutical-related safe harbors: (i) a safe harbor applicable to certain prescription drug point-of-sale discounts as offered to Medicare and Medicaid beneficiaries to reduce their direct out-of-pocket prescription drug costs (the “Point-of-Sale Safe Harbor”) and (ii) a safe harbor applicable to flat fee arrangements paid by drug companies directly to PBMs for PBM services (the “PBM Service Fees Safe Harbor”).
Continue Reading Eleventh Hour Rulemaking: HHS Eliminates Safe Harbor Protections for PBM Drug Rebates and Creates Two New Safe Harbors for Point-of-Service Discounts and PBM Fixed-Fee Arrangements

On Friday, President Trump announced four executive orders directed at decreasing prescription drug prices by ordering certain actions by the Department of Health and Human Services (“HHS”).  One order – which has received the most negative reaction from the pharmaceutical industry – would create a “most-favored nation” policy to limit the price Medicare Part B pays for certain drugs to the lowest price paid in another Organization for Economic Cooperation and Development country.  The White House did not release the text of this order on Friday and stated that it would not take effect until August 24, or at all if pharmaceutical companies can offer an alternative proposal to substantially reduce drug prices or if Congress acts.
Continue Reading A Shot Across the Bow of the Pharmaceutical Industry: President Trump Issues a Quartet of Executive Orders on Drug Pricing that Might Eventually (OR NEVER?) Take Effect

On February 6, 2019, the Office of the Inspector General of the U.S. Department of Health and Human Services (the “OIG”) published in the Federal Register a proposed rule (the “Proposed Rule”) that, if made final in its current form, would (i) amend the Anti-kickback Statute (“AKS”) Discount Safe Harbor to explicitly exclude discounts relating to price reductions or other remuneration offered by a pharmaceutical manufacturer to a Medicare Part D plan sponsor (“Plan Sponsor”), a Medicaid managed care organization (“MCO”), and/or a pharmacy benefit manager (“PBM”) under contract with such a sponsor or organization; and (ii) add two new safe harbors: a “Discounts Offered at the Point-of-Sale” safe harbor (“Point of Sale Safe Harbor”) and a PBM Fee Arrangement Safe Harbor (“PBM Safe Harbor”).
Continue Reading HHS Proposes Rule to Eliminate Safe Harbor for PBM Drug Rebates

Section 1822 of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act (the “SUPPORT Act”), passed at the end of October 2018, includes the “Eliminating Kickbacks in Recovery Act of 2018” (“EKRA”). Although EKRA was created to address “patient brokering,” the practice by recovery homes and treatment facilities of engaging third parties, or “body brokers,” to recruit patients in exchange for kickbacks, EKRA’s language prohibits a much broader scope of conduct. Specifically, EKRA has significant implications for any financial relationship that any clinical laboratory has with any individual or legal entity that generates business for it, even for clinical laboratories not involved in addiction recovery programs – including ownership, investment, employment, lease, purchasing, and independent contractor arrangements.
Continue Reading The Eliminating Kickbacks in Recovery Act: An Altered Landscape for Financial Relationships with Clinical Laboratories