[Federal Register Volume 61, Number 252 (Tuesday, December 31, 1996)]
[Proposed Rules]
[Pages 69060-69062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-33277]


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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

[[Page 69061]]

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

    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. 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

    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

    The Health Insurance Portability and Accountability Act of 1996, 
Public Law 104-191, effective August 21, 1996, now requires the 
Department to provide additional formal guidance regarding the 
application of the anti-kickback statute and the safe harbor 
provisions, as well as other OIG health care fraud and abuse sanctions. 
Among the provisions set forth in section 205 of Public Law 104-191 is 
the requirement that the Department develop and publish an annual 
notice in the Federal Register formally soliciting proposals for (1) 
modifying existing safe harbors, (2) developing new safe harbors and 
OIG Special Fraud Alerts, and (3) issuing requests for advisory 
opinions. After considering such proposals and recommendations, the 
Department, in consultation with the Department of Justice, will 
consider the issuance of new and modified safe harbor regulations, as 
appropriate. In addition, the OIG will consider the issuance of 
additional Special Fraud Alerts. Finally, 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.

[[Page 69062]]

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

    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