[Federal Register Volume 63, Number 136 (Thursday, July 16, 1998)]
[Rules and Regulations]
[Pages 38311-38326]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18874]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Part 1008

RIN 0991-AA85


Medicare and State Health Care Programs: Fraud and Abuse; 
Issuance of Advisory Opinions by the OIG

AGENCY: Office of Inspector General (OIG), HHS.

ACTION: Final rule.

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SUMMARY: In accordance with section 205 of the Health Insurance 
Portability and Accountability Act of 1996, this final rule sets forth 
the specific procedures by which the Department, through the Office of 
Inspector General (OIG), in consultation with the Department of Justice 
(DoJ), will issue advisory opinions to outside parties regarding the 
interpretation and applicability of certain statutes relating to the 
Federal and State health care programs. The procedures for submitting a 
request and obtaining an advisory opinion from the OIG were established 
through interim final regulations published in the Federal Register on 
February 19, 1997. In response to public comments received on these 
interim final regulations, this final rule revises and clarifies 
various aspects of the earlier rulemaking.

EFFECTIVE DATE: This rule is effective on July 16, 1998.

FOR FURTHER INFORMATION CONTACT: Joel Schaer, (202) 619-0089, OIG 
Regulations Officer.

SUPPLEMENTARY INFORMATION:

I. Background

A. Section 205 of Public Law 104-191

    The Health Insurance Portability and Accountability Act of 1996 
(HIPAA), Public Law 104-191, specifically required the Department to 
provide a formal guidance process to requesting individuals and 
entities regarding the application of the anti-kickback statute, the 
safe harbor provisions, and other OIG health care fraud and abuse 
sanctions. In accordance with section 205 of HIPAA, the Department, in 
consultation with the DoJ, issues written advisory opinions to parties 
with regard to: (1) what constitutes prohibited remuneration under the 
anti-kickback statute; (2) whether an arrangement or proposed 
arrangement satisfies the criteria in section 1128B(b)(3) of the Social 
Security Act (the Act), or established by regulation, for activities 
which do not result in prohibited remuneration; (3) what constitutes an 
inducement to reduce or limit services to Medicare or Medicaid program 
beneficiaries under section 1128A(b) of the Act \1\; and (4) whether an 
activity or proposed activity constitutes grounds for the imposition of 
civil or criminal sanctions under sections 1128, 1128A, or 1128B of the 
Act. Thus, advisory opinions may be issued with regard to the criminal 
provisions of section 1128B of the Act, which includes the anti-
kickback statute, as well as the provisions of section 1128 of the Act, 
which authorizes the Department to exclude individuals and entities 
from participation in Federal and State health care programs. 
Exclusions are authorized in a wide variety of circumstances, 
including, for example, conviction of health care related offenses, 
State licensure action, and submission of claims in excess of usual 
charges or for services that fail to meet professionally recognized 
standards of health care. In addition, advisory opinions are available 
regarding the civil money penalty provisions of section 1128A of the 
Act, which authorizes penalties for a variety of acts, including, among 
others, presentation of a false or fraudulent Medicare or Medicaid 
claim and hospital payments to physicians to induce them to reduce or 
limit care to any Medicare or Medicaid beneficiary under their direct 
care.
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    \1\ Public Law 104-191 erroneously cited this provision as 
section 1128B(b) of the Act. Section 4331(a) of the Balanced Budget 
Act of 1997, Public Law 105-33, corrected this citation to section 
1128A(b) of the Act.
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B. OIG Interim Final Regulations

    Because HIPAA required that specific procedures and final 
regulations on the advisory opinion process be in place by February 21, 
1997, the Secretary determined that it was both impracticable and 
contrary to the public interest to first issue regulations in proposed 
rulemaking form. As a result, on February 19, 1997, the OIG published 
interim final regulations (62 FR 7350) establishing a new part 1008 in 
42 CFR chapter V addressing the various procedural issues and aspects 
of the advisory opinion process. Specifically, the interim final rule 
set forth (1) the procedures to be followed by parties applying for 
advisory opinions and by the OIG in responding to these requests; (2) 
the time frames pursuant to which the OIG will receive and respond to 
requests; (3) the type and amount of fees to be charged to requesting 
parties; and (4) the manner in which the public will be informed of the 
issuance of any advisory opinions.
    The interim final rule also set forth a 60-day public comment 
period for specific comments and recommendations for refining the 
advisory opinion process.

C. Summary of the Interim Final Rule

    The establishment of a new part 1008 in 42 CFR chapter V 
specifically addressed, among other provisions, the following 
procedural aspects of the advisory opinion process:
1. Responsibilities of Outside Parties
    Section 1008.15 of the interim final rule indicated that any 
individual or entity may submit a request for an advisory opinion, but 
that the arrangement in question must, at the time of the request for 
an opinion, either be in existence or be an arrangement into which the 
parties have a good faith intention to enter in the future.\2\ Section 
1008.15(b) stated that requests presenting general questions of 
interpretation, posing hypothetical situations, or seeking an opinion 
about the activities of third parties would not qualify for advisory 
opinions. Section 1008.11 stated that the OIG would not provide 
advisory opinions to persons not involved directly in the arrangement. 
In addition, Secs. 1008.53 and 1008.55(b) of the rule stated that an 
advisory opinion would be legally binding on the Department and the 
requesting party only with respect to the specific conduct of the 
requesting party; it would not be legally binding with respect to third 
party conduct, even if such conduct appears similar to the conduct of 
the initial requestor.
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    \2\ Any individual or entity may submit a request for an 
advisory opinion. However, we anticipate that most requests will 
apply to health care business arrangements. Therefore, for purposes 
of this discussion, we will generally use the term ``arrangement'' 
to refer to the factual circumstances about which an advisory 
opinion is requested, even though we realize that some requests will 
involve facts not related to a business arrangement.
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    Section 1008.36 of the interim final rule indicated that a request 
for an advisory opinion must be submitted to the OIG in written form 
and must present all facts relevant to the subject matter for which the 
opinion is being requested. Section 1008.37 provided that all parties 
and potential parties to the arrangement must be identified.

[[Page 38312]]

Section 1008.38 of the regulations required the requesting party to 
certify to the truth, correctness, and completeness of all information 
submitted to the OIG, to the requestor's best knowledge. It also 
required a requesting party seeking an advisory opinion about a 
proposed arrangement to certify its good faith intent to enter into the 
arrangement upon receipt of a favorable advisory opinion.
    Section 1008.18 of the interim final rule provided that requestors 
may contact the OIG directly to inquire about the type and scope of 
information needed to process their requests, and that the OIG could 
provide requestors with a list of suggested preliminary questions to 
aid in formulating their requests. As set forth in Sec. 1008.39, at any 
time after the preliminary request for an advisory opinion, the OIG may 
request additional information that the OIG deems necessary to address 
the advisory opinion request.
2. Fees To Be Charged
    In accordance with HIPAA, subpart C of 42 CFR part 1008 of the 
regulations addressed fees for the cost of advisory opinions. 
Specifically, Sec. 1008.31 of the regulations stated that the OIG will 
charge a fee to the requestor (payable to the U.S. Treasury) equal to 
the costs incurred by the Department in responding to the request. The 
regulations stated that the fees will factor in the salary, benefits, 
and overhead costs of attorneys and others who work on analyzing the 
request and writing the advisory opinion. Because processing fees will 
vary according to the complexity of the request and the time needed to 
prepare the response, the rule did not establish specific processing 
costs in advance. The interim final rule's preamble discussion, 
however, contains broad estimates of costs and staff time to aid 
prospective requestors.
3. Responding to the Advisory Opinion Request
    Subpart E of the interim final rule addressed the obligations and 
responsibilities of the OIG in accepting and issuing formal advisory 
opinions. Section 1008.41 specifically indicated that the OIG would 
promptly examine the request for an advisory opinion upon receipt and 
determine whether additional information would be required. The 
regulations established that within ten (10) working days of receiving 
the request, the OIG would notify the requestor in writing that (i) it 
was formally accepting the request, (ii) it was declining to accept the 
request, or (iii) it needed additional information to process the 
request.
    In accordance with Sec. 1008.43(c) of the rule, once sufficient 
information is provided to the OIG, the OIG will consult with DoJ and 
issue an advisory opinion within sixty (60) days after formally 
accepting the advisory opinion request. Section 1008.45 of the 
regulations addresses the OIG's right to rescind an advisory opinion 
after its issuance in limited circumstances.
4. Dissemination of Advisory Opinions
    Section 1008.47 of the interim final rule addressed the 
circumstances under which the OIG may disclose information submitted by 
requestors, including making copies of issued opinions available for 
public inspection and on the OIG's Internet web site.\3\
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    \3\ http://www.dhhs.gov/progorg/oig
_____________________________________-

II. Response to Comments and Summary of Revisions

    As indicated above, the interim final rule established a 60 day 
comment period for soliciting relevant public comments on the scope and 
applicability of the provisions set forth in 42 CFR part 1008. We 
received a total of twenty (20) timely-filed public comments from 
various health care associations and organizations and from several 
State and professional medical societies. The comments included both 
broad concerns about the issuance of advisory opinions in general and 
more detailed comments on specific aspects of the advisory opinion 
process. In addition, based on informal discussions with potential 
requestors and experience gained in reviewing and processing advisory 
opinion requests since issuance of the interim final rule, the OIG is 
using this opportunity to clarify portions of the regulations 
consistent with the statute and the intent of this procedural 
rulemaking. Set forth below is a synopsis of the various comments 
received and a summary of the specific revisions and clarifications 
being made to the regulations in 42 CFR part 1008.

A. General Comments

    Comment: Many commenters welcomed the prospect of advisory opinions 
and expressed general support for the advisory opinion process 
established by the interim final rule. One commenter indicated that the 
interim final rule is an attempt ``to develop an effective advisory 
opinion process as a method of bringing clarity to the current Federal 
fraud and abuse statutory and regulatory system.'' Another commenter 
stated that the interim final rule was a ``positive step in the right 
direction.'' A third commenter, reflecting the view of several, stated 
that ``the best deterrent to fraud and abuse in the health care 
industry is clear guidance from the Government concerning its view of 
the applicable requirements.''
    The general support of these remarks notwithstanding, these 
commenters and others expressed concerns about the advisory opinion 
process. Several commenters viewed the regulations as overly 
restrictive and complex. Commenters stated that the requirements for 
submitting substantial amounts of supporting information would dissuade 
parties from seeking advisory opinions. One commenter stated that other 
agencies rendering advisory opinions have less onerous requirements, 
citing the DoJ Antitrust Division Procedures for Business Review 
Letters, 28 CFR 50.6, and the Federal Trade Commission (FTC) Advisory 
Opinion Procedures, 16 CFR 1.1 through 1.4. This commenter and others 
believed that the OIG advisory opinion process could be simplified 
without compromising the OIG's position. One commenter suggested that 
the requirements, which it perceived as burdensome, reflect the OIG's 
opposition to issuing advisory opinions during the legislative process.
    Response: The OIG intends to carry out Congress' mandate in good 
faith and to the best of our ability. We are hopeful that an effective 
advisory opinion program will further the OIG's fraud-fighting mission 
by aiding requestors in complying with the fraud and abuse laws. 
Deterring fraud and abuse in the Federal health care programs continues 
to be an integral part of that mission. For example, the OIG special 
fraud alerts and model compliance plans are specifically targeted at 
deterring fraudulent and abusive activities. Consistent with the OIG 
mission, we endeavored to develop an advisory opinion process that 
balances the industry's desire for a process that is not overly 
burdensome with the OIG's need for full and complete disclosure of 
facts pertaining to the arrangements under review.
    Our goal is to render meaningful and informed opinions based on a 
complete and comprehensive understanding of the relevant facts and 
circumstances of a given arrangement, protecting in the process only 
those arrangements that pose little or no risk of fraud or abuse to the 
Federal health care programs. For complex arrangements, this may 
require relatively extensive submissions by a requestor. We believe 
that it is difficult to develop bright line rules for the

[[Page 38313]]

submission of information uniformly applicable to the wide array of 
arrangements and sanction authorities that may be the subject of 
advisory opinions.
    The Department is in a unique position among agencies of being 
compelled by statute to provide advisory opinions that bind the 
Department and the requestors in criminal, as well as civil, matters. 
The Department must issue these opinions within a sixty (60) day 
period, regardless of the complexity of the arrangement in question. 
Accordingly, the OIG has a heightened need to scrutinize arrangements 
closely to assure that fraudulent or abusive arrangements are not 
inappropriately granted protection from sanction.
    As we gain experience in issuing advisory opinions, we will 
continue to look for ways to simplify the process. Presently, we are 
revising these regulations to provide increased flexibility to respond 
to the circumstances of individual situations. As described in greater 
detail below, these changes include, among others, expressly permitting 
submission of requests by counsel; allowing submission of drafts, 
models, or narrative descriptions of operative documents for proposed 
arrangements; providing for informal consultation with requestors to 
aid the OIG's deliberative process; and providing for notice, an 
opportunity to respond, and a reasonable unwinding period in the 
unlikely event of termination of a favorable advisory opinion. In 
addition, these regulations add a procedure for obtaining initial non-
binding fee estimates.
    Comment: One commenter recommended that the OIG publish generic 
standards and criteria by which the ``case specific'' safe harbors 
afforded by advisory opinions would be granted. The commenter believed 
that without the promulgation of such standards and criteria, the 
advisory opinion process could be viewed as arbitrary and capricious.
    Response: These regulations are designed to establish procedures 
for obtaining advisory opinions that will provide the public with 
meaningful advice regarding the anti-kickback statutes and other OIG 
sanction authorities as applied to specific factual situations. The 
statutory and regulatory safe harbors to the anti-kickback statute 
describe generalized, hypothetical arrangements that are protected. In 
contrast, an advisory opinion is a means of relating the anti-kickback 
statute, as well as other OIG sanction authorities, to the facts of a 
particular arrangement. There are likely to be factors that make some 
specific arrangements appropriate for a favorable advisory opinion, 
even in subject matter areas where a generalized safe harbor may be 
impractical. Thus, we believe that particularized or ``case specific'' 
safe harbor treatment is appropriate where the specific arrangement 
contains limitations, requirements, or controls that give adequate 
assurance that Federal health care programs cannot be abused. Our use 
of the phrase ``particularized'' or ``case specific'' safe harbors 
refers simply to a determination by the OIG, in the exercise of 
prosecutorial discretion, not to impose sanctions for specific 
arrangements that may constitute technical violations of OIG 
authorities.

B. Specific Comments on the Advisory Opinion Process

Section 1008.1, Basis and Purpose
    Comment: A number of commenters suggested that requiring a 
requestor to be a party to the arrangement, or proposed arrangement, 
that is the subject of a request appears to prevent an attorney from 
requesting an advisory opinion on behalf of a client.
    Response: We recognize that many requesting parties will employ 
attorneys to assist them in preparing advisory opinion requests. We 
believe that it is appropriate for an attorney, acting as counsel, to 
submit an advisory opinion request on behalf of a client, provided that 
the client is a proper requesting party in all respects under these 
regulations. This means that the client itself must comply with all 
requirements for being a proper requesting party under these 
regulations, including, but not limited to, the requirements under 
Sec. 1008.36 that the requesting party be specifically identified, and 
under Sec. 1008.38 that the requesting party provide certain 
certifications (these certifications must be signed by the client, not 
by the attorney). Section 1008.1 is being clarified accordingly.
Section 1008.5, Matters Subject to Advisory Opinions
    Comment: One commenter requested that we clarify the meaning of the 
term ``authority'' as we used it in our preamble to the interim final 
rule at page 7352. Specifically, the preamble stated:

    ``To the extent that the subject matter of the request is the 
requestor's potential liability under one sanction authority, we 
believe the request should provide a complete description of the 
facts addressing the elements of that authority. Under these interim 
final regulations, if the request asks the OIG to advise on whether 
an arrangement is subject to sanction under more than one legal 
authority, we believe the submission should include a complete 
description of the facts regarding the different sanction 
authorities in those statutes.''

    Response: We agree with the commenter that clarification of our use 
of the term ``authority'' would be helpful. ``Authority,'' as used in 
the interim final rule preamble cited above, refers to each separate 
sanction authority enumerated in sections 1128, 1128A, 1128B of the 
Act, i.e., each potential ground for exclusion, civil money penalty, or 
criminal penalty. The section 1128, 1128A, and 1128B sanction 
authorities cover a wide range of conduct, from kickbacks to false 
claims to doing business with sanctioned persons. It is unlikely that 
any one arrangement that is the subject of an advisory opinion would 
implicate all of the section 1128, 1128A, and 1128B sanction 
authorities. Because it is most familiar with the circumstances of its 
arrangement, a requesting party is in the best position, as an initial 
matter, to identify those authorities that may be implicated in its 
arrangement and thus expedite processing of its advisory opinion 
request. Accordingly, when submitting advisory opinion requests, 
requestors should identify the specific sanction authority or 
authorities within sections 1128, 1128A, and 1128B of the Act about 
which they seek an advisory opinion and should describe the facts 
relevant to each identified authority. Requesting parties may seek an 
advisory opinion on all sanction authorities they believe may be 
implicated by their arrangements. However, a blanket designation that a 
party seeks an advisory opinion on sections 1128, 1128A, and 1128B of 
the Act, without more specificity, is likely to elicit an OIG request 
for substantial additional information and delay processing of the 
advisory opinion. For these same reasons, requestors seeking opinions 
on compliance with the anti-kickback safe harbors should specify those 
safe harbors they believe may apply to their arrangements. We have 
revised the regulations to require designation of the specific sanction 
authorities about which an advisory opinion has been requested.
    Comment: In HIPAA, Congress enacted a new statutory safe harbor to 
the anti-kickback statute for certain shared-risk arrangements (section 
1128B(b)(3)(F) of the Act). This safe harbor is the subject of an on-
going negotiated rulemaking process mandated by HIPAA and being

[[Page 38314]]

conducted under the auspices of the OIG. The goal of the negotiated 
rulemaking is the promulgation of regulations governing the safe 
harbor. One commenter expressed the view that the OIG should not 
withhold advisory opinions on the shared-risk exception pending the 
outcome of the negotiated rulemaking.
    Response: We discern nothing in HIPAA that permits us to decline to 
give advisory opinions on the shared-risk safe harbor pending the 
outcome of the negotiated rulemaking and promulgation of applicable 
regulations. Accordingly, we will opine on the statute as written. Any 
advisory opinion issued will be binding on the Department and the 
requesting parties as provided in these regulations. However, favorable 
and unfavorable advisory opinions issued before the outcome of the 
rulemaking process may be subject to modification or termination based 
on the rule eventually promulgated.
    Comment: Two commenters believed that the OIG advisory opinions 
should address the application of the ``Stark amendment'' under section 
1877 of the Act.
    Response: Section 4314 of the Balanced Budget Act of 1997, Public 
Law 105-33, includes a new requirement that the Department issue 
advisory opinions on the ``Stark'' provisions. These opinions will be 
issued by the Health Care Financing Administration (HCFA) in accordance 
with regulations issued by the Department. To aid in coordinating both 
advisory opinion processes, we are modifying our regulations to require 
requesting parties to notify the OIG if they apply to HCFA for a 
``Stark'' opinion on the same arrangement for which they are seeking an 
OIG advisory opinion.
Section 1008.15, Facts Subject to Advisory Opinions
    Comment: Several commenters suggested that trade associations 
should be permitted to seek advisory opinions on behalf of their 
members. These commenters assert that such requests would benefit 
association members who may not have sufficient resources to obtain an 
advisory opinion independently. One commenter noted that trade 
association opinions would be particularly valuable for arrangements 
involving ``national issues.'' Several commenters also suggested that 
we issue advisory opinions about ``model'' arrangements that might be 
duplicated by many individual entities and that we issue non-binding 
opinions or business guidance to individual parties and trade 
associations similar to advice provided by the FTC and DoJ on antitrust 
matters.
    Response: Section 205 of HIPAA contemplates advisory opinions 
regarding arrangements currently existing or proposed by specific, 
identified requestors. This follows from HIPAA's mandate that advisory 
opinions be binding on the parties, as well as the Department. It is 
difficult to discern how an advisory opinion issued to a trade 
association could be made binding for association members or others who 
later implement an arrangement described in a trade association 
request. The same difficulty would arise with respect to parties 
attempting to duplicate protected ``model'' arrangements. HIPAA's 
requirements notwithstanding, it is unlikely that a party could 
precisely duplicate an approved arrangement; invariably, there would be 
differences, some of which might be significant. Sanction authorities 
impose liability based on acts by specific people in particular factual 
circumstances. Thus, a particular arrangement may be legal with respect 
to one party, but not with respect to another. We believe that it is 
impossible to identify all hypothetical factors that might lead to 
different results.
    We will continue, however, to offer other industry guidance in the 
form of safe harbor regulations and special fraud alerts. As part of 
the OIG's expanded fraud-fighting efforts, we are actively working to 
finalize the existing proposed safe harbors, to issue new special fraud 
alerts, and to consider new safe harbors proposed by the public. In 
accordance with HIPAA, we will formally solicit public comments 
annually regarding new proposals for safe harbors and special fraud 
alerts. However, we welcome written comments from the public at any 
time regarding these topics or other fraud and abuse concerns.
Section 1008.31, Oig Fees for the Cost of Advisory Opinions
    Comment: We received several comments regarding the fee provisions 
of the regulations. A number of commenters objected to the OIG charging 
a fee for processing an advisory opinion. These commenters believed 
that a fee would deter some requesting parties and would impose an 
undue burden on small companies.
    Response: Under section 205 of HIPAA Congress directed that the 
Department charge a fee equal to the costs incurred by the Department 
in processing an advisory opinion (42 U.S.C. 1320a-7d(b)(5)(B)(ii)).
    Comment: Many commenters believed that the amount of the fee 
charged for an advisory opinion should be limited. These commenters 
contend that uncertainty about the ultimate fee to be charged for an 
opinion will be especially problematic for individuals and small 
entities. Several commenters suggested that the ``triggering dollar 
amount'' provided for in the interim final rule, permitting requestors 
to designate the maximum fee they are willing to incur, does not 
adequately address the problem of unlimited fees, although some 
commenters generally supported the concept and advocated its retention. 
One commenter observed that once the triggering dollar amount is 
reached, a requesting party ``is faced with the untenable decision of 
paying the triggering dollar amount and receiving nothing to show for 
its money, or authorizing the OIG to proceed to process the request 
regardless of the cost.'' Many commenters suggested that the solution 
to this dilemma would be for the OIG to provide a fee estimate based on 
an initial review of the request. Commenters essentially proposed two 
types of estimates: (1) an initial estimate, with a cap on the final 
fee equal to a certain percentage above the original estimate (for 
example, 110% of the original estimate), or (2) a non-binding estimate 
combined with continued use of the triggering dollar amount 
designation, which designation could be amended based on the non-
binding estimate. Additionally, four commenters suggested that the OIG 
adopt a fixed fee schedule similar to the one used by the Internal 
Revenue Service (IRS) for processing private letter rulings.
    Response: In light of our limited experience with the advisory 
opinion process, at this time we believe that a binding estimate with a 
percentage cap would be contrary to section 205 of HIPAA, which 
requires recovery of actual costs incurred. We do not have enough 
experience to estimate actual costs with sufficient reliability to make 
such estimates binding. Similarly, it is not possible at this time to 
develop fee schedules that would reflect actual costs. As the OIG gains 
experience, we may be able to provide binding estimates or fee 
schedules; nothing in these regulations precludes us from revising 
these proposals at a later date if circumstances warrant.
    Until such time, we believe that providing an initial, non-binding 
estimate is reasonable and feasible. Accordingly, we are revising the 
regulations to provide for a non-binding, good faith estimate, if 
requested, based on an initial review of an advisory

[[Page 38315]]

opinion request. This initial estimate will be provided at the time an 
advisory opinion is accepted. However, we will toll processing of the 
advisory opinion request from the date of acceptance of the request 
until the requesting party authorizes us in writing to continue the 
processing. This tolling will enable requesting parties who find that 
the estimated fee is more than they wish to spend to withdraw their 
requests before incurring additional costs. We are retaining the 
triggering dollar amount designation procedures and providing for 
revised designations in response to our non-binding fee estimates. We 
note that fees for advisory opinions issued to date generally have been 
in the range of $1,500 to $3,000, with several costing considerably 
less.
    Comment: Some commenters believed that not all requestors may be 
able to afford advisory opinions. One commenter suggested that the OIG 
use a sliding fee schedule based on after-tax net profits of the 
requestor. Further, one commenter believed that the $250 deposit was 
excessive for individuals and small entities making simple requests for 
which the costs might not total $250, i.e., requesting confirmation of 
the applicability of an existing opinion to a new participant in the 
arrangement. Another commenter urged the OIG to notify the requestor 
prior to processing an advisor opinion if the processing costs are 
likely to exceed the designated triggering dollar amount to permit 
requestors who do not wish to pay more than the designated amount to 
withdraw their requests before incurring costs.
    Response: Section 205 of HIPAA contains no financial hardship 
exception to the mandate that the Department collect a fee equal to the 
costs incurred by the Department. Even if there were such an exception, 
the proposal for a sliding scale based on a requestor's after-tax net 
profits strikes us as impractical to calculate and administer. It is 
unclear how such a system would apply to individual requestors or non-
profit organizations. The $250 initial deposit represents the OIG's 
reasonable assessment of the minimum processing costs for advisory 
opinion requests. Every request for an advisory opinion takes time to 
read and analyze to ensure that the OIG has an accurate understanding 
of the facts submitted and the application of the fraud statutes to 
those facts. The OIG must then consult with DoJ and write the actual 
advisory opinion. Our experience thus far demonstrates that it is 
unlikely that even the simplest advisory opinions will cost the agency 
less than $250. Where possible, we will try to notify requestors 
informally if, as an initial matter, we believe that their designated 
triggering dollar amounts are likely to be exceeded.
    Comment: One commenter suggested that the OIG notify requestors if 
experts for which costs will be incurred will be required.
    Response: Section 1008.33 of the interim final rule provided for 
notice to requestors, with an estimate of costs, if expert opinions are 
required. For purposes of clarity, that provision is being moved to 
Sec. 1008.31(e). We are further revising the rule to clarify that 
requestors will be responsible for payment of the actual costs of 
expert opinions and that the expert's work and opinion will be subject 
to the sole direction of the OIG regardless of the source of payment.
Section 1008.33, Expert Opinions From Outside Sources
    Comment: One commenter suggested that requestors should be 
permitted to review and comment on expert opinions from outside 
sources, and should be given an opportunity to provide their own expert 
opinions.
    Response: Nothing in the regulations precludes a requestor from 
submitting an expert opinion if they so desire. In addition, the OIG 
can solicit a requestor's views on expert opinions if the OIG believes 
such input would aid its deliberative process. However, we do not 
believe that it is necessary or cost-efficient to require the OIG to 
consult with requestors regarding expert opinions in all cases.
Subpart D, Submission of a Formal Request for an Advisory Opinion
    Comment: Subpart D of these regulations enumerates the information 
requestors must submit with their advisory opinion requests. A number 
of commenters found the requirements of this subpart overly burdensome 
and likely to dissuade parties from seeking advisory opinions. These 
commenters expressed the view that the advisory opinion process was not 
intended as a preliminary enforcement tool by which the OIG could 
collect large quantities of information about providers and other 
health care entities.
    Response: The procedural requirements set forth in this subpart are 
intended to ensure that the OIG has a complete record on which to base 
its advisory opinion, which will bind the Department and the parties. 
An advisory opinion serves as an individualized safe harbor against 
criminal and civil penalties; therefore, it is incumbent upon the OIG 
to conduct a thorough review.
Section 1008.36, Submission of a Request
    Comment: Several commenters stated that requesting parties should 
not be required to provide extensive information about potential 
participants in an arrangement who are not actual requestors. One 
commenter expressed the view that the focus of an advisory opinion 
should be on the factual circumstances of an arrangement, not on the 
identities of the parties. Additionally, several commenters believed 
that sometimes it would be impossible or highly impractical to identify 
all potential participants to an arrangement. According to their 
concerns, some arrangements might involve hundreds or even thousands of 
parties. One commenter cited as an example a request involving all 
network providers in a managed care plan. The commenter explained that 
there might be practical difficulties in identifying all such 
providers; moreover, the problem could be further complicated if the 
roster of providers were subject to change as a direct result of 
implementation of the arrangement.
    Response: We believe that the identity of parties is sometimes 
important to rendering an informed decision about an arrangement. There 
may be different implications under the sanction authorities for 
different parties in similar factual circumstances. For example, the 
analysis of a proposed joint venture arrangement under the anti-
kickback statute may depend on whether or not the proposed investors 
are potential referral sources or have other business relationships. 
Furthermore, identification of parties helps the OIG to determine if 
the arrangement in question or a similar arrangement is the subject of 
any ongoing investigation or is, or has been, the subject of a 
governmental proceeding. As stated in Sec. 1008.15 of these 
regulations, the OIG will not opine on any matters under investigation.
    Section 1008.36(b)(1) requires disclosure of participants to the 
extent known to the requestor. We agree that there may be situations in 
which it is not possible or practical to identify all potential 
participants in an arrangement. In many of these select cases, the OIG 
may be able to render an informed opinion without knowing the 
identities of all participants. The managed care network described 
above might be one such case. Another example might be a proposed 
pricing arrangement affecting hundreds or thousands of potential 
customers. In

[[Page 38316]]

these types of circumstances, requesting parties should make clear in 
their requests the reasons why the identities of all potential 
participants cannot be provided. If it appears to the OIG that the 
identities of potential participants are reasonably available, the OIG 
may decline to process the request or may accept the request subject to 
the subsequent receipt of the identities of potential participants. An 
advisory opinion issued in such circumstances will be binding only on 
the requesting party. The requesting party may not be protected by an 
advisory opinion if the material facts about the unidentified parties 
differ from the material facts described in the request. For example, 
if a requestor seeking an advisory opinion about a pricing arrangement 
describes potential customers as hospitals and the character of the 
customers is material, a favorable advisory opinion would not be 
binding on sales to non-hospital customers. Parties joining an 
arrangement after issuance of an advisory opinion may seek a separate 
advisory opinion in their own right.
    Comment: Several commenters recommended that requestors be 
permitted to submit anonymous requests, identifying themselves only 
when it appeared that the OIG would issue a favorable opinion.
    Response: Early identification of requestors helps the OIG 
determine whether the party making the request is under investigation 
or is involved in proceedings involving the Department or other 
governmental agencies that would preclude issuance of an advisory 
opinion under Sec. 1008.15. By making this determination as early in 
the process as practicable, the OIG can minimize processing fees 
incurred by requestors.
    Comment: Several commenters objected to the required disclosure of 
the identities of non-requesting parties. Commenters were concerned 
that such disclosures could undermine the business and competitive 
interests of all parties to an arrangement. One commenter explained 
that non-requesting parties may not want to identify themselves in the 
early planning stages of a transaction, before they are assured that 
the proposed transaction passes fraud and abuse muster. This is 
especially true, according to some commenters, because the anti-
kickback statute reaches mere offers of prohibited remuneration. 
Further, they believe there may also be proprietary business reasons 
for non-requesting parties to withhold their identities. For example, 
they may be engaged in preliminary discussions and not want to risk 
being disadvantaged by competitors who may discover their identity. For 
these reasons, some commenters believed that the OIG should permit 
generic descriptions of non-requesting parties to the transaction.
    Response: For reasons previously stated, we believe that the 
identities of parties can be essential to rendering an informed opinion 
about an arrangement. We recognize that some proposed arrangements may 
be presented to us at an early stage before all parties are fully 
committed to participate in the arrangement. For example, a group of 
surgeons planning an ambulatory surgical center may not have 
commitments from all prospective investors. Requestors in such 
circumstances run the risk that the OIG response may be rendered 
meaningless by subsequent changes in the identities of the parties, 
i.e., a non-referral source party is replaced in an arrangement by a 
potential referral source. As set forth in Sec. 1008.53, advisory 
opinions are operative and binding only for requestors. If parties 
desire protection, they must be identified as requestors. Non-
requesting parties seeking protection after the advisory opinion is 
issued would need to submit a new request for an advisory opinion.
    We are mindful that the risk of disclosures of proprietary 
information may be troublesome from a business perspective. The OIG is 
subject to the Freedom of Information Act (FOIA), 5 U.S.C. 552, and the 
Department's FOIA regulations set forth in 45 CFR part 5. The OIG will 
endeavor to protect submissions of proprietary information to the 
extent and in the manner permitted by these authorities.
    Comment: Several commenters suggested that the OIG not require 
requestors to provide complete copies of all operative documents. 
Instead, these commenters advocated permitting detailed descriptions of 
such documents. In addition, some commenters noted that operative 
documents may not be available for proposed arrangements and that 
requiring their preparation would impose significant costs for 
arrangements that might never be implemented. Commenters also expressed 
concerns regarding the potential for disclosure of operative documents 
under FOIA. One commenter asked that the OIG clarify the meaning of the 
term ``operative documents.''
    Response: As used in these regulations, ``operative documents'' 
broadly encompasses all written documents relevant to the organization 
or operation of the arrangement in question. These may include, but are 
not limited to, contracts, leases, lease guarantees, deeds, loan 
documents (promissory notes, loan agreements, guarantees, mortgages, 
etc.), employment agreements, court documents and records, settlement 
agreements, licenses, permits, corporate and partnership organizational 
documents (articles of incorporation, bylaws, partnership agreements, 
operating agreements, etc.), and any documents related to these 
documents. The specific documents required for review of a particular 
arrangement will depend on the nature of the arrangement.
    We are clarifying the regulations to provide that for proposed 
arrangements, draft or model documents or detailed descriptions of 
material terms to be contained in such documents may be provided in 
lieu of operative documents. We caution requestors that material 
differences between the drafts, models, or descriptions provided and 
the final operative documents, including changes or omissions, may 
affect the enforceability of their options. Accordingly, requestors are 
encouraged to provide full, complete, and accurate information 
regarding material terms of operative documents for proposed 
arrangements.
    We are further revising these regulations to permit parties to 
submit initially only those portions of documents relevant to the 
arrangement at issue. Parties submitting partial documents must clearly 
identify and describe in general terms those portions that have been 
withheld. For example, a diversified corporation may elect to submit 
only those portions of its business plan relating to health care items 
or services that are the subject of the request. Nothing in these 
regulations precludes the OIG from subsequently requesting copies of 
the withheld portions (and from tolling the processing time in 
accordance with Sec.  1008.39 pending receipt), if the OIG deems those 
portions necessary in order to render an informed opinion. The ultimate 
determination of the relevancy of operative documents, or portions 
thereof, rests in the sole discretion of the OIG.
    Comment: One commenter proposed eliminating the requirement that 
requesting parties provide Medicare and Medicaid provider numbers.
    Response: We agree that provider numbers are not necessary in every 
case. We are eliminating the requirement for submitting these numbers, 
but reserve the right to request provider numbers, or other identifying 
information, if we determine that they are necessary in particular 
circumstances. We have

[[Page 38317]]

determined, however, that the Debt Collection Improvement Act of 1996 
(section 31001 of Public Law 104-134) requires agencies to collect the 
Taxpayer Identification Number (TIN) from all persons or business 
entities ``doing business with a Federal agency'' (see 31 U.S.C. 
7701(c)). We believe that requesting, receiving and paying for the 
OIG's work on an advisory opinion fits into the category of ``doing 
business with a Federal agency.'' Therefore, a request for an advisory 
opinion must include the requestor's TIN. The TIN will be used for 
purposes of collecting and reporting on any delinquent amounts arising 
out of the requestor's failure to render proper payment for the 
advisory opinion.
    Comment: Five commenters stated that requiring requestors to 
provide detailed and highly specific information regarding existing or 
prospective arrangements raises questions about the requesting and non-
requesting parties' exposure to sanction in the event of an unfavorable 
opinion. These commenters considered this potential exposure to be a 
disincentive to using the advisory opinion process. One commenter 
explained, for example, that if the OIG determines that an arrangement 
violates the anti-kickback statute, the requester will have given the 
OIG much, if not all, of the information necessary to prosecute. This 
commenter suggested that the OIG adopt a ``grace'' period to allow 
parties found to be in violation to terminate or restrict an 
arrangement without risk of prosecution.
    Response: There is an unavoidable risk in submitting a request for 
an advisory opinion regarding the potential applicability of a criminal 
statute to an existing arrangement. A thorough and detailed 
understanding of arrangements about which advisory opinions are sought 
is necessary for the OIG to render an informed opinion. to the extent 
the arrangement does not qualify for a ``safe harbor'' or a favorable 
advisory opinion, it is subject to scrutiny and potential 
investigation. Otherwise, we believe unscrupulous parties could use the 
advisory opinion process to immunize themselves from prosecution. In 
most instances, however, we believe the risk to be minimal. First, most 
requests will be about arrangements that are not yet operative. Second, 
in seeking an advisory opinion, most requesting parties presumably will 
have reviewed the arrangement and determined that it poses little risk 
of fraud and abuse to Federal health care programs. Third, the failure 
to obtain a favorable advisory opinion does not mean that an 
arrangement is illegal; it means only that the arrangement may pose 
some risk of fraud and abuse.
    As we have observed in the past, the fact that an arrangement does 
not qualify for a safe harbor or for a favorable advisory opinion does 
not mean that the anti-kickback statute has been violated or that an 
enforcement action is appropriate. For example, in an enforcement 
proceeding, whether an arrangement in fact constitutes a violation of 
the anti-kickback statute would depend on a showing of requisite intent 
to solicit, receive, offer, or pay remuneration to induce referrals or 
business covered by a Federal health care program.
    Comment: We indicated in the preamble to the interim final rule 
that because of the wide diversity of arrangements about which the OIG 
might be asked to opine, we could not detail in the regulations all of 
the information a particular requestor would need to submit. Instead, 
we provided for the use of suggested preliminary questions, which we 
would provide, and permitted potential requestors to contact us for 
further guidance about what information to submit. We specifically 
solicited comments regarding this approach. One commenter agreed that 
the information necessary to issue an advisory opinion depends on the 
nature of the request, and that it is not feasible to set hard and fast 
rules regarding the specific types of information required to issue an 
advisory opinion.
    Response: We are leaving in place the provision regarding the use 
of the preliminary questions. Moreover, we will continue to permit 
potential requestors to contact us in writing for guidance on the 
specific types of information that might be needed for their particular 
requests.
Section 1008.37, Disclosure of Ownership and Related Information
    Comment: One commenter opposed the requirement that requesting 
parties disclose ownership and related information on the ground that 
such requirement is burdensome.
    Response: We are not persuaded that this requirement is burdensome. 
The majority of requestors will likely already be providing this 
information to HCFA through required filings of HCFA form 1513. A copy 
of a requestor's current HCFA form 1513 will satisfy this requirement.
Section 1008.38, Signed Certifications by the Requestor
    Comment: We solicited comments regarding the certification process 
outlined in the interim final rule. This process requires requesting 
parties to certify to the truthfulness of their submissions, including 
their good faith intent to enter into proposed arrangements. Several 
commenters viewed the certification requirement as an unnecessary and 
burdensome requirement not contemplated by section 205 of HIPAA. These 
commenters stated that the certification requirement is unnecessary 
because the OIG is not bound by an advisory opinion if it later 
discovers that a requestor did not fully and accurately disclose 
information. One commenter suggested that we replace the certification 
requirement with a provision stating that the protection afforded by an 
advisory opinion would be applicable only to the arrangement as 
described in the request and only to the extent implemented by the 
requestor in accordance with the facts represented in the request. 
Another commenter believed that certifications were unnecessary, 
because the advisory opinion process itself is a complicated and costly 
procedure adequate to deter providers from seeking advisory opinions on 
arrangements that are hypothetical or not under serious consideration.
    Response: The required certifications help ensure that the OIG's 
time and resources are spent addressing real concerns of legitimate 
requestors. In particular, the requirement that requestors seeking 
advisory opinions about proposed arrangements certify to a good faith 
intent to enter into the proposed arrangement safeguards against abuse 
of the advisory opinion process by requestors seeking opinions about 
competitor's practices or hypothetical questions. We are not persuaded 
that our ability to invalidate an opinion upon later discovery of 
discrepancies in the facts or implementation is a sufficient or 
efficient means of protecting against improper or inappropriate 
requests. In addition, we are not convinced that the advisory opinion 
process is so costly or complex as to thwart misuse of the process.
    As a practical matter, our experience suggests that the 
certification requirement benefits requesting parties as well. The 
requirement serves as an incentive to requestors to focus on the 
completeness and accuracy of their presentations and to research

[[Page 38318]]

thoroughly and document their arrangements before submitting their 
requests or submitting additional information. We believe that this 
keeps costs down and expedites issuance of opinions by reducing our 
need to request clarifications and additional information. 
Additionally, enhanced diligence should reduce the need for ancillary 
opinions after issuance of the original advisory opinion when new facts 
or understandings surface that were not fully investigated or 
considered by the requestor at the time of the initial request. 
Consequently, we believe that certifications will help ensure more 
meaningful and informed opinions.
    We are clarifying the certification requirements in Sec. 1008.38 in 
two ways. First, we are adding a provision, inadvertently omitted from 
the interim final rule, designating the appropriate signatory on behalf 
of requestors that are limited liability companies. Second, we are 
clarifying that each requesting party must provide the required 
certification. These certifications must be signed by the requesting 
party, not by its attorney.
    Comment: Several commenters objected to the requirement for 
certification of a good faith intent to enter into an arrangement upon 
receipt of a favorably advisory opinion. These commenters argue that 
there may be legitimate business reasons, unrelated to the fraud and 
abuse determination, that an arrangement is not consummated. For 
example, seeking an advisory opinion may be part of the parties' 
initial feasibility determinations. Commenters explained that in the 
fluid and changing health care marketplace, many legitimate business 
factors may arise between the time a request is filed and the advisory 
opinion is issued would cause the parties to abandon their proposed 
arrangements. One commenter questioned what action the OIG would or 
could take if an arrangement described in a favorable advisory opinion 
is not implemented. Several commenters urged that failure to implement 
an approved arrangement should not subject a requestor to any adverse 
action or inference.
    Response: We continue to believe that requiring a good faith intent 
to enter into a transaction is a reasonable safeguard against misuse of 
an advisory opinion process. The certification requirement as set forth 
in these regulations does not preclude abandonment of a proposed 
arrangement for legitimate business reasons (i.e., an investor 
withdraws, financing becomes unavailable) that were not reasonably 
foreseeable at the time the certification was signed.
    Comment: One commentor requested that we revise Sec. 1008.38 to 
accommodate a change in the individual signing additional 
certifications if, for example, the requestor hires a new chief 
executive officer while the advisory opinion is pending.
    Response: The person signing certifications on behalf of a 
requestor should be the person occupying the position listed in 
Sec. 1008.38(c). We are clarifying this section to make clear that 
changes of the type described by this commentor are allowed.
Section 1008.40, Withdrawal
    Comment: Three commenters suggested that all documents submitted in 
support of a withdrawal request should be returned to the requestor.
    Response: We do not believe that requesting parties have a right to 
the return of documents voluntarily submitted to the Government. In 
particular, there is no right to the return of potential evidence of a 
violation of law, and the Government would be remiss in returning such 
information. In addition, it may be necessary to retain submitted 
materials to document the workings of the advisory opinion process. 
Nevertheless, although the OIG reserves the right to retain documents 
submitted by requestors, nothing in these regulations precludes the OIG 
from returning documents in its discretion to the extent allowed by 
law. Parties should note that as part of OIG's required consultation 
with DoJ, copies of requests and related documents may be sent to DoJ. 
The OIG can make no representation as to return of such documents to 
DoJ.
Section 1008.41, Oig Acceptance of the Request
    Comment: We requested comments on the process for screening 
requests for advisory opinions. One commenter suggested that instead of 
screening and rejecting incomplete requests, such requests should be 
accepted contingent on receipt of the missing information, and the 
processing time should be tolled until the missing information is 
submitted. This commenter explained that in the dynamic health care 
marketplace, all information may not be available at the time of the 
request. Another commenter maintained that Sec. 1008.41(b)(3), which 
provides for formally declining a request, is unnecessary and should be 
deleted.
    Response: We disagree that Sec. 1008.41(b)(3) is unnecessary. There 
may be circumstances in which a request must be declined in accordance 
with section 205 of HIPAA, for example, where it seeks a determination 
of fair market value or asks whether a physician is an employee of a 
hospital for purposes of qualifying for the employee safe harbor to the 
anti-kickback statute. However, nothing in these regulations precludes 
the OIG, in appropriate circumstances, from accepting incomplete 
requests conditionally, and we have done so in practice.
    Comment: One commenter suggested that the OIG should provide a 
written statement of reasons for declining a request.
    Response: In order to make the advisory opinion program meaningful, 
it has generally been our practice to inform requestors of the bases 
for declining to issue a requested advisory opinion, particularly in 
situations where the requestor may be able to correct or modify a 
request so as to make it acceptable. Section 1008.15 sets forth certain 
circumstances under which advisory opinions will not be issued. We are 
taking this opportunity to clarify in the rule that the circumstances 
set forth in Sec. 1008.15 preclude both acceptance and issuance of 
advisory opinions. In addition, requests will not be accepted if they 
fall outside the scope of the advisory opinion process, as set forth in 
Sec. 1008.5, or otherwise fail to satisfy the technical requirements of 
these regulations.
Section 1008.43, Issuance of a Formal Advisory Opinion
    Comment: Several commenters suggested that requestors be given an 
opportunity to meet with the OIG during processing of requests to 
answer questions and address any concerns the OIG might have about 
their arrangements. Commenters proposed that the OIG provide prior 
notice to requestors if the OIG determines that it is going to issue an 
unfavorable opinion, thus permitting requestors to withdraw their 
requests or make changes to their proposed arrangements to address OIG 
objections.
    Response: Our experience with advisory opinions has demonstrated 
that informal oral consultation with requestors often aids our 
understanding of the arrangements at issue and better enables us to 
render meaningful and informed opinions. However, requiring 
consultation for every request would impose an unwarranted burden on 
the OIG and, in many cases, serve only to increase costs to requesting 
parties with no significant benefit to the process. Nothing in these 
regulations precludes informal consultation, and we intend to continue 
working with requestors in appropriate circumstances to facilitate the 
advisory opinion process. During

[[Page 38319]]

these informal consultations, we may identify concerns that, if not 
adequately addressed by the requestor before the advisory opinion is 
issued, may lead us to render an unfavorable opinion. However, it is 
not our role to structure business arrangements. We believe that 
parties needing such assistance should seek private business and legal 
guidance.
    We are aware that some requestors may want an opportunity to 
address the OIG's concerns about their arrangements in a manner that 
would enable them to structure acceptable arrangements and avoid, where 
possible, an unfavorable outcome. A formal notification requirement, 
however, could permit unscrupulous parties to misuse the advisory 
opinion process to ``test'' hypothetical arrangements, as well as lead 
to inefficient use of the OIG's resources. We believe that the informal 
consultation process described above is a better approach and will more 
effectively address the concerns of requestors who may want an 
opportunity to modify their arrangements in response to the OIG's 
concerns.
    While requestors may request informal consultations, we anticipate 
that we will initiate most consultations when we determine that the 
requestor's input would be helpful. If there are facts or issues that a 
requestor wants us to consider, the requestor should bring those facts 
or issues to our attention (and provide any desired explanation) either 
in its request for an advisory opinion or, if the facts or issues arise 
after the initial request, in a supplemental submission of additional 
information.
    Additional material information provided in the course of oral 
consultations will need to be submitted in writing and certified in 
accordance with Secs. 1008.38 and 1008.39. For purposes of calculating 
the time for issuing the opinion, if the additional information 
substantially changes the arrangement under consideration, the original 
request will be treated as having been withdrawn and a new request as 
having been resubmitted as of the date the OIG receives the additional 
information in writing.
    Comment: Several commenters proposed that the OIG be required to 
explain its analysis and bases for decision in the written advisory 
opinion, since the analysis and reasoning will serve as useful guidance 
to the requestors, the Department and the health care industry.
    Response: As indicated in the preamble to the interim final rule, 
advisory opinions will restate the material facts known to the OIG and 
will discuss the OIG's analysis and conclusions regarding the legal 
questions to be applied to the facts presented. We believe that 
Sec. 1008.43, as written, reflects this intent. We iterate that 
opinions are only binding upon the specific parties to whom they are 
issued.
    Comment: One commenter suggested that changes made to an 
arrangement to correct aspects deemed objectionable by the OIG in an 
unfavorable advisory opinion should not require an additional advisory 
opinion in order to be protected.
    Response: We are not persuaded that this suggestion is workable in 
practice. We are unwilling to rely on a determination by the parties 
that modifications or changes they have made to their arrangements 
correct in all respects those aspects to which we objected. Moreover, 
we could not be certain, without further review, that modifications or 
changes made to one aspect of an arrangement would not adversely impact 
some other aspect of the arrangement. We are mindful, however, that 
requestors want to minimize costs associated with requesting a second 
opinion. We will make a good faith effort to control costs of a 
subsequent advisory opinion by avoiding duplication of effort expended 
on the first advisory opinion to the extent possible.
Section 1008.45, Rescission
    Comment: The OIG received many responses to its solicitation of 
comments regarding whether Sec. 1008.45 reasonably balances the 
Government's need to ensure that advisory opinions are legally correct 
and the requestor's interest in finality of advisory opinions. Most 
commenters were concerned that the OIG's authority to rescind advisory 
opinions defeats the main purpose of obtaining an opinion, which is to 
ensure that an arrangement will not be subject to sanction under the 
fraud and abuse statutes. Several commenters urged the OIG to identify 
a narrower standard to be applied in deciding to rescind an advisory 
opinion than ``in the public interest''. These commenters indicated 
that rescission should be limited to changes in law or material facts. 
Some commenters objected to using good faith reliance on the request as 
the standard for enforcement proceedings, suggesting instead that the 
OIG not proceed against a requestor unless the requestor failed to 
disclose materially adverse facts. One commenter thought that the OIG 
should not require parties to unwind transactions unless the OIG had 
not been provided with all relevant information or the information 
provided was misleading or inaccurate. If unwinding were to be 
required, several commenters urged the OIG to permit a reasonable 
unwinding period during which a requestor would not be subject to 
sanction. Further, several commenters noted the significant investment 
of time and money involved in arrangements operating under the 
protection of advisory opinions. It was suggested that the OIG limit 
the use of rescinded opinions to putting parties on notice that the OIG 
has changed its analysis for the future. Another commenter recommended 
that the OIG's right to rescind an advisory opinion should be limited 
to one year from the date of the opinion.
    Response: In crafting these regulations, we have been mindful of a 
requestor's significant interest in the finality of an advisory opinion 
and have endeavored to balance that interest against the government's 
compelling interest in protecting the integrity of the Federal 
agencies, including the Federal Trade Commission, the International 
Trade Commission, the Food and Drug Administration, and the Internal 
Revenue Service (See, for example, 16 CFR 1.1.3, 19 CFR 211.54(b), 21 
CFR 108.5, and 26 CFR 601.201(1).)
    Our use of the words ``rescind'' and ``revoke'' in Sec. 1008.45 may 
have led some members of the public to misconstrue the intent of this 
section. If a requestor has fully and accurately provided all material 
information regarding an arrangement in its submission to the OIG, its 
advisory opinion will bind the Department and the parties during the 
period it is in effect, that is, until it is terminated, if ever. If, 
on the other hand, the OIG determines that a requestor's submissions 
did not fully and accurately provide all material information regarding 
an arrangement, the OIG may rescind the advisory opinion retroactively 
to the date of issuance. For purposes of clarity, we are substituting 
the word ``terminate'' for ``revoke'' where appropriate in this 
section, to more clearly distinguish these two concepts. In addition, 
as discussed below, we are amending Sec. 1008.45 to make clear that in 
appropriate cases there is a third, intermediate possibility which is 
modification of an advisory opinion.
    Accordingly, for the purposes of part 1008 we are adding 
definitions in Sec. 1008.45 for the terms ``rescind,'' ``terminate,'' 
and ``modify.'' To ``rescind'' an advisory opinion will mean that the 
advisory opinion is revoked retroactively to the original date of 
issuance with the result that the

[[Page 38320]]

advisory opinion will be deemed to have been without force and effect 
from the original date of issuance. Rescission will be reserved for 
those situations where a requestor has not fully, completely and 
accurately disclosed facts to the OIG that it knew, or should have 
known, were relevant and material to the subject matter of the advisory 
opinion. (The OIG will make the determination of whether the requestor 
had this state of mind following an opportunity for the requestor to 
comment on this issue.)
    To ``terminate'' an advisory opinion will mean that the advisory 
opinion is revoked as of the termination date and is no longer in force 
and effect after the termination date. However, the opinion will have 
been in effect as originally issued from the date of issuance until the 
date of termination.
    To ``modify'' an advisory opinion will mean that the advisory 
opinion is amended, altered or limited, and that the advisory opinion 
continues in full force and effect in modified form thereafter. 
However, the opinion will have been in effect as originally issued from 
the date of issuance until the date of modification.
    The regulations reserve the right of the OIG to rescind, terminate, 
or modify an advisory opinion after its issuance solely in 
circumstances ``where the public interest requires.'' We expect that 
rescissions, terminations, and modifications of advisory opinions will 
be rare, occurring only in limited circumstances, such as when the OIG 
learns after the issuance of the opinion that the arrangement in 
question may lead to fraud or abuse, and the potential for such fraud 
or abuse was not foreseeable at the time the advisory opinion was 
issued. Situations that might lead to termination or modification of an 
advisory opinion may include the following circumstances--
     changes in the law or the business operations of the 
health care industry that make it possible for an arrangement that 
previously carried little risk of fraud or abuse to result in fraud or 
abuse in the future;
     changes in medical science or technology that render an 
arrangement subject to the risk of fraud or abuse;
     material changes in the arrangement during the course of 
its implementation; or,
     the operation of the arrangement in practice differs from 
what the OIG anticipated based on the advisory opinion request.
    The latter two examples reflect the fact that proposed business 
arrangements sometimes change in unexpected ways during and after their 
implementation.
    Prior to any rescission, termination or modification, the OIG will 
notify the requesting party that it intends to rescind, terminate, or 
modify the advisory opinion and afford the requesting party a 
reasonable opportunity to comment in response. An advisory opinion will 
only be rescinded, terminated, or modified after appropriate 
consultation with the requesting party. With respect to modifications, 
if the party does not agree to modifications proposed by the OIG, or 
does not itself suggest modifications that satisfy the OIG's concerns, 
the OIG may instead terminate the advisory opinion under this section. 
In the event of a determination to rescind, terminate, or modify an 
advisory opinion under Sec. 1008.45, the OIG will notify the requestor 
and make such final notice available to the same extent as an advisory 
opinion.
    Except as discussed below, the requestor will not be subject to OIG 
sanction for actions it took prior to the final notice of termination 
or modification if the requestor (1) acted in good faith reliance on 
the advisory opinion, and (2) promptly discontinues such actions upon 
notification of a termination or promptly modifies such actions upon 
notification of a modification, as the case may be. We recognize that 
it may be impracticable to discontinue immediately certain complex 
business arrangements. Accordingly, except in exceptional circumstances 
or as otherwise described below, a requestor will be afforded a 
reasonable opportunity to unwind or otherwise disengage from 
arrangements subject to terminated advisory opinions, provided that the 
requestor pursues such unwinding or disengagement promptly, diligently 
and in good faith. A requestor will be afforded a similar reasonable 
opportunity to implement modifications to an arrangement that is 
subject to a modified advisory opinion. During any unwinding period, 
the protection afforded by the advisory opinion will continue in 
effect.
    We are revising Sec. 1008.45 to provide for a reasonable unwinding 
period set at the discretion of OIG, after consultation with the 
requestor, based on the facts and circumstances of the arrangement. For 
example, the unwinding period for a complex business structure may be a 
period of years, whereas it may be a much shorter period for a simple 
compensation arrangement. In determining the duration of the reasonable 
unwinding or modification period, the OIG will take into account the 
complexity of the arrangements involved and the impact of unwinding or 
modification of Federal program beneficiaries. If the OIG determines, 
however, that the requestor failed to provide material information or 
provided untruthful information in its submissions to the OIG, the 
advisory opinion will be deemed to have been without effect from the 
time is was issued and no unwinding period will be recognized.
    Comment: One commenter requested that the OIG return documents 
submitted in connection with rescinded opinions. This commenter argued 
that such documents should be exempted from FOIA as pre-decisional 
documents.
    Response: As indicated in our discussion of Sec. 1008.40, we do not 
believe that requesting parties have a right to the return of documents 
voluntarily submitted to the Government, especially where those 
documents are potential evidence of a violation of law. In addition, 
retention of submitted materials may be necessary to document the 
workings of the advisory opinion process. However, the OIG may return 
such documents at its discretion to the extent allowed by law. While 
certain documents may have been provided to DoJ in the course of our 
consultations, the OIG has no authority over the return of such 
documents by DoJ. The OIG is subject to FOIA and intends to release 
documents if required by FOIA, in accordance with procedures set forth 
in 45 CFR part 5.
Section 1008.47, Disclosure
    Comment: Several commenters stated that the disclosure provisions 
of Sec. 1008.47 do not comport with congressional intent in enacting 
the advisory opinion program. Several commenters expressed concern 
about our statement that we could use information submitted by 
requestors for ``any governmental purpose.'' One commenter specifically 
stated that if ``any governmental purpose'' means that the OIG can use 
information submitted with requests as a basis for investigation, the 
OIG should expressly say so and put parties on notice to that effect. 
These commenters indicated that the risk of information being used for 
any governmental purpose would inhibit the industry from seeking 
guidance, and considered the risk of public disclosure of a requestor's 
identity and of the result of its advisory opinion as a further 
deterrent. One commenter believed that such disclosure could adversely 
impact a requestor's stock prices or general competitiveness.

[[Page 38321]]

    Response: Our primary purpose under these regulations is to gather 
and assess information in order to render informed advisory opinions. 
However, the anti-kickback statute is a criminal statute, and therefore 
review of arrangements that potentially implicate the statute requires 
heightened scrutiny. As a law enforcement agency, the OIG cannot ignore 
information lawfully obtained to further legitimate governmental 
purposes.
    Comment: Several commenters recommended that the OIG redact names 
and identifying information from published advisory opinions, as the 
IRS does with its private letter rulings.
    Response: Our current practice is to limit public disclosure of 
names and identifying information, subject to the requirements of FOIA. 
Unlike the OIG, the IRS has a specific statutory exception (26 U.S.C. 
6110) to FOIA that affords it greater latitude in protecting 
information from disclosure.
    Comment: One commenter requested that the OIG not disclose 
information without first notifying the requestor and obtaining its 
consent.
    Response: The OIG is subject to FOIA and the Department's FOIA 
regulations set forth at 45 CFR part 5. These regulations provide that 
the Department will make reasonable efforts to notify submitters--in 
this case, the requestors--if the Department determines that material 
that submitters have designated as exempt from disclosure under 
exemption 4 to FOIA (trade secrets and confidential commercial or 
financial information) may have to be disclosed in response to a FOIA 
request. The regulations at 45 CFR 5.65 provide that submitters of 
records may designate in writing that all or part of the information 
contained in such records is exempt from disclosure under exemption 4 
at the time they submit such records or within a reasonable time 
thereafter. Under the Department's FOIA regulations, requestors have an 
opportunity to respond and, if desired, file a court action to prevent 
disclosure of exempt records. Requesting parties must specifically 
identify in their requests for advisory opinions any information they 
reasonably believe is exempt from disclosure under exemption 4.
    These advisory opinion regulations have been amended to incorporate 
more clearly the requirement for designating trade secrets and 
confidential commercial or financial information with specificity. 
Information should be designated in the manner described in 45 CFR 
5.65(c) and (d). Parties are encouraged to refrain from designating 
more information than arguably may be classified as trade secrets or 
confidential commercial or financial information. Wholesale 
designations of entire request letters are counterproductive and may 
make it more difficult for legitimately exempt information to be 
protected under FOIA. The requestor's assertions about the nature of 
the information it has submitted are not controlling. Consistent with 
the OIG's law enforcement responsibilities, we reserve the right to 
make disclosures other than in response to FOIA requests where the 
public interest requires, to the extent authorized by law. Unauthorized 
releases of confidential information would be a criminal violation of 
18 U.S.C. 1905 (the Trade Secrets Act).
    In addition, although a document may be exempt from disclosure 
under FOIA, facts reflected in that document may become part of the 
advisory opinion that the OIG will provide to the public. We will 
describe the material facts of the arrangement in question in the body 
of each advisory opinion, which will be made available to the public. 
To the extent that it may be necessary to reveal specific facts that 
could be regarded as confidential information, we believe we have the 
authority to do so under sections 1106(a) and 1128D(b) of the Act. 
Nevertheless, we do not intend to incorporate any such facts into the 
body of an advisory opinion unless we believe incorporating such 
information is necessary in order to render an informed opinion. 
Moreover, where we intend to incorporate into an advisory opinion 
information designated by the requesting party as confidential 
proprietary information, we will endeavor to provide the requesting 
party with reasonable notice and a reasonable opportunity to respond or 
withdraw its request.
Section 1008.53, Affected Parties
    Comment: One commenter suggested that all parties should be 
required to consent to a request for an advisory opinion and that the 
requestor should be required to certify that such consent has been 
obtained.
    Response: The crux of this comment appears to center around a 
concern that one party to an arrangement may submit information to the 
OIG without the knowledge or consent of another party who may not want 
such information disclosed. We believe that this is a matter best 
handled and resolved between the parties. In addition, for reasons set 
forth above, we believe that it may be impractical, if not impossible, 
to obtain consent from all potential parties to certain types of 
arrangements.
Section 1008.55, Admissibility of Evidence
    Comment: While several commenters commended the OIG for prohibiting 
adverse inferences to be drawn from a party's failure to obtain an 
advisory opinion, other commenters suggested that we delete or clarify 
Sec. 1008.55(b), which they found confusing with regard to the 
prohibition on the use of advisory opinions by third parties. One 
commenter objected to paragraph (b) of this section because an advisory 
opinion may be probative evidence as to why someone structured an 
arrangement in a particular way. The commenter questioned whether the 
OIG has the power to create evidentiary rules that would be binding on 
courts or administrative law judges.
    Response: We agree that Sec. 1008.55(b) was confusing as originally 
written. Consistent with our original intent to preclude legal reliance 
by non-requestors, this section is being revised to read as follows: 
``An advisory opinion may not be introduced into evidence by a person 
or entity that was not the requester of the advisory opinion to prove 
that the person or entity did not violate the provisions of sections 
1128, 1128A, or 1128B of the Act or any other law.'' The Department has 
the authority to create procedural rules applicable in its tribunals 
(42 CFR 1005, for example). With respect to other tribunals, the OIG 
believes it is proper to limit the use of documents created by the OIG 
for a specific purpose. Consistent with HIPAACs statutory directive 
that advisory opinions bind only requesting parties and the Department, 
it is our intention to preclude legal reliance by non-requestors; it 
follows necessarily that an advisory opinion may not be introduced into 
evidence by such non-requestors in any tribunal.
Section 1008.59, Range of Advisory Opinion
    Comment: One commenter stated that advisory opinions should be 
binding on DoJ as well. The commenter believed that it would be unfair 
if DoJ, which must be consulted during the advisory opinion process, 
could still instigate enforcement proceedings against a requestor that 
has a favorable advisory opinion from the Department.
    Response: Section 205 of HIPAA requires only that advisory opinions 
be binding on this Department. The Department lacks the authority to 
bind DoJ through the Department's rulemaking.

III. Additional Technical Changes

     In Sec. 1008.5(b)(1), the phrase ``what the'' is being 
changed to ``whether'' to

[[Page 38322]]

correct a technical error, and the word ``and'' is being changed to 
``or'' to be consistent with the statutory directive and our intent 
that we will not opine on questions of fair market value or bona fide 
employee status.
     In Sec. 1008.31(c), the phrase ``to be'' in the first 
sentence is being deleted to be consistent with the intent of the 
regulation that the OIG will calculate the actual costs incurred by the 
Department in responding to an advisory opinion request.
     The phrase ``from the time the OIG notifies the 
requestor'' is being added in Sec. 1008.31(d)(4) to be consistent with 
our original intention that the time period in question commences upon 
the OIG's notice.
     In Sec. 1008.37, the phrase ``will'' in the first sentence 
is being replaced by ``must'' to be consistent with the mandatory 
nature of the requirement, and the phrase ``or entity'' is being 
inserted to be consistent with the usage of the same term at the 
beginning of the sentence.
     In Sec. 1008.38(c), the phrase ``will'' is being replaced 
by ``must'' to be consistent with the mandatory nature of the 
requirement.
     In Sec. 1008.43(a), the word ``when'' is being replaced by 
``and'' to clarify, consistent with our original intent and practice, 
that an advisory opinion is issued when payment is received and the 
opinion is dated, numbered, and signed.
     In Sec. 1008.43(b) is being revised to provide internal 
consistency within the section and to be consistent with our intent 
that advisory opinions will be based on the information provided by 
requestors.
     The word ``next'' appearing in Sec. 1008.43(c)(2) has been 
repositioned to correct a technical error. In Sec. 1008.47(c), the word 
``in'' is being replaced by the word ``by'' to correct a technical 
error.
     Section 1008.59 has been revised to reflect more clearly 
our intent that the OIG will not provide legal opinions on questions or 
issues regarding authorities vested in other Federal, State, or local 
government agencies.

IV. Regulatory Impact Analysis

Executive Order 12866

    The Office of Management and Budget (OMB) has reviewed this final 
rule in accordance with the provisions of Executive Order 12866. 
Executive Order 12866 directs agencies to assess all costs and benefits 
of available regulatory alternatives and, when rulemaking is necessary, 
to select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health, safety, distributive, 
and equity effects).
    As indicated in our preamble discussions, this rule addresses 
procedural issues involved in processing requests for advisory opinions 
submitted to the OIG. It sets up the procedures, as required by Public 
Law 104-191, for obtaining an advisory opinion on whether or not 
certain activities violate designated fraud and abuse authorities. This 
rule does not address the substance of the anti-kickback or other 
sanction statutes. Nor does it address the substance or content of 
advisory opinions which may be issued in the future. To the extent that 
advisory opinions affect the behavior of health care providers, that 
effect is the product of the substantive content of the sanction 
statutes themselves and the substantive content of the advisory 
opinions which will be issued on a case-by-case basis in the future. 
The effect of advisory opinions on health care providers is not a 
function of the process for requesting an advisory opinion.
    In addition, the extent to which advisory opinions will result in 
alteration of future business practices, if any, is impossible to 
analyze without experience. It would be completely speculative to try 
to divine to what degree business deals may or may not occur as a 
result of the substance of advisory opinions issued in the future.
    Moreover, we have no way of knowing in advance what the volume of 
requests for advisory opinions will be. However, we estimate that we 
will receive approximately 100 requests per year that will generally 
require between 3 and 60 hours each to process. Accordingly, it would 
likely cost in the range of $30,000 to $600,000 per year to issue 
advisory opinions.

Regulatory Flexibility Act

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), if a rule 
has a significant economic effect on a substantial number of small 
businesses the Secretary must specifically consider the effects of the 
rule on small business entities and analyze regulatory options that 
could lessen the impact of the rule. As stated above, this rule does 
not address the substance of the fraud and abuse statutes or the 
substance of advisory opinions which may be issued in the future. It 
describes the process by which an individual or entity may receive an 
opinion about the application of these statutes to particular business 
practices. The aggregate economic impact of this rulemaking on small 
business entities should, therefore, be minimal. There will, however, 
be costs involved in filing requests for opinions by OIG. Those costs 
will vary depending on the complexity of the request. Compared to the 
costs of seeking private legal advice, it would appear that fees 
charged for the OIG's review will not be substantial. Furthermore, the 
requirement that applicants pay cost-based fees for advisory opinions 
is not a product of this rulemaking; it is prescribed by statute. This 
rule merely lays out the procedures for such costs to be paid. Thus, we 
have concluded, and the Secretary certifies, that this final rule will 
not have a significant economic impact on a substantial number of small 
business entities, and that a regulatory flexibility analysis is not 
required for this rulemaking.

V. Paperwork Reduction Act

A. Introduction

    In order to provide appropriate advisory opinions, the OIG has 
specified certain information from the parties who request advisory 
opinions. Under section 3506(c)(2)(A) of the Paperwork Reduction Act of 
1995, we are required to solicit public comments and secure final 
approval from OMB on these information collection requirements. In the 
interim final regulations published on February 19, 1997, we indicated 
that Secs. 1008.18, 1008.36(b) and 1008.37 through 1008.40, along with 
a listing of voluntary preliminary questions, specifically contained 
information collection requirements that required approval by OMB. As a 
result, the OIG published a Federal Register notice on March 21, 1997 
(62 FR 13621) specifically requesting comments on these information 
collection activities. The information collection requirements set 
forth in the interim final rule were subsequently approved by OMB in 
September, 1997 under control number 0990-0213. OMB also approved a set 
of preliminary questions which provide guidance as toe what should be 
included in a request for an advisory opinion.

B. Discussion of Revised Information Collection Requirements

    This final rulemaking is now easing or streamlining a number of 
these information collection activities in response to public comments 
received on the interim final regulations. Specifically, as indicated 
in this preamble, we are revising Sec. 1008.36(b), with respect to the 
submission of a request, to permit parties to submit only those 
portions of documents relevant to the arrangement at issue, and 
describe in general terms those portions of the documents that have 
been withheld. In

[[Page 38323]]

addition, to avoid a blanket designation when a party seeks an advisory 
opinion, we have revised Sec. 1008.36(b)(3) to indicate that requestors 
must give explicit designation of the specific sanction authorities 
about which an advisory opinion has been requested. Also in 
Sec. 1008.36, we are eliminating the requirement that requesting 
parties submit their Medicare and Medicaid provider numbers. We are, 
however, adding a new paragraph (b)(8) to this section to require, in 
accordance with the Debt Collection Improvement Act of 1996, that 
requesting parties include their Taxpayer Identification Number when 
requesting an advisory opinion.
    Further, new Secs. 1008.36(b)(7) and 1008.39(e) are also being 
added to require requesting parties to notify the OIG if they apply to 
HCFA for an advisory opinion in accordance with 42 CFR part 411 on the 
same arrangement for which they are seeking an OIG advisory opinion. We 
believe that this change will better aid efforts to address and 
coordinate both the OIG and the HCFA advisory opinion processes.
    Finally, we are revising or clarifying certain requirements in 
Sec. 1008.38(c) concerning who may sign original (and additional) 
certifications submitted by requestors. Specifically, this revised 
section now clearly designates the appropriate signatory on behalf of 
requestors that are limited liability companies, and clarifies that 
each requesting party, and not its attorney, must provide the required 
certifications.

C. Proposed Information Collection Activities

    The proposed information collection requirement described below 
will be submitted to the OMB for review and approval, as required by 
the Paperwork Reduction Act. In accordance with the Paperwork Reduction 
Act, we are soliciting public comment on the collection of the 
information in conjunction with section 205 of HIPAA that are contained 
in this revised final. Interested persons are invited to send comments 
regarding burden estimates or any aspect of the collection of 
information, including (1) whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (2) the accuracy of the agency's estimate of the burden of the 
proposed collection of information; (3) ways to enhance the quality, 
utility and clarity of the information to be collected; and (4) ways to 
minimize the burden of the collection of information on respondents, 
including through the use of automated collection techniques or other 
forms of information technology.
    Type of information collection request: OIG Advisory Opinion 
Procedures in 42 CFR Part 1008. Section 205 of HIPAA, Public Law 104-
191, requires the Department to provide advisory opinions to the public 
regarding several categories of subject matter, including the 
requestor's potential liability under sections 1128, 1128A and 1128B of 
the Social Security Act (the Act). The OIG published interim final 
regulations in the Federal Register on February 19, 1997 (62 FR 7350), 
setting forth the procedures under which members of the public may 
request advisory opinions from the OIG, and a Federal Register notice 
on March 21, 1997 (62 FR 13621) that contained a more thorough 
discussion of the information collection activities associated with the 
advisory opinion process. In order to aid potential requestors and the 
OIG in providing opinions under this process, a series of preliminary 
questions that may be answered in an advisory opinion request was 
developed by the OIG. These preliminary questions remain voluntary. The 
information collection requirements in the interim final rule and the 
preliminary questions were approved by OMB under control number 0990-
0213.
    The aggregate information burden for the information collection 
requirements contained in these revised final regulations is set forth 
below.
    Respondents: The ``respondents'' for the collection of information 
described in the OIG rulemaking will be self-selected individuals and 
entities that choose to submit request for advisory opinions to the 
OIG. We anticipate that the respondents will include many types of 
health care providers, from sole practitioner physicians to large 
diversified publicly-traded corporations.
    Estimated number of respondents: 500. Most individuals and entities 
that provide medical services that may be paid for by Medicare, 
Medicaid or Federal health care programs could potentially have 
questions regarding one of the subject matters about which the OIG will 
issue advisory opinions. In reality, we believe that the number of 
requestors will be a small fraction of such providers.
    Over the past several years, the Office of the General Counsel, 
Inspector General Division has answered telephone inquires from 
individuals and entities seeking informal guidance with respect to the 
Medicare and State health care programs' anti-kickback statute and 
other sanction authorities. Many of the inquires related to authorities 
outside the scope of the advisory opinion process, such as the self-
referral provisions of section 1877 of the Act. In addition, we believe 
that most of the inquiries received have been of a nature that the 
caller or requestor would be unlikely to request a formal written 
advisory opinion on the subject matter. Many inquiries related to 
rather simple and straight-forward matters that could have been 
researched by private counsel at relatively minor expense. 
Nevertheless, the rate of telephone inquiries form a starting point for 
estimating point for estimating the potential number of advisory 
opinion requests.
    We estimate that the OIG received an average of six related 
telephone inquiries per day over the past several years. Using that 
history as a general guide and benchmark, we estimate an annual number 
of 500 respondents. Obviously, the actual number of requests could be 
larger since, for the first time, formal written opinions are 
available. Conversely, the number of inquiries could be less based on 
combination of several unquantifiable reasons, including the desire not 
to have one's arrangement be subject to scrutiny by the OIG (following 
issuance of the opinion) and the general public.
    Estimated number of responses per respondent: One.
    Estimated total annual (hour) burden on respondents: 5,000 hours. 
We believe that the burden of preparing requests for advisory opinions 
will vary widely depending upon the differences in the size of the 
entity making the request and the complexity of the advice sought. We 
estimate that the average burden for each submitted request for an 
advisory opinion will be in the range of 2 to 40 hours. We further 
believe that the burden for most request will be closer to the lower 
end of this range, with an average burden of approximately 10 hours per 
respondent.
    The OIG is requiring requests for advisory opinions to involve 
actual or intended fact scenarios. We anticipate that most requests 
will involve business arrangements into which the requesting party 
intends to enter. Because the facts will relate to business plans, the 
requesting party will have collected and analyzed all, or almost all, 
of the information we will need to collect to review the request. 
Therefore, in order to request an advisory opinion, in many instances 
the requestor will simply have need to compile already collected 
information for our examination. In some cases, the requestor may need 
to expend a more significant amount of time and cost in preparing a 
submission related to more complex arrangements

[[Page 38324]]

that involve a large number of parties or participants.
    Estimated annual cost burden on respondents (in addition to the 
hour burden): $1,000,000. In addition to the hour burden on respondents 
discussed above, some respondents may incur additional information 
collection costs related to the purchase of outside professional 
services, such as attorneys or consultants. We believe that the cost 
burden related to such outside assistance will vary from zero to 40 
hours per request, with an average of 10 hours. At the rate of $200 per 
hour, this total burden would amount to $1,000,000.
    Authority: Section 3506 of the Paperwork Reduction Act of 1995, 44 
U.S.C. Chapter 35, as amended.
    Interested persons are invited to submit comments regarding this 
collection of information. Comments on this information collection 
should refer to the document identifier code OIG-10-F, and should be 
sent both to: Cynthia Agens Bauer, OS Reports Clearance Officer, Room 
503H, Humphrey Building, 200 Independence Avenue, S.W., Washington, 
D.C. 20201, FAX: (202) 690-6352; and Allison Herron Eydt, OIG Desk 
Officer, Office of Management and Budget, Room 10235, New Executive 
Office Building, 725 17th Street, N.W., Washington, D.C. 20053, FAX: 
(202) 395-6974.
    To request more information on the project or to obtain a copy of 
the information collection plans, please contact the OS Reports 
Clearance Officer, (202) 690-6207. Written comments should be received 
by [60 days from date of publication in the Federal Register], but in 
order to expedite full consideration of any concerns we recommend that 
comments be submitted as soon as possible within the first 30 days. 
After due consideration of all timely-filed public comments on these 
revised information collection activities, we will re-submit these 
sections to OMB for their approval under the Paperwork Reduction Act. 
These sections will not become effective until cleared by OMB. In the 
interim, requestors should rely on the preliminary questions issued by 
the OIG on which OMB has already granted approval.

List of Subjects in 42 CFR Part 1008

    Administrative practice and procedures, Fraud, Grant programs--
health, Health facilities, Health professions, Medicaid, Medicare, 
Penalties.
    Accordingly, the interim final rule adding 42 CFR part 1008, which 
was published at 62 FR 7350 on February 19, 1997, is adopted as a final 
rule with the following changes:

PART 1008--[AMENDED]

    1. The authority citation for part 1008 continues to read as 
follows:

    Authority: 42 U.S.C. 1320a-7d(b).

    2. Section 1008.1 is amended by revising paragraphs (a) and (b) to 
read as follows:


Sec. 1008.1  Basis and purpose.

    (a) This part contains the specific procedures for the submission 
of requests by an individual or entity for advisory opinions to, and 
the issuance of advisory opinions by, the OIG, in consultation with the 
Department of Justice (DoJ), in accordance with section 1128D(b) of the 
Social Security Act (Act), 42 U.S.C. 1320a-7d(b). The OIG will issue 
such advisory opinions based on actual or proposed factual 
circumstances submitted by the requesting individual or entity, or by 
counsel on behalf of the requesting individual or entity, provided all 
other requirements of this part are satisfied (including the 
requirement that the requesting individual or entity provide the 
certifications required in accordance with Sec. 1008.38 of this part).
    (b) An individual or entity may request an advisory opinion from 
the OIG regarding any of five specific subject matters described in 
Sec. 1008.5 of this part.
* * * * *
    3. Section 1008.5 is amended by republishing introductory paragraph 
(b) and by revising paragraph (b)(1) to read as follows:


Sec. 1008.5  Matters subject to advisory opinions.

* * * * *
    (b) Exceptions. The OIG will not address through the advisory 
opinion process--
    (1) What the fair market value will be, or whether fair market 
value was paid or received, for any goods, services or property; or
* * * * *
    4. Section 1008.15 is amended by revising introductory paragraph 
(c) and paragraph (c)(3) to read as follows:


Sec. 1008.15  Facts subject to advisory opinions.

* * * * *
    (c) Advisory opinion request will not be accepted, and/or opinions 
will not be issued when--
* * * * *
    (3) An informed opinion cannot be made, or could be made only after 
extensive investigation, clinical study, testing, or collateral 
inquiry.
    5. Section 1008.18 is amended by revising paragraph (b) to read as 
follows:


Sec. 1008.18  Preliminary questions suggested for the requesting party.

* * * * *
    (b) Questions the OIG suggests that the requestor address may be 
obtained from the OIG. Requests should be made in writing, specify the 
subject matter, and be sent to the headquarter offices of the OIG.
* * * * *
    6. Section 1008.31 is amended by revising paragraphs (c), (d)(1), 
(d)(2), (d)(3), and (e)(2); by redesignating paragraphs (d)(2) through 
(d)(5) as paragraphs (d)(3) through (d)(6) respectively; and by adding 
a new paragraph (d)(2) to read as follows:


Sec. 1008.31  OIG fees for the cost of advisory opinions.

* * * * *
    (c) Calculation of costs: Prior to the issuance of the advisory 
opinion, the OIG will calculate the costs incurred by the Department in 
responding to the request. The calculation will include the costs of 
salaries and benefits payable to attorneys and others who have worked 
on the request in question, as well as administrative and supervisory 
support for such person. The OIG has the exclusive authority to 
determine the cost of responding to a request for an advisory opinion 
and such determination is not reviewable or waiveable.
    (d) Agreement to pay all costs. (1) By submitting the request for 
an advisory opinion, the requestor agrees, except as indicated in 
paragraph (d)(4) of this section, to pay all costs incurred by the OIG 
in responding to the request for an advisory opinion.
    (2) In its request for an advisory opinion, the requestor may 
request a written estimate of the cost involved in processing the 
advisory opinion. Within 10 business days of receipt of the request, 
the OIG will notify in writing of such estimate. Such estimate will not 
be binding on the Department, and the actual cost to be paid may be 
higher or lower than estimated. The time period for issuing the 
advisory opinion will be tolled from the time the OIG notifies the 
requestor of the estimate until the OIG receives written confirmation 
from the requestor that the requestor wants the OIG to continue 
processing the request. Such notice may include a new or revised 
triggering dollar amount, as set forth in paragraph (d)(3) of this 
section.
    (3) In its request for an advisory opinion, the requestor may 
designate a

[[Page 38325]]

triggering dollar amount. If the OIG estimates that the costs of 
processing the advisory opinion request have reached, or are likely to 
exceed, the designated triggering dollar amount, the OIG will notify 
the requestor. The requestor may revise its designated triggering 
dollar amount in writing in its response to notification of a cost 
estimate in accordance with paragraph (d)(2) of this section.
* * * * *
    (e) Fees for outside experts. * * *
    (2) If the OIG determines that it is necessary to obtain expert 
advice to issue a requested advisory opinion, the OIG will notify the 
requestor of that fact and provide the identity of the appropriate 
expert and an estimate of the costs of the expert advice.
    7. Section 1008.33 is amended by revising paragraphs (b) and (c) to 
read as follows:


Sec. 1008.33  Expert opinions from outside sources.

* * * * *
    (b) The time period for issuing an advisory opinion will be tolled 
from the time that the OIG notifies the requestor of the need for an 
outside expert opinion until the time the OIG receives the necessary 
expert opinion.
    (c) Once payment is made for the cost of the expert opinion, as set 
forth in Sec. 1008.31(e) of this part, either directly to the expert or 
otherwise, the OIG will arrange for a prompt expert review of the issue 
or issues in question. Regardless of the manner of payment, the 
expert's work and opinion will be subject to the sole direction of the 
OIG.
    8. Section 1008.36 is amended by republishing introductory 
paragraph (b); by revising paragraphs (b)(1), (b)(3), and (b)(4); by 
deleting existing paragraph (b)(5); by redesignating (b)(6) and (b)(7) 
as (b)(5) and (b)(6) respectively and revising them; and by adding new 
paragraphs (b)(7) and (b)(8) to read as follows:


Sec. 1008.36  Submission of a request.

* * * * *
    (b) Each request for an advisory opinion must include--
    (1) To the extent known to the requestor, the identities, including 
the names and addresses, of the requestor and of all other actual and 
potential parties to the arrangement, that are the subject of the 
request for an advisory opinion;
* * * * *
    (3) A declaration of the subject category or categories as 
described in Sec. 1008.5 of this part for which the advisory opinion is 
requested. To the extent an individual or entity requests an advisory 
opinion in accordance with Secs. 1008.5(a)(3) or (a)(5) of this part, 
the requesting individual or entity should identify the specific 
subsections of sections 1128, 1128A or 1128B of the Act or the specific 
provision of Sec. 1001.952 of this chapter about which an advisory 
opinion is sought:
    (4) A complete and specific description of all relevant information 
bearing on the arrangement for which an advisory opinion is requested 
and on the circumstances of the conduct,\1\ including--
---------------------------------------------------------------------------

    \1\ The requestor is under an affirmative obligation to make 
full and true disclosure with respect to the facts regarding the 
advisory opinion being requested.
---------------------------------------------------------------------------

    (i) Background information,
    (ii) For existing arrangements, complete copies of all operative 
documents,
    (iii) For proposed arrangements, complete copies of all operative 
documents, if possible, and otherwise descriptions of proposed terms, 
drafts, or models of documents sufficient to permit the OIG to render 
an informed opinion,
    (iv) Detailed statements of all collateral or oral understandings, 
if any, and
    (v) If applicable, a designation of trade secrets or confidential 
commercial or financial information in the manner described in 45 CFR 
5.65;
    (5) Signed certifications by the requestor(s), as described in 
Sec. 1008.37 of this part;
    (6) A check or money order payable to the Treasury of the United 
States in the amount of $250, as discussed in Sec. 1008.31(b) of this 
part;
    (7) A declaration regarding whether an advisory opinion in 
accordance with part 411 of this title has been or will be requested 
from HCFA about the arrangement that is the subject of the advisory 
opinion request; and
    (8) Each requesting party's Taxpayer Identification Number. 
(Approved by the Office of Management and Budget under control number 
0990-0213)
    9. Section 1008.37 is revised to read as follows:


Sec. 1008.37  Disclosure of ownership and related information.

    Each individual or entity requesting an advisory opinion must 
supply full and complete information as to the identity of each entity 
owned or controlled by the individual or entity, and of each person 
with an ownership or control interest in the entity, as defined in 
section 1124(a)(1) of the Social Security Act (42 U.S.C. 1302a-3(a)(1)) 
and part 420 of this chapter. (Approved by the Office of Management and 
Budget under control #0990-0213)
    10. Section 1008.38 is amended by revising paragraphs (a) and (b), 
introductory paragraph (c), paragraphs (c)(2) and (c)(3); and by adding 
a new paragraph (c)(4) to read as follows:


Sec. 1008.38  Signed certifications by the requestor.

    (a) Every request must include the following signed certification 
from all requestors: ``With knowledge of the penalties for false 
statements provided by 18 U.S.C. 1001 and with knowledge that this 
request for an advisory opinion is being submitted to the Department of 
Health and Human Services, I certify that all of the information 
provided is true and correct, and constitutes a complete description of 
the facts regarding which an advisory opinion is sought, to the best of 
my knowledge and belief.''
    (b) If the advisory opinion relates to a proposed arrangement, the 
request must also include the following signed certification from all 
requestors: ``The arrangement described in this request for an advisory 
opinion is one that [the requestor(s)] in good faith plan(s) to 
undertake.'' This statement may be made contingent on a favorable OIG 
advisory opinion, in which case, the phrase ``if the OIG issues a 
favorable advisory opinion'' should be added to the certification.
    (c) The certification(s) must be signed by--
* * * * *
    (2) The chief executive officer, or comparable officer, of the 
requestor, if the requestor is a corporation;
    (3) The managing partner of the requestor, if the requestor is a 
partnership; or
    (4) The managing member, or comparable person, if the requestor is 
a limited liability company.
    11. Section 1008.39 is amended by revising paragraph (c) and by 
adding new paragraphs (e) and (f) to read as follows:


Sec. 1008.38  Additional information.

* * * * *
    (c) Additional information should be provided in writing and 
certified to be a true, correct and complete disclosure of the 
requested information in a manner equivalent to that described in 
Sec. 1008.38 of this part.
* * * * *
    (e) Requesting parties are required to notify the OIG if they 
request an advisory opinion in accordance with part 411 of this title 
from HCFA about the arrangement that is the subject of their advisory 
opinion request.

[[Page 38326]]

    (f) Where appropriate, after receipt of an advisory opinion 
request, the OIG may consult with the requesting parties to the extent 
the OIG deems necessary.
    12. Section 1008.41 is amended by revising paragraph (a); and by 
republishing introductory paragraph (b) and revising paragraph (b)(3) 
to read as follows:


Sec. 1008.41  OIG acceptance of the request.

    (a) Upon receipt of a request for an advisory opinion, the OIG will 
promptly make an initial determination whether the submission includes 
all of the information the OIG will require to process the request.
    (b) Within 10 working days of receipt of the request, the OIG 
will--
* * * * *
    (3) Formally decline to accept the request.
* * * * *
    13. Section 1008.43 is amended by revising paragraphs (a), (b) and 
(c)(2); and by republishing introductory paragraph (c)(3) and revising 
paragraph (c)(3)(i) to read as follows:


Sec. 1008.43  Issuance of a formal advisory opinion.

    (a) An advisory opinion will be considered issued once payment is 
received and it is dated, numbered, and signed by an authorized 
official of the OIG.
    (b) An advisory opinion will contain a description of the material 
facts provided to the OIG with regard to the arrangement for which an 
advisory opinion has been requested. The advisory opinion will state 
the OIG's opinion regarding the subject matter of the request based on 
the facts provided to the OIG. If necessary, to fully describe the 
arrangement, the OIG is authorized to include in the advisory opinion 
the material facts of the arrangement, notwithstanding that some of 
these facts could be considered confidential information or trade 
secrets within the meaning of 18 U.S.C. 1905.
    (c) * * * * *
    (2) If the 60th day falls on a Saturday, Sunday, or Federal 
holiday, the time period will end at the close of the next business day 
following the weekend or holiday;
    (3) The 60 day period will be tolled from the time the OIG--
    (i) Notifies the requestor that the costs have reached, or are 
likely to exceed, the triggering amount until the time when the OIG 
receives written notice from the requestor to continue processing the 
request;
* * * * *
    14. Section 1008.45 is revised to read as follows:


Sec. 1008.45  Rescission, termination or modification.

    (a) Any advisory opinion given by the OIG is without prejudice to 
the right of the OIG to reconsider the questions involved and, where 
the public interest requires, to rescind, terminate or modify the 
advisory opinion. Requestors will be given a preliminary notice of the 
OIG's intent to rescind, terminate or modify the opinion, and will be 
provided a reasonable opportunity to respond. A final notice of 
rescission, termination or modification will be given to the requestor 
so that the individual or entity may discontinue or modify, as the case 
may be, the course of action taken in accordance with the OIG advisory 
opinion.
    (b) For purposes of this part--
    (1) To rescind an advisory opinion means that the advisory opinion 
is revoked retroactively to the original date of issuance with the 
result that the advisory opinion will be deemed to have been without 
force and effect from the original date of issuance. Recission may 
occur only where relevant and material facts were not fully, completely 
and accurately disclosed to the OIG.
    (2) To terminate an advisory opinion means that the advisory 
opinion is revoked as of the termination date and is no longer in force 
and effect after the termination date. The OIG will not proceed against 
the requestor under this part if such action was promptly, diligently, 
and in good faith discontinued in accordance with reasonable time 
frames established by the OIG after consultation with the requestor.
    (3) To modify an advisory opinion means that the advisory opinion 
is amended, altered, or limited, and that the advisory opinion 
continues in full force and effect in modified form thereafter. The OIG 
will not proceed against the requestor under this part if such action 
was promptly, diligently, and in good faith modified in accordance with 
reasonable time frames established by the OIG after consultation with 
the requestor.
    15. Section 1008.47 is amended by revising paragraphs (c) and (d) 
to read as follows:


Sec. 1008.47  Disclosure.

* * * * *
    (c) Any pre-decisional document, or part of such pre-decisional 
document, that is prepared by the OIG, DoJ, or any other Department or 
agency of the United States in connection with an advisory opinion 
request under the procedures set forth in this part generally will be 
exempt from disclosure under 5 U.S.C. 552, and will not be made 
publicly available.
    (d) Documents submitted by the requestor to the OIG in connection 
with a request for an advisory opinion may be available to the public 
in accordance with 5 U.S.C. 552 through procedures set forth in 45 CFR 
part 5.
* * * * *
    16. Section 1008.55 is amended by revising paragraph (b) to read as 
follows:


Sec. 1008.55  Admissibility of evidence.

* * * * *
    (b) An advisory opinion may not be introduced into evidence by a 
person or entity that was not the requestor of the advisory opinion to 
prove that the person or entity did not violate the provisions of 
sections 1128, 1128A or 1128B of the Act or any other law.
    17. Section 1008.59 is amended by revising paragraph (a) to read as 
follows:


Sec. 1008.59  Range of the advisory opinion.

    (a) An advisory opinion will state only the OIG's opinion regarding 
the subject matter of the request. If the arrangement for which an 
advisory opinion is requested is subject to approval or regulation by 
any other Federal, State or local government agency, such advisory 
opinion may not be taken to indicate the OIG's views on the legal or 
factual issues that may be raised before that agency. The OIG will not 
provide any legal opinion on questions or issues regarding an authority 
which is vested in other Federal, State or local government agencies.
* * * * *
    Dated: February 6, 1998.
June Gibbs Brown,
Inspector General, Department of Health and Human Services.
    Approved: March 24, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-18874 Filed 7-15-98; 8:45 am]
BILLING CODE 4150-04-M