[Federal Register Volume 65, Number 241 (Thursday, December 14, 2000)]
[Proposed Rules]
[Pages 78124-78125]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31808]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Part 1001


Solicitation of New Safe Harbors and Special Fraud Alerts

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

ACTION: Notice of intent to develop regulations.

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SUMMARY: In accordance with section 205 of the Health Insurance 
Portability and Accountability Act (HIPAA) of 1996, this annual notice 
solicits proposals and recommendations for developing new and modifying 
existing safe harbor provisions under the Federal and State health care 
programs' anti-kickback statute, as well as developing new OIG Special 
Fraud Alerts.

DATES: To assure consideration, public comments must be delivered to 
the address provided below by no later than 5 p.m. on February 12, 
2001.

ADDRESSES: Please mail or deliver your written comments to the 
following address: Office of Inspector General, Department of Health 
and Human Services, Attention: OIG-51-N, Room 5246, Cohen Building, 330 
Independence Avenue, SW., Washington, DC 20201.
    We do not accept comments by facsimile (FAX) transmission. In 
commenting, please refer to file code OIG-51-N. Comments received 
timely will be available for public inspection as they are received, 
generally beginning approximately 3 weeks after publication of a 
document, in Room 5541 of the Office of Inspector General at 330 
Independence Avenue, SW., Washington, DC, on Monday through Friday of 
each week from 8:00 a.m. to 4:30 p.m.

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

SUPPLEMENTARY INFORMATION:

I. Background

A. The OIG Safe Harbor Provisions

    Section 1128B(b) of the Social Security Act (the Act) (42 U.S.C. 
1320a-7b(b)) provides criminal penalties for individuals or entities 
that knowingly and willfully offer, pay, solicit or receive 
remuneration in order to induce business reimbursed under the Federal 
or State health care programs. The offense is classified as a felony, 
and is punishable by fines of up to $25,000 and imprisonment for up to 
5 years. The OIG may also impose administrative sanctions or exclude 
violators from the Federal or State health care programs.
    The types of remuneration covered specifically include kickbacks, 
bribes, and rebates, whether made directly or indirectly, overtly or 
covertly, or in cash or in kind. In addition, prohibited conduct 
includes not only remuneration intended to induce referrals of 
patients, but remuneration intended to induce the arranging for or the 
purchasing, leasing or ordering of any good, facility, service, or item 
paid for by Federal or State health care programs.
    Since the statute on its face is so broad, concern has been 
expressed for many years that some relatively innocuous commercial 
arrangements are technically covered by the statute and are, therefore, 
subject to criminal prosecution. As a response to the above concern, 
the Medicare and Medicaid Patient and Program Protection Act of 1987, 
section 14 of Public Law 100-93, specifically required the development 
and promulgation of regulations, the so-called ``safe harbor'' 
provisions, designed to specify various payment and business practices 
which, although potentially capable of inducing referrals of business 
under the Federal and State health care programs, would not be treated 
as criminal offenses under the

[[Page 78125]]

anti-kickback statute (section 1128B(b) of the Act; 42 U.S.C. 1320a-
7b(b)) and would not serve as a basis for a program exclusion under 
section 1128(b)(7) of the Act; 42 U.S.C. 1320a-7(b)(7). The OIG safe 
harbor provisions have been developed ``to limit the reach of the 
statute somewhat by permitting certain non-abusive arrangements, while 
encouraging beneficial and innocuous arrangements'' (56 FR 35952, July 
29, 1991). Health care providers and others may voluntarily seek to 
comply with these provisions so that they have the assurance that their 
business practices are not subject to any enforcement action under the 
anti-kickback statute or program exclusion authority.
    To date, the OIG has developed and codified in 42 CFR 1001.952 a 
total of 21 final safe harbors that describe practices that are 
sheltered from liability. The OIG is also currently developing a final 
safe harbor rule addressing ambulance restocking arrangements.

B. OIG Special Fraud Alerts

    In addition, the OIG has also periodically issued Special Fraud 
Alerts to give continuing guidance to health care providers with 
respect to practices the OIG regards as unlawful. These Special Fraud 
Alerts serve to notify the health care industry that the OIG has become 
aware of certain abusive practices that the OIG plans to pursue and 
prosecute, or to bring civil and administrative action, as appropriate. 
The Special Fraud Alerts also serve as a tool to encourage industry 
compliance by giving providers an opportunity to examine their own 
practices. The OIG Special Fraud Alerts are intended for extensive 
distribution directly to the health care provider community, as well as 
those charged with administering the Medicare and Medicaid programs.
    In developing these Special Fraud Alerts, the OIG has relied on a 
number of sources and has consulted directly with experts in the 
subject field, including those within the OIG, other agencies of the 
Department, other Federal and State agencies, and those in the health 
care industry. To date, ten individual Special Fraud Alerts have been 
issued by the OIG and subsequently reprinted in the Federal 
Register.\1\
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    \1\ See 59 FR 65372 (December 19, 1994); 60 FR 40847 (August 10, 
1995); 61 FR 30623 (June 17, 1996); 63 FR 20415 (April 24, 1998); 
and 64 FR 1813 (January 12, 1999). The OIG has also issued three 
Special Advisory Bulletins--64 FR 37985 (July 14, 1999); 64 FR 52791 
(September 30, 1999); and 64 FR 61353 (November 10, 1999).
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C. Section 205 of Public Law 104-191

    Section 205 of Public Law 104-191 requires the Department to 
develop and publish an annual notice in the Federal Register formally 
soliciting proposals for modifying existing safe harbors to the anti-
kickback statute and for developing new safe harbors and Special Fraud 
Alerts.
    In developing safe harbors for a criminal statute, the OIG is 
compelled to engage in a complete and thorough review of the range of 
factual circumstances that may fall within the proposed safe harbor 
subject area so as to uncover all potential opportunities for fraud and 
abuse. Only then can the OIG determine, in consultation with the 
Department of Justice, whether it can effectively develop regulatory 
limitations and controls that will permit beneficial and innocuous 
arrangements within a subject area while, at the same time, protecting 
the Federal health care programs and their beneficiaries from abusive 
practices.

II. Solicitation of Additional New Recommendations and Proposals

    In accordance with the requirements of section 205 of Public Law 
104-191, the OIG is continuing to study safe harbor and Special Fraud 
Alert proposals submitted in response to the annual solicitations. Some 
of those suggestions have been addressed in the safe harbor rulemakings 
published on November 19, 1999 (64 FR 63504 and 64 FR 63518) or are 
already under development. The OIG last published a Federal Register 
solicitation notice for developing new safe harbors and Special Fraud 
Alerts on December 10, 1999 (64 FR 69217). The OIG received 17 timely-
filed responses from a cross-section of organizations, associations and 
other interested parties. In response to that and previously-issued 
Federal Register solicitation notices, a status report of the public 
comments received for new and modified safe harbors is set forth in 
Appendix G to the OIG's Semiannual Report covering the period April 1, 
2000 through September, 30, 2000.\2\ OIG is currently taking the 
recommendations listed in the appendix under advisement and is not 
seeking additional public comment on those proposals at this time. 
Rather, this notice seeks additional recommendations from affected 
provider, practitioner, supplier and beneficiary representatives 
regarding the development of proposed or modified safe harbor 
regulations and new Special Fraud Alerts beyond those summarized in the 
appendix to the OIG Semiannual Report referenced above.
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    \2\ The OIG Semiannual Report can be accessed through the OIG 
web site at http://www.dhhs.gov/oig/semann/index.htm.
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Criteria for modifying and establishing safe harbor provisions

    In accordance with the statute, we will consider a number of 
factors in reviewing proposals for new or modified safe harbor 
provisions, such as the extent to which the proposals would effect an 
increase or decrease in--
     Access to health care services;
     The quality of care services;
     Patient freedom of choice among health care providers;
     Competition among health care providers;
     The cost to Federal health care programs;
     The potential overutilization of the health care services; 
and
     The ability of health care facilities to provide services 
in medically underserved areas or to medically underserved populations.
    In addition, we will also take into consideration the existence (or 
nonexistence) of any potential financial benefit to health care 
professionals or providers that may vary based on their decisions 
whether to (1) order a health care item or service, or (2) arrange for 
a referral of health care items or services to a particular 
practitioner or provider.

Criteria for Developing Special Fraud Alerts

    In determining whether to issue additional Special Fraud Alerts, we 
will also consider whether, and to what extent, those practices that 
would be identified in new Special Fraud Alerts may result in any of 
the consequences set forth above, and the volume and frequency of the 
conduct that would be identified in these Special Fraud Alerts.
    A detailed explanation of justifications or empirical data 
supporting the suggestion, and sent to the address indicated above, 
would prove helpful in our considering and drafting new or modified 
safe harbor regulations and Special Fraud Alerts.

    Dated: December 7, 2000.
June Gibbs Brown,
Inspector General.
[FR Doc. 00-31808 Filed 12-13-00; 8:45 am]
BILLING CODE 4152-01-P