[Federal Register Volume 67, Number 236 (Monday, December 9, 2002)]
[Proposed Rules]
[Pages 72894-72896]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31039]


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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 anti-kickback statute 
(section 1128B(b) of the Social Security Act), as well as developing 
new OIG Special Fraud Alerts. In addition, this notice solicits public 
comments regarding the development of possible guidance addressing 
certain credentialing practices.

DATES: To assure consideration, public comments must be delivered to 
the address provided below by no later than 5 p.m. on February 7, 2003.

ADDRESSES: Please mail or deliver your written comments to the 
following address: Office of Inspector General, Department of Health 
and Human Services, Attention: OIG-71-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-71-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 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 or reward business reimbursable under 
the Federal 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 propose the imposition of civil money 
penalties, in accordance with section 1128A(a)(7) of the Act (42 U.S.C. 
1320a-7a), or exclusions from the Federal health care programs, in 
accordance with section 1128(b)(7) of the Act (42 U.S.C. 1320a-
7(b)(7)).
    Since the statute on its face is so broad, concern has been 
expressed for many years that some relatively innocuous commercial 
arrangements may be subject to criminal prosecution or administrative 
sanction. In 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, specifying 
various payment and business practices which, although potentially 
capable of inducing referrals of business reimbursable under the 
Federal health care programs, would not be treated as criminal offenses 
under the anti-kickback statute and would not serve as a basis for 
administrative sanctions. 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 related administrative authorities. The safe harbor 
provisions are codified at 42 CFR 1001.952.

B. OIG Special Fraud Alerts and Special Advisory Bulletins

    The OIG has also periodically issued Special Fraud Alerts and 
Special Advisory Bulletins to give continuing guidance to health care 
providers with respect to practices the OIG finds potentially 
fraudulent or abusive. The Special Fraud Alerts and Bulletins encourage 
industry compliance by giving providers guidance that can be applied to 
their own businesses. The OIG Special Fraud Alerts and Bulletins are 
intended for extensive distribution directly to the health care 
provider community, as well as those charged with administering the 
Federal health care programs. The OIG Special Fraud Alerts and 
Bulletins are available on the

[[Page 72895]]

OIG Web page at http://oig.hhs.gov/fraud/fraudalerts.html.

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 
required to engage in a thorough review of the range of factual 
circumstances that may fall within the proposed safe harbor subject 
area so as to uncover 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 last published a Federal Register solicitation notice 
for developing new safe harbors and Special Fraud Alerts on December 
19, 2001 (66 FR 65460). As required under section 205, a status report 
of the public comments received in response to that notice is set forth 
in Appendix G to the OIG's Semiannual Report covering the period April 
1, 2002 through September, 30, 2002.\1\ The OIG is not seeking 
additional public comment on the proposals listed in Appendix G at this 
time. Rather, this notice seeks additional recommendations regarding 
the development of proposed or modified safe harbor regulations and new 
Special Fraud Alerts beyond those summarized in Appendix G to the OIG 
Semiannual Report referenced above. A detailed explanation of 
justifications for a suggested safe harbor or Special Fraud Alert, as 
well as supporting empirical data if available, would be helpful and 
should, if possible, be included in any response to this solicitation.
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    \1\ The OIG Semiannual Report can be accessed through the OIG 
Web site at http://oig.hhs.gov/publications/semiannual.html.
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A. Criteria for Modifying and Establishing Safe Harbor Provisions

    In accordance with section 205 of HIPAA, 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--
    [sbull] Access to health care services;
    [sbull] The quality of care services;
    [sbull] Patient freedom of choice among health care providers;
    [sbull] Competition among health care providers;
    [sbull] The cost to Federal health care programs;
    [sbull] The potential overutilization of the health care services; 
and
    [sbull] The ability of health care facilities to provide services 
in medically underserved areas or to medically underserved populations.
    In addition, we will take into consideration other factors, 
including, for example, the existence (or nonexistence) of any 
potential financial benefit to health care professionals or providers 
that may vary based on their decisions to (1) order a health care item 
or service or (2) arrange for a referral for health care items or 
services to a particular practitioner or provider.

B. Criteria for Developing Special Fraud Alerts and Advisory Bulletins

    In determining whether to issue Special Fraud Alerts and Special 
Advisory Bulletins, we will consider, among other factors, whether, and 
to what extent, the identified conduct may result in any of the 
consequences set forth above, as well as the potential volume and 
frequency of the identified conduct.

III. Solicitation of Public Comments on Certain Credentialing Practices

    We have been asked by the American Medical Association (AMA) to 
issue guidance regarding the legality under the federal anti-kickback 
statute of certain practices in connection with the granting of 
hospital staff privileges. According to the AMA and other sources, an 
increasing number of hospitals are refusing to grant staff privileges 
to physicians who (1) own or have other financial interests in, or 
leadership positions with, competing healthcare entities, (2) refer to 
competing health care entities, or (3) fail to admit some specified 
percentage of their patients to the hospital. There may be other 
examples of restrictive credentialing.
    In evaluating the propriety of these credentialing practices, the 
OIG has identified the following issues about which it is soliciting 
public comment in order to develop a better understanding of these 
practices and their potential for abuse:
    A. Are hospital staff privileges ``remuneration''? Historically, so 
long as a physician had privileges at one hospital, the denial of 
privileges at another hospital was rarely actionable, since the 
physician could admit his or her patients to the hospital at which the 
physician had privileges. With the growth of managed care networks, 
especially in combination with the growth of health care systems that 
substantially control local markets, access to patients may depend on 
having privileges at the proper hospital. What effect, if any, do these 
developments have on the determination whether staff privileges are 
remuneration? Should the determination whether staff privileges have 
monetary value turn on the particular factual circumstances (e.g., in a 
given market, does access to privileges have a demonstrable monetary 
value)? Under what circumstances do staff privileges have monetary 
value?
    B. What are the implications of a hospital's denial of privileges 
to a physician who competes with the hospital? Increasingly, physicians 
invest in and own entities, such as ambulatory surgical centers, 
cardiac catheterization labs, and specialty hospitals, that compete 
with hospital services. These physicians may be in a position to steer 
profitable business or patients to their own competing business through 
their control of referrals. A credentialing policy that categorically 
refuses privileges to physicians with significant conflicts of interest 
would not appear to implicate that anti-kickback statute in most 
situations. How should such physicians be defined: ownership? employee 
or contractor? staff leadership position?
    C. Should the exercise of discretion by the privilege-granting 
hospital affect the analysis under the anti-kickback statute? Several 
credentialing practices have been brought to our attention that give 
the privilege-granting hospital discretion to evaluate the ``financial 
conflict'' created by a physician's outside business interests and 
permit the physician to retain privileges subject to periodic review. 
Such discretionary decision-making appears to raise substantial risks 
under the anti-kickback statute (i.e., privileges are conditioned on a 
sufficient flow of referred business). What factors other than the 
amount of business still being generated for the hospital might be used 
as the basis for the hospital exercising discretion in these kinds of 
arrangements? From a policy perspective, are there bases for the 
hospital's review or exercise of discretion that should not implicate 
the

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anti-kickback statute? Are there limits on discretion that might 
provide sufficient safeguards under the anti-kickback statute?
    D. Can privileges ever be conditioned on referrals, other than 
minimums necessary for clinical proficiency? Some hospitals have 
apparently attempted to condition privileges on a physician's referral 
of a predetermined level of his or her hospital business to the 
hospital. Assuming the privileges have monetary value, such conditions 
would appear to be suspect under the anti-kickback statute. Are there 
conditions under which such conditions might be justified? Failing 
financial health? Guaranteeing a patient volume sufficient to support 
offering a critical service not otherwise available (e.g., a cardiac 
service in a rural area)? Does the level of required referrals or 
business matter (e.g., is there a difference between a requirement of 
25 percent of referrals compared to 75 percent)?
    E. What is the effect of credentialing restrictions that apply only 
to members of a group practice? What are the implications of a hospital 
restricting privileges for some, but not all, members of a group 
practice? What about restricting privileges of the entire group?
    Finally, we are interested in comments on other aspects of 
restrictive credentialing practices that should inform our review of 
these practices and development of possible guidance under the anti-
kickback statute.

    Dated: November 19, 2002.
Janet Rehnquist,
Inspector General.
[FR Doc. 02-31039 Filed 12-6-02; 8:45 am]
BILLING CODE 4152-01-P