[Federal Register Volume 67, Number 236 (Monday, December 9, 2002)]
[Proposed Rules]
[Pages 72892-72894]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31040]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Part 1001


Solicitation of Public Comments on Exceptions Under Section 
1128A(a)(5) of the Social Security Act

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

ACTION: Notice of intent to develop regulations.

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SUMMARY: The OIG is soliciting public comments on the possible 
development of exceptions under section 1128A(a)(5) of the Social 
Security Act (the Act), the civil money penalty (CMP) prohibition on 
offering inducements to Medicare and Medicaid beneficiaries to 
influence their selection of a provider, practitioner, or supplier. In 
particular, the OIG is interested in comments on possible exceptions 
for complimentary local transportation, inducements related to clinical 
trials, and inducements of nominal value. The OIG welcomes suggestions 
for other exceptions under section 1128A(a)(5) of the Act, as well.

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-72-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-72-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

    The Health Insurance Portability and Accountability Act of 1996 
(HIPAA), Public Law 104-191, amended the Social Security Act (the Act) 
to prohibit providers from offering patients any inducement to order or 
receive Medicare or Medicaid reimbursable items or services from a 
particular provider, practitioner, or supplier. Specifically, section 
231(h) of HIPAA established a new provision, section 1128A(a)(5) of the 
Act, to provide for the imposition of a CMP against any person who:

    Offers or transfers remuneration to any individual eligible for 
benefits under [Medicare or Medicaid] that such person knows or 
should know is likely to influence such individual to order or 
receive from a particular provider, practitioner, or supplier any 
item or service for which payment may be made, in whole or in part, 
under [Medicare or Medicaid].

    Section 231(h) of HIPAA also created a new section 1128A(i)(6) of 
the Act to define ``remuneration'' for purposes of section 1128A(a)(5) 
of the Act. This section defines ``remuneration,'' in relevant part, as 
``transfers of items or services for free or for other than fair market 
value.'' Remuneration does not include certain enumerated practices, 
including waivers of coinsurance and deductible amounts if the waiver 
is not advertised; not routinely offered; and made following an 
individualized good faith assessment of financial need or after the 
failure of reasonable collection efforts. Other statutory exceptions 
include properly disclosed copayment differentials in health plans; 
incentives to promote the delivery of preventive health care services; 
any practice permitted under a safe harbor to the federal anti-kickback 
statute at 42 CFR 1001.952; and waivers of hospital outpatient 
copayment amounts in excess of the minimum copayment amounts.
    In 1998, Congress enacted section 6201 of the Omnibus Consolidated 
and Emergency Supplemental Appropriations Act for Fiscal Year 1999, 
which authorized the Secretary to issue regulations establishing ``safe 
harbor'' exceptions under section 1128A(a)(5) of the Act for payment 
practices that would otherwise run afoul of the statute. In addition, 
the Secretary is vested with the authority to issue advisory opinions 
providing legal and regulatory guidance to providers under this 
section.
    The OIG issued proposed regulations interpreting section 
1128A(a)(5) of the Act on March 25, 1998 (63 FR 14393) and final 
regulations on April 26, 2000 (65 FR 24400). To alert the industry to 
the scope of acceptable practices, promote compliance, and level the 
competitive playing field, we have issued further guidance on the 
statute in a Special Advisory Bulletin on Offering Gifts and Other 
Inducements to Beneficiaries (67 FR 55855; August 30, 2002). In the 
Bulletin, we indicated our intent to solicit public comments on the 
possible regulatory exceptions to the statute.

II. Solicitation of Comments and Suggestions for Additional Exceptions

    The OIG invites comments and suggestions for new regulatory 
exceptions to section 1128A(a)(5) of the Act. In particular, we are 
seeking comments and suggestions on possible exceptions for 
complimentary local transportation; remuneration to induce 
participation in clinical trials; and inducements of low value. We also 
welcome comments on other possible exceptions to section 1128A(a)(5). 
Comments that include detailed descriptions of relevant industry 
business practices, address the legal and policy concerns raised by the 
application of section 1128A(a)(5) to particular business practices, 
and offer specific suggestions for applicable criteria that might apply 
under a regulatory exception are particularly useful.

A. Criteria for Establishing Exceptions

    In giving the OIG authority to create additional regulatory 
exceptions to--and issue advisory opinions on--section 1128A(a)(5) of 
the Act, Congress provided no guidance on the criteria to be applied. 
The absence of criteria is especially problematic because any exception 
to the prohibition creates the very harm prohibited (i.e., the 
inducement of beneficiaries), resulting in an uneven competitive 
playing field. Moreover, any exception will result in a valuable 
benefit to Medicare and

[[Page 72893]]

Medicaid beneficiaries. In the absence of statutory guidance, 
attempting to distinguish among types of benefits or categories of 
beneficiaries necessarily results in arbitrary standards. In these 
circumstances, the OIG has determined to exercise its regulatory 
authority cautiously by limiting exceptions to areas in which Congress 
has indicated a desire for flexibility in the provision remuneration to 
beneficiaries or where the provision of such remuneration serves a 
governmental interest.

B. Specific Areas of Interest

1. Complimentary Local Transportation
    In enacting section 1128A(a)(5) of the Act, Congress intended that 
the statute not preclude the provision of complimentary local 
transportation of nominal value (H.R. Conf. Rep. No. 104-191 at 255 
(1996)). We have interpreted nominal value to mean no more than $10 per 
item or service or $50 in the aggregate. (See 65 FR 24411; April 6, 
2000.) We are concerned that this interpretation may be overly 
restrictive in the context of complimentary local transportation. 
Accordingly, we seek public input on the following issues as they 
relate to a possible exception for complimentary transportation:
    [sbull] Forms of transportation. What forms of transportation 
should be considered in developing an exception and how should various 
forms of transportation be treated? We believe that luxury 
transportation (e.g., limousines), as well as certain specialized 
transportation (e.g., ambulances) should not be covered in an 
exception. Are there other forms of transportation that should be 
excluded (e.g., handicapped-accessible vans, taxis, public 
transportation)?
    [sbull] Area in which transportation is offered. Should the 
complimentary transportation service be limited to a provider's primary 
service area? If so, how should a service area be defined? Should there 
be a different rule for rural or underserved areas or patients? Should 
complimentary transportation be permitted to the nearest facility even 
if the patient resides outside the primary service area?
    [sbull] Eligibility for transportation. Should providers be 
required to offer the transportation services to all patients? What 
other kinds of eligibility requirements might be permitted? Certain 
eligibility criteria, such as diagnosis or insurance coverage, would 
clearly raise significant issues. What about other eligibility 
criteria, such as a showing of transportation or financial need, 
chronic conditions, special services, or safety or treatment 
compliance?
    [sbull] Type of provider offering the transportation. Should the 
rules be different depending on the type of provider or supplier 
offering the transportation services? Free transportation services 
offered by individuals or small groups of providers, including 
physicians, or by freestanding clinics have been subject to greater 
scrutiny. Historically, for example, unscrupulous providers and clinics 
have offered free transportation in conjunction with Medicare and 
Medicaid frauds.
    [sbull] Destination. Should a provider be permitted to furnish 
transportation to other health care providers or only to its own 
premises for appointments for its own services? Some hospitals 
apparently provide free transportation to patients for private office 
visits with local physicians or other professionals; others limit 
transportation service to practitioners with hospital staff privileges. 
In addition, many hospitals and physician practices are co-located on a 
single campus. What safeguards might be included to protect against 
abuse if transportation is offered to the premises of other providers 
(e.g., free transportation of patients as a financial benefit to other 
providers)? What about transportation among entities affiliated through 
health systems? What about transportation for reasons other than 
medical appointments?
    [sbull] Marketing and advertising. What are the practical and 
policy considerations associated with allowing marketing or advertising 
of complimentary transportation services? What would constitute 
reasonable limits on promotional activities?
    [sbull] Other criteria. Are there other safeguards, limitations, or 
conditions that should apply in any exception for complimentary 
transportation?
2. Clinical Trials
    Historically, sponsors of clinical trials have offered various 
inducements to patients to enroll in their trials. Because Medicare did 
not cover medical services incident to most clinical trials, these 
inducements did not trigger scrutiny under the various federal program 
fraud and abuse sanctions. However, in 2000, the Centers for Medicare 
and Medicaid Services (CMS) issued a national coverage determination 
(NCD) providing for coverage for physician, hospital, and other 
services incidental to certain clinical trials (``Medicare Coverage 
Routine Costs of Beneficiaries in Clinical Trials''; September 19, 
2000). Under the NCD, all other requirements of the Medicare program 
apply, including the various fraud and abuse authorities. In extending 
coverage to certain clinical trials, CMS intended to remove impediments 
to Medicare beneficiaries who want to enroll in trials, but not to 
grant favored status to clinical trials. This distinction is important, 
because many clinical trials involve unproven alternatives to existing 
effective treatments.
    Because we are concerned that section 1128A(a)(5) not unduly impede 
valuable clinical trials, we are soliciting comments and suggestions on 
how to apply section 1128A(a)(5) to inducements to participate in bona 
fide clinical trials. Issues of particular interest to the OIG include:
    [sbull] Threshold level of Medicare reimbursement. In many clinical 
trials, the volume and value of covered Medicare services provided to 
enrollees is likely to be significant, and trial sponsors may have a 
financial incentive to offer inducements to Medicare beneficiaries to 
enroll. For example, hospitalization triggers a substantial Medicare 
payment. However, it is possible that some clinical trials may involve 
only a small volume or value of Medicare covered services. Should a 
possible exception turn on the volume or value of Medicare services 
involved? If so, what would be the appropriate threshold level?
    [sbull] Sponsorship of studies. One issue in crafting an exception 
for inducements associated with clinical trials would be defining the 
universe of trials that would be covered by the exception. We believe 
covered trials should have a clear potential public benefit. The scope 
of ``deemed'' trials under the NCD is overly broad for purposes of a 
possible exception to section 1128A(a)(5) of the Act. We are interested 
in comments regarding the scope of covered trials and the criteria that 
might apply to distinguish those with potential public benefit from 
those with solely or chiefly commercial value. We are also concerned 
that, as noted in several OIG studies, some trial sponsors provide 
investigators and other persons in positions to identify and influence 
potential enrollees with substantial monetary payments. (See, for 
example, the OIG report issued in June 2000, entitled ``Recruiting 
Human Subjects: Pressures in Industry-Sponsored Clinical Research'' 
(OEI-01-97-00195)).
    [sbull] Type or amount of inducements. We are interested in 
information regarding the types of beneficiary inducements that might 
be offered in connection with clinical trials (e.g., waivers of 
copayments, provision of otherwise uncovered services, drugs, or 
equipment). In the clinical trial context,

[[Page 72894]]

what are the practical and policy considerations associated with the 
various forms of inducements? Which kinds of inducements matter most to 
the efficient and successful completion of a clinical trial? What might 
be a reasonable cap on the value of inducements offered to particular 
patients?
    [sbull] Sources of benefits. The OIG is aware that, in some cases, 
free items or services are offered to enrollees in a clinical trial by 
parties other than the trial sponsor. For example, a manufacturer might 
furnish patients with free or discounted products used in the course of 
the trial (but not the products that are the subject of the clinical 
trials). These kinds of arrangements raise concerns, as the benefits 
may induce enrollees to continue to use the manufacturer's products 
after completion of the trial.
3. Inducements of Low Value
    As noted above, Congress indicated an intent to permit items and 
services of ``nominal'' value under section 1128A(a)(5) of the Act. 
Consistent with this intent, in the preamble to the final regulations 
governing section 1128A(a)(5), we indicated that items and services of 
nominal value are not prohibited by the statute and thus no exception 
would be necessary (65 FR 24410; April 6, 2000). We further interpreted 
``nominal'' value to mean less the $10 per item and $50 in the 
aggregate on an annual basis (65 FR 24411; April 6, 2000).
    We invite comments on whether, for the sake of clarity and bright-
line guidance, we should codify an exception for inducements of low 
value, and, if so, what the value should be. Should the exception 
include a per item or service limitation on value or should it look 
solely to value on an annual (or other) aggregate basis?
4. Other Exceptions
    The OIG welcomes suggestions for other possible exceptions to 
section 1128A(a)(5) of the Act. As noted above, comments are 
particularly useful if they address the legal and policy concerns 
raised by the application of section 1128A(a)(5) to particular business 
practices and offer specific suggestions for applicable criteria.

    Dated: November 19, 2002.
Janet Rehnquist,
Inspector General.
[FR Doc. 02-31040 Filed 12-6-02; 8:45 am]
BILLING CODE 4152-01-P