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Article Excerpt
I. INTRODUCTION
II. STATUTES ADDRESSING MEDICARE AND MEDICAID FRAUD A. Medicaid False Claims Statute 1. Elements of the Offense a. Statement of Material Fact b. False Representation c. Knowing and Willful d. Knowledge of Falsity 2. Penalties B. Medicaid Anti-Kickback Statute 1. Elements of the Offense a. Knowing and Willful b. Solicitation or Receipt of Remuneration c. For the Purpose of Inducing Referral Business 2. Defenses a. Unconstitutional Vagueness b. Entrapment by Estoppel c. Good Faith 3. Penalties 4. Safe Harbor Provisions a. Purpose b. Uncertainty in the New Regulations c. Enumerated Safe Harbors i. Investment Interest ii. Sale of Physician Practices, Practitioner Recruitment, and Obstetrical Malpractice Insurance Subsidies iii. Contracts for Space, Equipment, Personal Services, and Employment iv. Advertisements and Promotions v. Electronic Prescription Systems vi. Referral Services vii. Relationships Between Providers viii. Arrangements Between Providers and Health Plans ix. Relationships Between Providers and Suppliers x. Ambulance Replenishing d. Proposed Amendments C. Self-Referral/Stark Amendments 1. Elements of the Offense a. Financial Relationship b. Referral c. Submission of a Claim for Services d. Absence of an Exception or Safe Harbor 2. Penalties D. The Health Insurance Portability and Accountability Act of 1996 1. Offenses 2. Defenses 3. Exemptions 4. Penalties III. PROSECUTING HEALTH CARE FRAUD WITH GENERAL FEDERAL STATUTES A. False Claims Act 1. Elements of the Offense a. Presentation of a Claim b. False, Fictitious, or Fraudulent Nature of a Claim c. Intent 2. Defenses 3. Penalties B. False Statements 1. Elements of the Offense a. Statement to a Governing Agency b. Falsity of Statement c. Intent 2. Defenses 3. Penalties C. Mail and Wire Fraud 1. Elements of the Offense a. Scheme or Artifice to Defraud b. Use of the Mails or Wire in Furtherance of the Scheme 2. Defenses 3. Penalties IV. ENFORCEMENT A. Introduction B. Entities Responsible for Enforcement 1. Federal Enforcement a. Department of Justice b. Department of Health and Human Services i. Health Care Financing Administration ii. Office of the Inspector General c. Private Parties and Qui Tam Actions 2. State Level Enforcement 3. Federal and State Cooperation 4. Compliance Programs
I. INTRODUCTION
The Centers for Medicare and Medicaid Services ("CMS"), formerly the Health Care Financing Administration ("HCFA"), (1) estimates that by the year 2016, health care spending will reach $4.3 trillion and will account for 19.5% of the Gross Domestic Product. (2) With FY 2006 federal expenditures reaching $554 billion, (3) the Medicare and Medicaid programs comprise the largest single purchaser of health care in the world, and over twenty percent of all U.S. federal government spending. (4) Thus, it is no surprise that criminals view health care fraud as a lucrative field for illicit profit. (5) Indeed, the National Health Care Anti-Fraud Association ("NHCAA") estimates that such fraud accounts for at least three, but as much as ten, percent of total health care expenditures. (6) Because health care fraud costs taxpayers more than $13.3 billion a year, (7) federal and state agencies have made health care fraud prosecution a primary focus. (8) In FY 2006, the federal government negotiated or won about $2.2 billion in judgments and settlements, plus additional administrative impositions in health care fraud cases and proceedings. (9) In addition, the number of health care fraud cases referred for criminal prosecution by the Department of Health and Human Services ("HHS") has significantly increased. (10) Even following September 11, 2001, countering fraud and abuse remains a priority. (11)
The federal government concentrates on detecting and prosecuting health care fraud in its health care insurance programs, Medicare and Medicaid. (12) Statutes enacted to deal with fraud in these specific programs are necessary because, "[a]s the government's second largest social program, Medicare continues to be an attractive target for fraud and abuse." (13)
Persons and organizations certified by the HHS to receive payment under the Social Security Act are the most likely targets for Medicare and Medicaid fraud investigations. (14) Persons and organizations include hospitals, nursing and rehabilitation centers, health maintenance organizations (HMO), and intermediate carriers such as private insurance companies, private and public clinics, medical laboratories, durable medical equipment (DME) providers, physicians, and physician practice groups. (15) In addition, assisted living facilities are of increasing concern. (16)
Several government agencies are involved in decreasing health care fraud. The Department of Justice ("DOJ") and HHS provide monitoring and enforcement of health care fraud regulations. (17) Individual states assist the HHS Office of the Inspector General ("OIG") and CMS to initiate and pursue investigations of Medicare and Medicaid fraud. (18) In addition, OIG uses its permissive exclusion authority to induce providers to help track fraud through a voluntary disclosure program. (19) In prosecutions of fraud, DOJ employs the resources of its own criminal and civil divisions, as well as those of the United States Attorneys' Offices and the FBI. (20)
Health care fraud poses a demonstrated abuse to the public treasury. This article will examine federal and state efforts to address this abuse. Section II of this article examines the statutes specifically enacted to address Medicare and Medicaid fraud and reviews the elements, defenses, penalties, and safe harbor provisions for each statute. Section III of this article discusses general federal statutes used to prosecute health care fraud, including the False Claims and False Statements Act and the Mail and Wire Fraud Act, and describes the elements of the offenses, available defenses, and penalties applicable under each statute. Section IV provides an overview of federal and state government agencies' efforts to investigate and prosecute health care fraud. (21)
II. STATUTES ADDRESSING MEDICARE AND MEDICAID FRAUD
The U.S. Congress' response to the escalating increase in Medicare and Medicaid fraud and abuse has been to strengthen existing statutes. (22) The result is a statutory and regulatory scheme that creates civil and criminal sanctions for any person or legal entity that provides health care goods or services in a fraudulent or abusive manner. (23) The federal government may also bring criminal prosecution under the False Claims Act (24) or other criminal fraud statutes, which are addressed in Section III. (25)
In four parts, this Section discusses statutes enacted to fight Medicaid and Medicare fraud and abuse. Section A discusses the Medicaid False Claims Statute. (26) Section B addresses the Medicaid Anti-Kickback Statute. (27) Section C examines the amendments that limit physician referrals. (28) Finally, Section D discusses the relevant provisions of the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). (29)
A. Medicaid False Claims Statute
The Medicaid False Claims Statute criminalizes false statements or representations in connection with any application for claim of benefits or payment, (30) or the disposal of assets, (31) under a federal health care program. (32) While the Medicaid False Claims Statute was enacted to target false statements or representations specifically related to health care, the majority of prosecutions related to health care fraud and abuse continue to be brought under other statutes. (33)
1. Elements of the Offense
Under the Medicaid False Claims Statute, the government (34) must prove four elements to sustain a conviction: (i) the defendant made, or caused to be made, a statement or representation of material fact in an application for payment or benefits under a federal health care program; (35) (ii) the statement or representation was false; (36) (iii) the defendant knowingly and willfully made the statement; (37) and (iv) the defendant knew the statement was false. (38)
a. Statement of Material Fact
The issue of materiality is a question of law. (39) Materiality exists where the false statement has a "natural tendency to influence, or be capable of affecting or influencing, a function entrusted to a government agency." (40) Only the potential for a statement to influence a government agency needs to be demonstrated; actual reliance on the false statement is unnecessary. (41)
b. False Representation
To meet the statutory requirement, the false claim must have actually been submitted to the federal government for reimbursement. (42) This includes, but is not limited to: (i) billing Medicaid for procedures or tests not performed; (43) (ii) falsely claiming that a series of procedures were needed due to "accidents;" (44) (iii) submitting claims for patients never seen; (45) and (iv) submitting claims for services not personally rendered. (46)
c. Knowing and Willful
The Medicaid False Claims Statute applies to whoever "knowingly and willfully makes or causes to be made any false statement or representation...." (47)
d. Knowledge of Falsity
While most circuits have not yet considered whether knowledge of falsity is required under the Medicaid False Claims Statute, both the Ninth and Tenth Circuits have stated that knowledge of falsity is an essential element of Medicaid fraud. (48) In United States v. Laughlin, the Tenth Circuit reversed the defendant's Medicaid fraud convictions on the ground that the trial judge committed prejudicial error by failing to apprise the jury that the defendant must have known the statement was false when the claim was submitted. (49) Similarly, in United States v. Larm, the Ninth Circuit affirmed the defendant's Medicaid fraud conviction based in part on evidence of knowledge of falsity of claims billed to Medicaid under an improper code. (50) As such, in these circuits, the defendant must not only have made a false statement, but the defendant must also have known the statement to be false at the time the statement was made. (51)
2. Penalties
Conviction under the Medicaid False Claims Statute is a felony that is punishable by a fine not to exceed $25,000, imprisonment for not more than five years, or both. (52) Prior to 1998, a person who counseled or assisted an individual to transfer or dispose of assets in order to become eligible for medical assistance was guilty of a misdemeanor and faced a fine not exceeding $10,000, imprisonment for not more than one year, or both. (53) However, the validity of this stringent provision of the statute, [section] 1320a-7b(a)(6)(ii), has been called into question. In 1998, the Northern District of New York enjoined DOJ from enforcing the provision on First Amendment grounds. (54) Relying on this case, a Florida state Court of Appeals declared this provision unconstitutional. (55) The Supreme Court, however, has not ruled on the constitutionality of this provision. (56)
Additionally, the administrator of the federal program may limit, restrict, or suspend a person found guilty under [section] 1320a-7b from participating in Medicaid and Medicare programs for a period not to exceed one year. (57) Courts have held that this suspension is not punitive and, therefore, does not violate the Double Jeopardy Clause of the Fifth Amendment. (58)
B. Medicaid Anti-Kickback Statute
The Medicaid Anti-Kickback Statute (59) prohibits knowingly and willfully paying or receiving any remuneration directly or indirectly, overtly or covertly, in cash or in kind, in exchange for prescribing, purchasing, or recommending any service, treatment, or item for which payment will be made by Medicare, Medicaid, or any other federally funded health care program. (60) The statute is quite broad in scope and applies to virtually all sectors of the health care industry. (61) Section 1320a-7b(b) prohibits not only patently illegal actions, such as kickbacks and bribes, but also an array of economic relationships significantly more complex than simple direct payments for services. (62) As a result, the statute applies to many practices that were previously commonly accepted in business, including discount arrangements, incentives given to pharmacists, payments for services, and the practice of manufacturers giving gifts and offering business courtesies. (63) Referral of Medicare and Medicaid patients to health care providers with whom the referring physician has a financial relationship is also prohibited under the "Stark II" amendments to the statute. (64)
1. Elements of the Offense
To convict under the federal Medicaid Anti-Kickback Statute, the government must prove three elements. It must show that the defendant: (i) knowingly and willfully (65) (ii) solicited or received remuneration (66) (iii) in return for, or to induce, referral of program-related business. (67)
a. Knowing and Willful
Interpretation of the "knowingly and willfully" requirement and of the definition of remuneration has yielded different results. The terms "knowingly and willfully" are not defined in the statute. (68) As such, the circuits have split on the requisite level of intent needed to satisfy the mens rea requirement. (69) Some circuits have construed "knowingly and willfully" to require that "the Government must prove that the defendants knew their conduct was unlawful." (70) For example, in Hanlester Network v. Shalala, the Ninth Circuit understood "knowingly and willfully" to require that defendants (i) know that the law prohibits offering or paying remuneration to induce referrals and (ii) nevertheless engage in prohibited conduct with the specific intent to disobey the law. (71) More recently, the Tenth Circuit in McClatchey v. United States (72) applied the higher specific intent standard. (73) This requirement would make criminal convictions more difficult to obtain (74) because the government must prove intent to disobey the law. (75) Other circuits have adopted a lower standard of intent, requiring the government to prove only that the defendant knowingly paid remuneration in return for, or in order to induce, referrals, regardless of whether the defendant knew the conduct was illegal. (76) The Sixth Circuit allows circumstantial evidence to show the requisite knowledge and fraudulent intent because of the difficulty in finding specific intent through direct evidence. (77)
b. Solicitation or Receipt of Remuneration
The Anti-Kickback Statute prohibits "any remuneration" (78) both "in return for" (79) and "to induce" (80) referrals of program-related business. (81) This includes kickbacks, bribes, or rebates, (82) as well as the transfers of anything of value in any form or manner. (83) Courts have begun to apply the doctrine of fair market value in determining whether a particular transaction falls within a safe harbor provision of the Anti-Kickback Statute. (84)
Not all courts have determined whether proof of an agreement is required to establish a violation of either subsection of the Anti-Kickback Statute. (85) In Hanlester Network, the Ninth Circuit analyzed the broad statutory language and found that the government is not required to show proof of an agreement for kickbacks, bribes, or rebates in order to establish a violation. (86) Other circuits have not yet adopted or rejected the Ninth Circuit's interpretation, which is based on construal of bribery statutes in other contexts. (87)
c. For the Purpose of Inducing Referral of Business
Several circuits have adopted the "one purpose" standard, whereby the Anti-Kickback Statute is violated if one purpose of the offer or payment was to induce referrals. (88) Most other circuits have yet to address this question. (89) The Ninth Circuit adopted the Secretary of HHS' position that "to induce" means "an intent to exercise influence over the reason or judgment of another in an effort to cause the referral of program-related business." (90) In addition, OIG has recently issued a special advisory bulletin addressing illegal inducements to patients. (91)
2. Defenses
There are three potential defenses to a prosecution under the Anti-Kickback Statute: (i) the statute is unconstitutionally vague; (ii) entrapment by estoppel; and (iii) good faith belief that one's conduct was not forbidden by the statute.
a. Unconstitutional Vagueness
The Supreme Court has stated that "a criminal statute must be sufficiently definite to give notice of the required conduct to one who would avoid its penalties." (92) A vagueness claim charges that a statute does not give fair warning of the standards by which conduct will be judged because its text yields varying possible interpretations. (93) Defendants have argued both that the Anti-Kickback Statute is generally vague and that its specific terms--including the safe harbor provisions and the term "kickback" itself--are unconstitutionally vague. (94) Both general and specific claims of vagueness have been rejected. (95) However, because the only vagueness challenges to be rejected have been those as applied to specific claims and facts in a particular case (as opposed to vagueness on the face of the statute), vagueness may still be a possible defense in some individual cases. (96)
b. Entrapment by Estoppel
Defendants have also sought dismissal under the previous Medicaid fraud prohibition (97) by claiming entrapment by estoppel. (98) The four necessary elements of entrapment by estoppel include: (i) a government must have announced that the charged criminal act was legal; (ii) the defendant relied on the government announcement; (iii) the defendant's reliance was reasonable; and (iv) given the defendant's reliance, the prosecution would be unfair. (99) In United States v. Levin, the Sixth Circuit upheld the dismissal of an indictment based on this defense, (100) finding that a surgical supply company could not be prosecuted for a sales inducement package after HCFA had stated it did not consider such package inducements to be reimbursement abuse. (101)
c. Good Faith
Finally, a good faith belief that one's conduct was not forbidden by the anti-kickback provisions may constitute a defense (102) under the Ninth Circuit's definition of "knowingly and willfully," which requires the defendant to know his actions were prohibited. (103) Thus, ignorance may be a viable defense, and a defendant may immunize himself from prosecution by claiming he relied in good faith on advice from his attorney. (104)
3. Penalties
Violations of the Anti-Kickback Statute may result in criminal and civil penalties. Violators may be fined up to $25,000, imprisoned for up to five years, or both. (105) In addition, OIG has the authority to limit, restrict, or suspend a violator from participating in Medicare and Medicaid programs for up to one year. (106) Additionally, civil remedies such as fines may be imposed. (107)
4. Safe Harbor Provisions (108)
a. Purpose
Under the Medicaid Anti-Kickback Statute, an individual who either pays or receives remuneration in order to attract business that is reimbursable under federal or state health care programs may be subject to civil and/or criminal penalties. (109) The statute has been interpreted very broadly by agencies and courts. (110) The anti-kickback provisions are so broad that they may even inhibit innocuous conduct. (111) Because of this potential, OIG has chosen to allow twenty-one payment practices that might otherwise come under the auspices of the anti-kickback laws. (112) These payment practices will be enumerated in this article. (113) OIG issues special fraud alerts and guidelines for activities it believes implicate the Anti-Kickback Statute. (114)
b. Uncertainty in the New Regulations
There are twenty-four safe harbor provisions. (115) However, due to the substantial uncertainty in the safe harbors since 1999, providers who attempt to structure their arrangements to fall within a safe harbor may not actually be protected, and each transaction will likely be evaluated on a case-by-case basis to determine whether the transaction constitutes an anti-kickback violation. (116) Incorporation of draft regulations by several safe harbors has introduced further uncertainty. (117)
It should be noted that the Stark statute and the anti-kickback provisions are not entirely consistent with one another. (118) Thus, arrangements that comply with one may still violate the other. (119) According to OIG, these discrepancies are the result of congressional intent. (120) There are two major differences between the anti-kickback provisions and the Stark statute. First, because the Anti-Kickback Statute is a criminal law, an improper intent is necessary to violate its provisions. (121) This is not true of the Stark statute, which is a civil law. (122) Second, arrangements must fall entirely within an exception to the Stark statute to be legal, but arrangements that fall outside of the scope of the anti-kickback law's safe harbor protections are not necessarily unlawful. (123) Compliance with the safe harbor provisions detailed below does not necessarily mean that the arrangement or transaction is also protected under the Stark statute. (124)
c. Enumerated Safe Harbors
Individuals or entities will be exempt (125) from prosecution under anti-kickback laws if the activities in which they engage satisfy the requirements of any of the following safe harbor provisions. (126)
i. Investment Interest
The first exception to the anti-kickback laws, the investment interest safe harbor, (127) protects an investor who holds a security issued by an entity, provided he satisfies the specific requirements enumerated in the statute. (128) The investment interest safe harbor was created because a literal interpretation of the anti-kickback laws would prohibit physicians from receiving remuneration from many investment activities. (129)
The safe harbor distinguishes between three types of securities: investments in entities with over $50 million in assets, (130) investments in entities with less than $50 million in assets, (131) and investments in entities that are located in medically underserved areas. (132) While investments in each type of entity--large entities, (133) small entities, (134) and entities in medically underserved areas (135)--must meet different criteria for this safe harbor to apply, there are some similarities between the three. First, for returns on investments to qualify for the investment interest safe harbor, an entity's products or services cannot be marketed or provided to passive investors in a manner different from their marketing to non-investors. (136) Second, neither the entity nor any investor (nor anyone acting on an investor's behalf) may make or guarantee a loan that will allow anyone who has the ability to generate business for the entity to acquire an investment interest. (137) Third, an investor's return must be directly proportional to his capital investment. (138) In addition to the similarities that the three categories share, a large entity must demonstrate that (i) the equity interest is registered with the SEC; (139) and (ii) the investment interests of an investor in a position to make or influence referrals to the entity were obtained on terms and at a price available to the public. (140)
A small entity must demonstrate that: (i) no more than forty percent of the value of the investment interest of each class of investments was held in the previous fiscal year or previous twelve-month period by investors in a position to make a referral for the entity; (ii) the terms on which an investment interest is marketed to a passive investor who is in a position to make referrals for the entity cannot be different from the terms offered to other passive investors; (iii) the terms on which an investment interest is marketed to an investor who is in the position to make referrals to the entity should not turn on the investor's ability to generate business for the entity; (iv) there is no requirement that a passive investor make referrals, or furnish items or services, to the entity to remain an investor; and (v) no more than forty percent of the entity's gross revenue related to products and services may come from referrals generated by investors. (141)
Finally, an entity located in a medically underserved area must also demonstrate that: (i) no more than fifty percent of the value of the investment interests of each class of investments was held in the fiscal year or previous twelve-month period by investors who are in a position to influence referrals for the entity; (ii) the terms on which an investment interest is marketed to a passive investor who is in a position to make referrals for the entity are not different from the terms offered to other passive investors; (iii) the terms on which an investment interest is marketed to an investor who is in the position to make referrals to the entity should not turn on the investor's ability to generate business for the entity; (iv) there is no requirement that a passive investor make referrals or furnish items or services to the entity to remain an investor; and (v) at least seventy-five percent of the dollar volume of the entity's business in the previous fiscal year or twelve-month period must be derived from the service of persons who reside in an undeserved area. (142)
ii. Sale of Physician Practices, Practitioner Recruitment, and Obstetrical Malpractice Insurance Subsidies
Additional safe harbors regarding the sale of physician practices, (143) practitioner recruitment, (144) and obstetrical malpractice insurance subsidies (145) also provide for medically underserved areas. The safe harbor provision regarding the sale of physician practices (146) is divided into two sections: (i) sales to another practitioner; (147) and (ii) sales to a hospital or other entity. (148) Each type of sale has different requirements, but sales to a hospital are generally not protected unless the practice is located in a Health Professional Shortage Area (HPSA) for that practitioner's specialty area. (149)
The practitioner recruitment safe harbor provides additional allowances for medically underserved areas. The safe harbor protecting practitioner recruitment activities (150) was designed to allow areas that have difficulty attracting physicians (151) to offer incentives to potential practitioners without being criminally liable under the Anti-Kickback Statute. (152) Payments that an entity makes to a practitioner to induce him to locate in an HHS-defined Health Professional Shortage Area ("HPSA") for the practitioner's specialty area will be protected by this safe harbor provision if nine conditions are met. The nine conditions are: (i) the arrangement is recorded in a written contract that specifies the benefits that the entity is to provide, the terms under which they are provided, and the obligations of each party; (ii) at least seventy-five percent of the revenues of a practitioner who is leaving an established practice must come from patients that the practitioner has not previously seen; (iii) at least seventy-five percent of the revenues of the new practice must come from patients residing in the HPSA or a Medically Underserved Area or who are part of a Medically Underserved Population, as defined by HHS; (iv) the benefits paid by the entity to the practitioner must not be provided for longer than three years and the contract cannot be renegotiated during this term; (v) the practitioner cannot be required to generate business for the entity as a condition for receiving benefits, although the practitioner may be required to maintain staff privileges at the entity; (vi) the practitioner cannot be prevented from establishing staff privileges at or referring business to any other entity; (vii) the amount of the benefits that the entity pays a practitioner may not be tied to the amount of business that the practitioner generates for the entity if that business is to be reimbursed in whole or in part by Medicare or a state health program; (viii) the practitioner must treat any patient receiving medical benefits or assistance under any federal health care program in a non-discriminatory manner; and (ix) the agreement between the entity and the practitioner may not benefit anyone other than the practitioner with the power to generate business for the entity. (153)
The obstetrical malpractice insurance subsidies safe harbor (154) is designed to allow hospitals or other entities to cover malpractice insurance costs for obstetricians practicing in HPSAs. (155) An entity may subsidize malpractice insurance premiums for a practitioner in a primary care HPSA who engages in obstetrical practice as a routine part of his practice if the conditions of the obstetrical malpractice insurance subsidies safe harbor are met. (156)
iii. Contracts for Space, Equipment, Personal Services, and Employment
A separate collection of safe harbor provisions specify how contracts with providers must be written to ensure immunity from anti-kickback laws. The safe harbors created for space rental agreements, (157) equipment rental agreements, (158) and personal services and management contracts (159) are similar. Payments under such contracts will not be the basis of prosecution or exclusion as long as the following criteria are fulfilled: (160) (i) the contract is in writing and signed; (161) (ii) the written contract covers all of the property or services exchanged between the parties, and the contract specifies what it covers; (162) (iii) the property or services are only to be used at periodic intervals, and the schedule of use is established in the contract; (iv) the contract is for at least one year; (v) the payments are equal to fair market value (163) and are established in advance; (164) and (vi) the space or amount of services covered by the contract is no more than necessary for a reasonable business purpose. (165)
OIG has provided guidance as to how employment contracts should be arranged to ensure that payments made by an employer to an employee are protected under the employee payments safe harbor. (166) The terms of this safe harbor are broad enough that they will be easily satisfied for most employment relationships. (167) The employee payments safe harbor does not, however, cover independent contractors. (168) iv. Advertisements and Promotions
Providers may generate business through advertising directly to patients or utilizing referral services. For these activities to avoid anti-kickback inquiry, they must fall within safe harbor requirements. A hospital that attempts to attract patients by advertising that it will waive coinsurance or deductible payments is potentially in violation of the anti-kickback statute. (169) While OIG has proposed broadening the coinsurance and deductible safe harbor proviso, (170) such waivers are presently only protected from prosecution under the anti-kickback statute if the beneficiary for whom fees are waived qualifies for subsidized services under the Public Health Services Act or Titles V or XIX of the Social Security Act, or if: (i) the waived amount is not later claimed as bad debt; (ii) the waiver is made irrespective of the reason for admission, length of stay or diagnosis; and (iii) the hospital's offer to waive fees is not part of a price reduction agreement with a third-party payor unless the agreement is part of a Medicare supplemental policy. (171)
An additional safe harbor allows health plans with agreements with CMS or a state health care program to provide care for beneficiaries to increase coverage, reduce cost sharing amounts, or reduce premium amounts for enrollees under certain conditions. (172) If the plan is an HMO, competitive medical plan (CMP), prepaid health plan (PHP) or other plan that has a contract with CMS or a state health care program, it must offer identical increased coverage or decreased cost-sharing or premiums to all Medicare or state health program enrollees unless CMS or the state approves otherwise. (173) If the plan has entered an agreement with CMS or a state to provide services on a reasonable cost or similar basis, it must offer the same coverage increase or reduced cost-sharing or premium to all enrollees covered by the contract and must not claim the costs of the increased coverage or decreased cost-sharing or premiums as a bad debt. (174)
v. Electronic Prescription Systems
In an effort to promote the use of electronic prescription systems, the MMA required the promulgation of a new safe harbor. This safe harbor protects non-monetary remuneration (in the form of hardware, software, or information technology and training services) necessary and used solely to receive and transmit electronic prescription information in accordance with the standards promulgated under this subsection and applicable federal regulations. (175) Congress has explained that the...
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