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Innovations in Health Care Delivery & Financing October 25, 2019

Fraud Laws Targeted as Major Barrier to SDOH Interventions and Health System Transformation

Health care is a highly regulated industry with complex sets of rules put in place to safeguard, among other things, patients and federal health care program dollars. These legal frameworks, while important, were not designed with the current health care system transformation in mind and many stifle its implementation. Advocates working on the integration of social determinants of health (“SDOH”) interventions into health care settings, for example, are often told “it can’t be done” or to “dream smaller” by real and perceived concerns over compliance.

What would it take to protect patients, payers, and providers while better supporting innovation? This is the question facing the U.S. Department of Health and Human Services (“HHS”) in what the agency is calling a “regulatory sprint to coordinated care.” With a major proposed rule published on October 17, HHS has officially started the next leg of the race.

Spotlight Shines on Federal Health Care Fraud and Abuse Laws

Two major areas of federal law that impact innovation are (1) the Anti-Kickback Statute (“AKS”) and (2) prohibitions on providing inducements to federal health care program beneficiaries (the “Beneficiary Inducements CMP”), both of which are in place to combat fraud.

  • The Anti-Kickback Statute (42 U.S.C. § 1320a-7(b)) generally prohibits knowingly and willfully offering, paying, soliciting or receiving anything of value to induce or reward referrals for items/services payable under a federal health care program. Safe harbors exempt certain arrangements from liability.
  • The Beneficiary Inducements CMP (42 U.S.C. § 1320a-7a) generally prohibits offering something of value to a federal health care program beneficiary that is likely to influence the beneficiary’s selection of particular providers unless the transaction fits within an exception.

We regularly hear from our partners, both community-based organizations and SDOH champions within health care settings, that providers are hesitant to develop food insecurity, housing, and transportation programs out of concerns that providing such additional support to patients will violate these laws.

Exceptions Currently in Place Limit the Reach of SDOH Interventions

Under both AKS and the Beneficiary Inducements CMP, several arrangements that might otherwise appear to be a violation are expressly permitted under federal rules that establish safe harbors and/or exceptions. In the context of providing services and supports to address patients’ unmet social needs, relevant exceptions include those for assistance that promotes access to care or is based on financial need, and a safe harbor created in 2016 that protects certain transportation assistance.

Unfortunately, these protections do not extend far enough in scope.  In order to take advantage of any given safe harbor or exception, an arrangement must comply with several highly specific design criteria or “conditions.”  For example, free local transportation is currently only protected if the service is (1) geographically limited (to trips within 25 or 50 miles depending on the area), (2) offered only to established patients, and (3) for purposes of accessing medically necessary items and services, among other requirements.  This type of rigidity means that programs often do not reach all of the patients that would benefit from a service or address a sufficiently diverse set of needs.  Consider the example above.  One glaring limitation is that transportation to social services is not expressly protected.

Significant and persistent information gaps impose additional barriers. Ongoing uncertainty about the application of these laws has a chilling effect and, although highly anticipated, word of the transportation safe harbor has been slow to spread.

The Regulatory Sprint to Coordinated Care: Proposed Changes to Fraud and Abuse Laws

In June 2018, HHS announced a new initiative “focused on identifying regulatory requirements or prohibitions that may act as barriers to coordinated care, assessing whether those regulatory provisions are unnecessary obstacles to coordinated care, and issuing guidance or revising regulations to address such obstacles.” The initiative was dubbed the “Regulatory Sprint to Coordinated Care,” and a request for information (“RFI”) on barriers associated with AKS and the Beneficiary Inducement CMP followed soon after in August 2018. (Additional priority areas for HHS include reforming the federal law governing physician self-referral (the “Stark Law”) and the Health Information Portability and Accountability Act (“HIPAA”).)

Now, in the proposed rule, we are seeing some promise of progress and have an opportunity to advocate for even greater flexibility. There is a lot to unpack about the proposal but, for now, we want to highlight some interesting facts about one particular new protection that HHS is considering for tools and supports provided to patients for “patient engagement and…to improve quality, health outcomes, and efficiency”:

  • In the proposal, HHS recognizes that “[t]here is substantial evidence that unmet social needs related to…determinants of health, such as transportation, nutrition, and safe housing, play a critical role in health outcomes and expenditures. These needs must be considered when thinking about maximizing health outcomes and lowering healthcare costs.”
  • Protected tools and supports would include items, goods, and services that bolster preventive care, in addition to those that improve care coordination and management. HHS identifies potential examples, such as nutrition to address clinical conditions, and notes that it is considering whether the final rule should specify specific tools and supports to address SDOH that would be permissible.
  • As currently written, only some health care providers would be permitted to rely on this new safe harbor. Moreover, interventions would have to identify a target patient population and items/services could only be provided to members of the target population.

Importantly, HHS is soliciting input on these issues and others. The devil is in the details and it will be critical that the terms of these new protections, in their final form, support maximum impact (while still protecting against fraud and abuse). Comments are due by December 31, 2019.

The Law Lab is actively monitoring HHS’ journey through its Regulatory Sprint to Coordinated Care, and will be responding to the proposed revisions and questions raised by the Agency through the public comment process.