Is it Time for New Anti-Kickback Safe Harbors?

A safe harbor is essential when the seas get rough, and it’s just as essential when handling something as complicated as the anti-kickback statute. As the health-care system transitions toward a value-based payment system, safe harbors are even more important, and drug and device companies recently urged the Health and Human Services Office of Inspector General to create new exceptions to the statute.

The OIG received six safe harbor proposals altogether, including one from the Advanced Medical Technology Associations (AdvaMed) that called for two new safe harbors that would protect value-based pricing arrangements as well as value-based warranties. The new safe harbors would help encourage manufacturers and providers develop value-based arrangements by giving them a better sense of what's permitted under existing regulations, AdvaMed said.

Value-based pricing arrangements allow for price adjustments based on clinical outcomes, while value-based warranty arrangements allow manufacturers to repay providers when expected clinical outcomes aren't achieved.

The industry comments were in response to the Health and Human Services OIG's annual request for proposals and recommendations for developing or modifying anti-kickback safe harbors. 

Pharmaceutical manufacturer Eli Lilly and the Pharmaceutical Research and Manufacturers of America also submitted comments urging the creation of new safe harbors. Tom Crane, a health-care attorney with Mintz Levin in Boston, told me that the comments represent a comprehensive effort to raise the issue that existing safe harbors aren’t doing enough to encourage innovation and are discouraging the move toward value-based payment arrangements.

Crane, who also serves on Bloomberg BNA's Health Care Fraud Report's advisory board, said the safe harbor proposals will likely create significant challenges for the Office of Inspector General, as one-size-fits-all safe harbors have to be drafted very narrowly.

As a result, industry stakeholders should consider using the existing OIG advisory opinion process to check the validity of new value-based arrangements, at least until there are details on any safe harbors the OIG releases, Crane said.

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