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DEPARTMENT OF HEALTH AND recommendations, without unduly I. Executive Summary delaying any final rulemaking. HUMAN SERVICES A. Purpose and Need for Regulatory ADDRESSES: In commenting, please Office of Inspector General Action reference file code OIG–0936–AA10–P. The Secretary of Health and Human Because of staff and resource 42 CFR Parts 1001 and 1003 Services (the Secretary) has identified limitations, we cannot accept comments transforming our healthcare system to RIN 0936–AA10 by facsimile (fax) transmission. one that pays for value as one of the top However, you may submit comments priorities of the Department of Health Medicare and State Healthcare using one of three ways (no duplicates, Programs: Fraud and Abuse; and Human Services (the Department or please): HHS). Unlike the traditional fee-for- Revisions To Safe Harbors Under the 1. Electronically. You may submit Anti-Kickback Statute, and Civil service (FFS) payment system, which electronic comments on this regulation rewards providers for the volume of care Monetary Penalty Rules Regarding to http://www.regulations.gov. Follow Beneficiary Inducements delivered, a value-driven healthcare the ‘‘Submit a comment’’ instructions. system is one that pays for health and AGENCY: Office of Inspector General 2. By regular, express, or overnight outcomes. Delivering better value from (OIG), Department of Health and Human mail. You may send written comments our healthcare system will require the Services (HHS). to the following address: Office of transformation of established practices ACTION: Proposed rule. Inspector General, Department of Health and enhanced collaboration among and Human Services, Attention: OIG– providers and other individuals and SUMMARY: This proposed rule is being 0936–AA10–P, Room 5521, Cohen entities. The purpose of this proposed issued by the Office of Inspector General Building, 330 Independence Avenue rule is to modify existing safe harbors to (OIG) in conjunction with the SW, Washington, DC 20201. the anti-kickback statute and add new Department of Health and Human Please allow sufficient time for mailed safe harbors and a new CMP law Services’ Regulatory Sprint to comments to be received before the exception to remove potential barriers to Coordinated Care. It proposes to add, on close of the comment period. more effective coordination and a prospective basis only after a final rule 3. By hand or courier. If you prefer, management of patient care and is issued, safe harbor protections under you may deliver your written comments delivery of value-based care that the Federal anti-kickback statute for by hand or courier before the close of improves quality of care, health certain coordinated care and associated the comment period to: Office of outcomes, and efficiency. value-based arrangements between or Inspector General, Department of Health Since the enactment in 1972 of the among clinicians, providers, suppliers, and Human Services, Cohen Building, Federal anti-kickback statute, there have and others that squarely meet all safe Room 5521, 330 Independence Avenue been significant changes in the delivery harbor conditions. It also would add SW, Washington, DC 20201. of, and payment for, healthcare items protections under the anti-kickback Because access to the interior of the and services within the Medicare and statute and civil monetary penalty Medicaid programs and for non-Federal (CMP) law that prohibits inducements Cohen Building is not readily available to persons without Federal Government payors and patients. This has included offered to patients for certain patient changes to traditional FFS Medicare engagement and support arrangements identification, commenters are encouraged to schedule their delivery (i.e., Medicare Parts A and B), Medicare to improve quality of care, health Advantage, and states’ Medicaid outcomes, and efficiency of care with one of our staff members at (202) 619–0335. programs. For some time, the delivery that squarely meet all safe Department has worked to align Inspection of Public Comments: All harbor conditions. The proposed rule payment under the Medicare program comments received before the end of the would add a new safe harbor for with the quality of the care provided to comment period will be posted on donations of cybersecurity technology Federal health care program http://www.regulations.gov for public and amend the existing safe harbors for beneficiaries. Laws such as the viewing. Hard copies will also be electronic health records (EHR) Medicare Prescription Drug, available for public inspection at the arrangements, warranties, local Improvement, and Modernization Act of Office of Inspector General, Department transportation, and personal services 2003 (MMA),1 the Deficit Reduction Act of Health and Human Services, Cohen and management contracts. Further, the of 2005 (DRA),2 and the Medicare proposed rule would add a new safe Building, 330 Independence Avenue Improvements for Patients and harbor pursuant to a statutory change SW, Washington, DC 20201, Monday Providers Act of 2008 (MIPPA) 3 are set forth in the Bipartisan Budget Act of through Friday from 8:30 a.m. to 4 p.m. among statutes that guided the 2018 (Budget Act of 2018) related to To schedule an appointment to view Department’s efforts to move toward beneficiary incentives under the public comments, phone (202) 619– healthcare delivery and payment Medicare Shared Savings Program and a 0335. reform. The Patient Protection and new CMP exception for certain FOR FURTHER INFORMATION CONTACT: Affordable Care Act (ACA) 4 required or telehealth technologies offered to Jillian Sparks or Meredith Williams, encouraged significant changes to the patients receiving in-home dialysis, also (202) 619–0335. Medicare program’s payment systems pursuant to the Budget Act of 2018. SUPPLEMENTARY INFORMATION: and provided the Secretary with broad DATES: To ensure consideration, authority to test and implement models comments must be delivered to the Social Security United States Code to promote reforms, including through address provided below by 5 p.m. on Act citation citation the Center for Medicare and Medicaid December 31, 2019. The 75-day period for public comments being set forth in 1128B, 1128D, 1102, 42 U.S.C. 1320a–7b, 1 Public Law 108–173, 117 Stat. 2066. this proposed rule will serve to protect 1128A. 42 U.S.C. 1320a– 2 Public Law 109–171, 120 Stat. 4. 3 the public’s interest in this rulemaking 7d, 42 U.S.C. Public Law 110–275, 122 Stat. 2494. 1302, 42 U.S.C. 4 Public Law 111–148, 124 Stat. 119, as amended process by allowing for an opportunity 1320a.–7a. by the Health Care and Education Reconciliation for additional input and Act of 2010 (Pub. L. 111–152, 124 Stat. 1029).

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Innovation (the Innovation Center) • providers’ alignment on end-to-end • safe harbor protection for financial within the Centers for Medicare & treatment (i.e., coordination among arrangements with entities not Medicaid Services (CMS).5 providers along the patient’s full care participating in Innovation Center The Department has identified the journey); models, including commercial and self- broad reach of the Federal anti-kickback • incentives for providers to pay APM arrangements; statute 6 and the CMP law provision coordinate, collaborate, and provide • additional protection for patient prohibiting inducements to patients tools to be more involved in tools and supports, such as in-kind beneficiaries, the ‘‘beneficiary their own care; and items and services to support patient inducements CMP,’’ 7 as well as the • information sharing among compliance with discharge and care Federal physician self-referral law providers, facilities, and other plans, services and supports to address (sometimes known as the Stark law),8 as stakeholders in a manner that facilitates unmet social needs affecting health, and potentially inhibiting beneficial efficient care while preserving and expanded protections under the local transportation safe harbor; arrangements that would advance the protecting patient access to data. • transition to value-based care and In connection with the Regulatory enhanced safe harbor protection for improve the coordination of patient care Sprint, OIG issued a request for transfers of information technology, among providers and across care information (OIG RFI) regarding the data, and cybersecurity tools; • modifications to the current settings in both the Federal health care Federal anti-kickback statute and ‘‘patchwork’’ fraud and abuse waiver programs and commercial sectors. beneficiary inducements CMP on framework for Innovation Center models Industry stakeholders have informed the August 27, 2018.10 CMS published a and the Medicare Shared Savings Department that, because the Request for Information Regarding the Program; and consequences of potential Physician Self-Referral Law in June • a variety of protections for 11 noncompliance with the physician self- 2018 (CMS RFI). In the OIG RFI, we pharmaceutical and medical device referral law and the Federal anti- sought feedback on ways in which we manufacturer arrangements, including kickback statute could be dire, might modify or add new safe harbors broad protections for drug and medical providers, suppliers, and others may be to the Federal anti-kickback statute and device manufacturer participation in discouraged from entering into exceptions to the beneficiary value-based contracts, pricing innovative arrangements that would inducements CMP definition of arrangements, warranty arrangements, improve quality and health outcomes, ‘‘remuneration’’ to foster arrangements and APMs, as well as protection for produce health system efficiencies, and that would promote care coordination coupons and other means of direct lower costs (or slow their rate of and advance the delivery of value-based copayment assistance to Medicare Part growth). care while also protecting patients and D beneficiaries in certain situations. To address these concerns and taxpayer dollars against harms caused accelerate the transformation of the by fraud and abuse. OIG received 359 B. Summary of OIG’s Approach and healthcare system into one that better comments in response to its RFI from a Proposals pays for value and promotes care variety of individuals and organizations. These proposed regulations are coordination, HHS launched a While most commenters strongly informed by comments and other Regulatory Sprint to Coordinated Care asserted the need for regulatory reform internal and external sources of (Regulatory Sprint), led by the Deputy to the anti-kickback statute safe harbors information, as well as our experience Secretary. This Regulatory Sprint aims and exceptions to the definition of interpreting and applying the safe to remove potential regulatory barriers ‘‘remuneration’’ under the beneficiary harbors and beneficiary inducements to care coordination and value-based inducements CMP, a number of CMP exceptions to a wide variety of care created by four key healthcare laws commenters acknowledged that arrangements. In developing this and associated regulations: (i) The increased regulatory flexibility could proposed rule, OIG has followed several physician self-referral law, (ii) the create program integrity vulnerabilities guiding principles. The first guiding Federal anti-kickback statute, (iii) the or increase the risk of harms associated principle has been to design proposed Health Insurance Portability and with fraud and abuse and urged OIG to safe harbors that allow for beneficial Accountability Act of 1996 (HIPAA),9 exercise caution and include adequate innovations in healthcare delivery. The and (iv) rules under 42 CFR part 2 safeguards in any regulatory proposals. second guiding principle has been to related to substance use disorder Comments supporting regulatory reform avoid promulgating safe harbors and treatment. encompassed a number of themes, exceptions that drive such innovation to Through the Regulatory Sprint, HHS including requests for: limited channels that may not reflect aims to encourage and improve: • New safe harbors protecting up-to-date understandings in medicine, • A patient’s ability to understand financial arrangements among parties science, and technology. The third treatment plans and make empowered participating in alternative payment guiding principle has been to design decisions; models (APMs), value-based proposed safe harbors useful for a range arrangements, and care coordination of individuals and entities engaged in 5 The Innovation Center’s purpose is to test activities; the coordination and management of innovative payment and service delivery models to patient care, including large and small reduce the cost of care furnished to patients in the 10 Medicare and State Health Care Programs: practices and health systems, rural and Medicare and Medicaid programs while preserving Fraud and Abuse; Request for Information or enhancing the quality of that care. Using its urban providers and suppliers, primary Regarding the Anti-Kickback Statute and care physicians and specialists, authority in section 1115A of the Social Security Beneficiary Inducements CMP, 83 FR 43607 (Aug. Act (the Act), 42 U.S.C. 1315a, the Innovation 27, 2018), available at https://oig.hhs.gov/ providers and suppliers contracting Center is testing many healthcare delivery and authorities/docs/2018/RFI_Regarding_AKS_ with public and private payors, payment models in which providers, suppliers, and Beneficiary_Inducements_CMP.pdf. individual practitioners participate. clinically integrated networks, and 11 Medicare Program; Request for Information 6 looser affiliations of providers and 42 U.S.C. 1320a–7b(b). Regarding the Physician Self-Referral Law, 83 FR 7 42 U.S.C. 1320a–7a(a)(5). 29524 (June 25, 2018), available at https:// suppliers collaborating to coordinate 8 42 U.S.C. 1395nn. www.gpo.gov/fdsys/pkg/FR-2018-06-25/pdf/2018- care for patients across the continuum 9 Public Law 104–191, 110 Stat. 1936. 13529.pdf. of care.

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Designing proposed safe harbors with traditional FFS risks. However, value- differences in statutory structures and these principles in mind is not without based payment models could present penalties. For some arrangements, we challenges and potential pitfalls, other risks, including stinting on care believe it is appropriate for the anti- particularly with respect to ensuring (underutilization), cherry picking kickback statute, which is a criminal, sufficient safeguards against potential lucrative or adherent patients, lemon intent-based statute, to serve as abuses and harms by those who might dropping costly or noncompliant ‘‘backstop’’ protection for arrangements misuse the safe harbors. In this patients, and incentives to manipulate that might be protected by a less proposed rule, we have tried to strike or falsify data used to verify restrictive exception to the civil, strict the right balance between flexibility for performance and outcomes for payment liability physician self-referral law. For beneficial innovation and safeguards to purposes. In addition, emerging value- any final rule, we would examine our protect patients and Federal health care based payment models might present rules in combination with any rules programs. No final determination has risks not yet identified by OIG or others CMS may choose to finalize with the yet been made that the balance is correct in the healthcare industry. Many new goal of creating an overall regulatory with respect to each proposed safe models combine FFS and value-based landscape that is well-coordinated and harbor. Thus, no final determination has payment features, subjecting providers serves the intended purpose to allow for been made that the arrangements to mixed incentives and potentially beneficial innovation; that is as described in the proposals are, or posing all or some of the risks raised by streamlined as possible, consistent with should be, exempt from liability under volume- and value-based payment. We program integrity considerations; and the anti-kickback statute. To aid us in seek comments on how best to address that provides strong protections for making that determination in a final existing and emerging risks with respect patients and programs, both in terms of rule, we solicit public comments to our proposals below, individually promoting value and ensuring that the throughout this proposed rule about and collectively. Government can take action to protect whether we have achieved the proper Section C of this Executive Summary patients and address fraud or abuse. balance such that the arrangements and sections III and IV of this preamble Arrangements that might be protected described in the proposed safe harbors summarize our specific proposals. by a physician self-referral law should be protected from criminal Several proposals address particular exception, but might not be explicitly liability under the anti-kickback statute. types of value-based arrangements protected by an anti-kickback statute To this end, we caution that these designed to promote care coordination safe harbor, would not necessarily be proposed safe harbors remain subject to and allow for outcomes-based unlawful under the anti-kickback change through the rulemaking process, payments. We have included a proposed statute. They would need to be and that the types of arrangements safe harbor for arrangements that engage examined on a case-by-case basis, described in this proposed rule remain patients more actively in preventive including with respect to the intent of subject to case-by-case review under the care and adhering to treatment and care the parties. We note that OIG’s proposed anti-kickback statute, and if applicable, plans developed between them and new safe harbor for cybersecurity items the beneficiary inducements CMP, their healthcare providers. We also are and services and modifications to the including with respect to the requisite proposing a new safe harbor related to existing safe harbor for electronic health intent of the parties. The proposed safe cybersecurity tools, as well as record items and services are closely harbors, if finalized, specifically would modifications to the existing safe aligned with CMS’ proposals. address barriers to coordinated and harbors related to personal services value-based care posed by the Federal arrangements, electronic health records, C. Summary of the Major Provisions anti-kickback statute and the beneficiary warranties, and local transportation. 1. Anti-Kickback Statute and Safe Our proposals in this rulemaking inducements CMP and would have no Harbors application to any other law. In focus on ensuring protected addition, any final safe harbors would arrangements: (i) Promote coordinated As described in more detail below, we provide only prospective protection. patient care and foster improved propose to amend 42 CFR 1001.952 by OIG’s mission is to protect the quality, better health outcomes, and modifying certain existing safe harbors integrity of the Federal health care improved efficiency; and (ii) would not to the anti-kickback statute and by programs as well as the health and be misused to perpetrate fraud and adding safe harbors that would provide welfare of the people they serve. OIG abuse, including, for example, schemes new protections or codify an existing prevents and detects fraud, waste, and in which patients receive unnecessary statutory protection. Subject to abuse, and promotes economy, or substandard care or Federal health definitions and conditions set forth in effectiveness, and efficiency in HHS care programs are billed for medically the proposed regulations, these programs. Stakeholders, including unnecessary items or services. We have proposed changes include: patients, depend upon OIG to be sought to strike an effective balance • Three proposed new safe harbors thoughtful, cautious, and deliberate in among the goals of clarity, objectivity, for certain remuneration exchanged promulgating safe harbors to ensure that flexibility, safeguards (including between or among participants in a the arrangements the safe harbors accountability and transparency), and value-based arrangement (as further protect do not inappropriately increase ease of implementation. defined) that fosters better coordinated costs to the Federal health care OIG and CMS coordinated closely to and managed patient care: (i) Care programs or patients, corrupt develop our respective proposed coordination arrangements to improve practitioners’ medical judgment, or rulemakings in connection with the quality, health outcomes, and efficiency result in overutilization, inappropriate Regulatory Sprint and strove, where (1001.952(ee)); (ii) value-based patient steering, unfair competition, or appropriate, to propose consistent arrangements with substantial downside poor-quality care. These abuses are terminology for value-based financial risk (1001.952(ff)); and (iii) sometimes characterized as traditional arrangements. In many respects, OIG’s value-based arrangements with full FFS fraud and abuse risks. proposed rules for value-based financial risk (1001.952(gg)). These Model design characteristics common arrangements are different or more proposed safe harbors vary, among other to properly structured value-based restrictive than CMS’s comparable ways, by the types of remuneration payment models could curb some proposals, in recognition of the protected (in-kind or in-kind and

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monetary), the level of financial risk (1001.952(hh)) and the proposed regulations, the so-called safe harbor assumed by the parties, and the types of modifications to the local transportation provisions, that would specify various safeguards included as safe harbor safe harbor (1001.952(bb)) would by payment and business practices that conditions; operation of law serve as exceptions to would not be subject to sanctions under • a proposed new safe harbor the beneficiary inducements CMP the anti-kickback statute, even though (1001.952(hh)) for certain tools and prohibition’s definition of they potentially may be capable of supports furnished under patient ‘‘remuneration.’’ inducing referrals of business for which engagement and support arrangements payment may be made under a Federal 3. Costs and Benefits to improve quality, health outcomes, health care program. and efficiency; There are no significant costs Section 205 of HIPAA established • a proposed new safe harbor associated with the proposed regulatory section 1128D of the Act (42 U.S.C. (1001.952(ii)) for certain remuneration revisions that would impose any 1320a–7d), which includes criteria for provided in connection with a CMS- mandates on State, local, or Tribal modifying and establishing safe harbors. sponsored model, which should reduce Governments or on the private sector. Specifically, section 1128D(a)(2) of the the need for OIG to issue separate and Act provides that, in modifying and II. Background distinct fraud and abuse waivers for establishing safe harbors, the Secretary new CMS-sponsored models; A. Anti-Kickback Statute and Safe may consider whether a specified • a proposed new safe harbor Harbors payment practice may result in: • (1001.952(jj)) for donations of Section 1128B(b) of the Act, (42 An increase or decrease in access to cybersecurity technology and services; U.S.C. 1320a–7b(b), the anti-kickback healthcare services; • proposed modifications to the • an increase or decrease in the statute), provides for criminal penalties existing safe harbor for electronic health quality of healthcare services; for whoever knowingly and willfully records items and services (1001.952(y)) • an increase or decrease in patient offers, pays, solicits, or receives to add protections for certain freedom of choice among healthcare remuneration to induce or reward the cybersecurity technology included as providers; referral of business reimbursable under part of an electronic health records • an increase or decrease in any of the Federal health care programs, arrangement, to update provisions competition among healthcare as defined in section 1128B(f) of the Act regarding interoperability, and to providers; (42 U.S.C. 1320a–7b(f)). The offense is remove the sunset date; • an increase or decrease in the • proposed modifications to the classified as a felony and is punishable ability of healthcare facilities to provide existing safe harbor for personal services by fines of up to $100,000 and services in medically underserved areas and management contracts (1001.952(d)) imprisonment for up to 10 years. or to medically underserved to add flexibility with respect to Violations of the anti-kickback statute populations; outcomes-based payments and part-time also may result in the imposition of • an increase or decrease in the cost arrangements; CMPs under section 1128A(a)(7) of the to Federal health care programs; • proposed modifications to the Act (42 U.S.C. 1320a–7a(a)(7)), program • an increase or decrease in the existing safe harbor for warranties exclusion under section 1128(b)(7) of potential overutilization of healthcare (1001.952(g)) to revise the definition of the Act (42 U.S.C. 1320a–7(b)(7)), and services; • ‘‘warranty’’ and provide protection for liability under the False Claims Act (31 the existence or nonexistence of any warranties for one or more items and U.S.C. 3729–33). potential financial benefit to a related services; The types of remuneration covered healthcare professional or provider, • proposed modifications to the specifically include, without limitation, which benefit may vary depending on existing safe harbor for local kickbacks, bribes, and rebates, whether whether the healthcare professional or transportation (1001.952(bb)) to expand made directly or indirectly, overtly or provider decides to order a healthcare and modify mileage limits for rural covertly, in cash or in kind. In addition, item or service or arrange for a referral areas and for transportation for prohibited conduct includes not only of healthcare items or services to a discharged patients; and the payment of remuneration intended particular practitioner or provider; or • codification of the statutory to induce or reward referrals of patients • any other factors the Secretary exception to the definition of but also the payment of remuneration deems appropriate in the interest of ‘‘remuneration’’ at section intended to induce or reward the preventing fraud and abuse in Federal 1128B(b)(3)(K) of the Act related to ACO purchasing, leasing, or ordering of, or health care programs. Beneficiary Incentive Programs for the arranging for or recommending the We have considered these factors in Medicare Shared Savings Program purchasing, leasing, or ordering of, any designing our proposals. We are (1001.952(kk)). good, facility, service, or item interested in public comments on these reimbursable by any Federal health care factors as they relate to our proposals. 2. Civil Monetary Penalty Authorities program. Properly structured and operated, we We propose to amend the definition Because of the broad reach of the believe that the arrangements we of ‘‘remuneration’’ in the CMP rules at statute, concern was expressed that propose to protect have the potential to 42 CFR 1003.110 by interpreting and some relatively innocuous business increase access to care, increase quality incorporating a new statutory exception arrangements were covered by the of care, aid in the provision of items and to the prohibition on beneficiary statute and, therefore, potentially services in underserved areas and to inducements for ‘‘telehealth subject to criminal prosecution. In underserved populations, decrease costs technologies’’ furnished to certain in- response, Congress enacted section 14 of to Federal health care programs, and home dialysis patients, pursuant to the Medicare and Medicaid Patient and decrease the potential for overutilization section 50302(c) of the Budget Act of Program Protection Act of 1987, Public of healthcare services. We are concerned 2018. Law 100–93 (section 1128B(b)(3)(E) of about reduced patient freedom of choice We further note that, if finalized, the the Act; 42 U.S.C. 1320a–7b(b)(3)(E)), among providers, potential decreases in proposed new safe harbor for patient which specifically requires the competition among health providers, engagement and support arrangements development and promulgation of and potential financial benefits to

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healthcare professionals or providers from liability under the anti-kickback practitioner, or supplier of any item or that may vary inappropriately based on statute and the beneficiary inducements service for which payment may be their ordering decisions. We solicit CMP only; individuals and entities made, in whole or in part, by Medicare comments on whether or not our remain responsible for complying with or a State healthcare program (including proposals adequately address these or all other laws, regulations, and guidance Medicaid). Section 1128A(i)(6) of the other undesired effects; if commenters that apply to their businesses. Act, 42 U.S.C. 1320a–7a(i)(6), defines believe the proposals would not In developing our proposals, we have ‘‘remuneration’’ for purposes of the adequately address these effects, we taken into account information gleaned beneficiary inducements CMP as solicit comments on the degree to which from a variety of sources: Industry including ‘‘transfers of items or services such effects might occur and on stakeholder input, including through for free or for other than fair market additional safeguards to mitigate them. comments to the OIG RFI; learnings value.’’ Section 1128A(i)(6) of the Act In giving the Department the authority from OIG’s work (e.g., fraud and abuse also includes a number of exceptions to to protect certain arrangements and waivers for the Medicare Shared the definition of ‘‘remuneration.’’ payment practices under the anti- Savings Program and Innovation Center Pursuant to section 1128A(i)(6)(B) of kickback statute, Congress intended the models, investigative and oversight the Act, any practice permissible under safe harbor regulations to be updated work applying the fraud and abuse laws, the anti-kickback statute, whether periodically to reflect changing business and audits and evaluations of program through statutory exception or practices and technologies in the effectiveness and efficiency); expertise regulations issued by the Secretary, is healthcare industry.12 Since July 29, from CMS and other HHS agencies; and also excepted from the definition of 1991, there have been a series of final other sources, including literature on ‘‘remuneration’’ for purposes of the regulations published in the Federal care coordination and value-based beneficiary inducements CMP. Register establishing safe harbors in payments. However, no parallel exception exists in various areas.13 These safe harbor the anti-kickback statute. Thus, the B. Civil Monetary Penalty Authorities provisions have been developed ‘‘to exceptions in section 1128A(i)(6) of the limit the reach of the statute somewhat 1. Overview of OIG Civil Monetary Act apply only to the definition of by permitting certain non-abusive Penalty Authorities ‘‘remuneration’’ applicable to section arrangements, while encouraging In 1981, Congress enacted the CMP 1128A. beneficial or innocuous Relevant to this proposed rulemaking, arrangements.’’ 14 law, section 1128A of the Act, 42 U.S.C. 1320a–7a, as one of several the Budget Act of 2018 created a new Healthcare providers and others may exception to the definition of voluntarily seek to comply with final administrative remedies to combat fraud and abuse in Medicare and Medicaid. ‘‘remuneration’’ for purposes of the safe harbors so that they have the beneficiary inducements CMP. This assurance that their business practices The law authorized the Secretary to impose penalties and assessments on exception applies to ‘‘telehealth would not be subject to any anti- technologies’’ provided on or after kickback enforcement action. persons who defrauded Medicare or Medicaid or engaged in certain other January 1, 2019, by a provider of Compliance with an applicable safe services or a renal dialysis facility to an harbor insulates an individual or entity wrongful conduct. The CMP law also authorized the Secretary to exclude individual with end-stage renal disease (ESRD) who is receiving home dialysis 12 persons from Federal health care H.R. Rep. No. 100–85, Pt. 2, at 27 (1987). for which payment is being made under 13 Medicare and State Health Care Programs: programs (as defined in section 1128B(f) Fraud and Abuse; OIG Anti-Kickback Provisions, 56 of the Act, 42 U.S.C. 1320a–7b(f)) and to Medicare Part B. FR 35952 (July 29, 1991); Medicare and State Health Care Programs: Fraud and Abuse; Safe Harbors for direct the appropriate State agency to III. Provisions of the Proposed Rule: Protecting Health Plans, 61 FR 2122 (Jan. 25, 1996); exclude the person from participating in Anti-Kickback Statute Safe Harbors Federal Health Care Programs: Fraud and Abuse; any State healthcare programs (as Statutory Exception to the Anti-Kickback Statute for defined in section 1128(h) of the Act, 42 A. Value-Based Framework Shared Risk Arrangements, 64 FR 63504 (Nov. 19, This section provides background on, 1999); Medicare and State Health Care Programs: U.S.C. 1320a–7(h)). Congress later Fraud and Abuse; Clarification of the Initial OIG expanded the CMP law and the scope of and an overarching summary of, the Safe Harbor Provisions and Establishment of exclusion to apply to all Federal health framework for value-based arrangements Additional Safe Harbor Provisions Under the Anti- care programs, but the CMP applicable set forth in this proposed rulemaking; Kickback Statute, 64 FR 63518 (Nov. 19, 1999); 64 explains proposed terminology used in FR 63504 (Nov. 19, 1999); Medicare and State to beneficiary inducements remains Health Care Programs: Fraud and Abuse; limited to Medicare and State healthcare certain proposed safe harbors; and Ambulance Replenishing Safe Harbor Under the program beneficiaries. Since 1981, explains the specific safe harbor Anti-Kickback Statute, 66 FR 62979 (Dec. 4, 2001); Congress has created various other CMP proposals to protect value-based Medicare and State Health Care Programs: Fraud arrangements (as defined in proposed and Abuse; Safe Harbors for Certain Electronic authorities covering numerous types of Prescribing and Electronic Health Records fraud and abuse. paragraph 1001.952(ee)) designed to Arrangements Under the Anti-Kickback Statute, 71 foster better care at lower cost through FR 45109 (Aug. 8, 2006); Medicare and State Health 2. The Beneficiary Inducements CMP improved care coordination for patients. Care Programs: Fraud and Abuse; Safe Harbor for and the Definition of ‘‘Remuneration’’ Our proposals endeavor to remove Federally Qualified Health Centers Arrangements Under the Anti-Kickback Statute, 72 FR 56632 (Oct. Section 1128A(a)(5) of the Act, 42 real or perceived regulatory barriers to 4, 2007); Medicare and State Health Care Programs: U.S.C. 1320a–7a(a)(5), the ‘‘beneficiary promote flexible, industry-led Fraud and Abuse; Electronic Health Records Safe inducements CMP,’’ provides for the innovation in the delivery of more Harbor Under the Anti-Kickback Statute, 78 FR imposition of civil monetary penalties efficient and better coordinated 79202 (Dec. 27, 2013); and Medicare and State Health Care Programs: Fraud and Abuse; Revisions against any person who offers or healthcare. Further, consistent with to the Safe Harbors Under the Anti-Kickback Statute transfers remuneration to a Medicare or emerging understandings of the benefits and Civil Monetary Penalty Rules Regarding State healthcare program (including of better care coordination and the Beneficiary Inducements, 81 FR 88368 (Dec. 7, Medicaid) beneficiary that the increasing adoption of value-based care 2016). 14 Medicare and State Health Care Programs: benefactor knows or should know is and payment models in the healthcare Fraud and Abuse; OIG Anti-Kickback Provisions, 56 likely to influence the beneficiary’s industry, our proposals may support a FR at 35958. selection of a particular provider, more rapid transition from volume (e.g.,

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FFS reimbursement for office visits, 2. Balancing Innovation With Protection risk from a payor for items and services tests, or procedures) toward value (e.g., Against Fraud and Abuse Risks furnished to patients helps mitigate paying for patient or population To remove regulatory barriers to care incentives that often drive fraud and outcomes). coordination and support value-based abuse present in traditional FFS. For the purposes of this rule, the arrangements, we are faced with the 1. Anti-Kickback Statute Implications of proposed safe harbors that require challenge of designing safe harbor Care Coordination and the Value-Based assumption of risk focus on value-based protections for emerging healthcare Framework arrangements with substantial downside arrangements. The optimal form, design, financial risk (1001.952(ff)) and value- and efficacy of such emerging Better care coordination—including based arrangements at full financial risk arrangements remain unknown or more effective transitions for patients (1001.952(gg)). While these proposed unproven. This is a key challenge of across the care continuum, less safe harbors largely focus on the duplication of items and services, and regulating during a period of innovation assumption of downside financial risk, open sharing of health data (consistent and experimentation. The challenge of we understand that participants in with privacy and security rules)—is designing appropriate safe harbors is value-based arrangements may assume integrally connected to advancing the exacerbated by: The substantial certain types of risk other than transition to a value-based healthcare variation in care coordination and downside financial risk for items and value-based arrangements contemplated system. Care coordination arrangements, services furnished to a target patient by the healthcare industry (meaning that especially when linked to appropriate population (e.g., upside risk, clinical one-size-fits-all safe harbor designs may clinical or other value-driven outcomes, risk, operational risk, contractual risk, be less than optimal), variation among or investment risk). can help improve health and the patient patient populations and provider experience of care; enable providers to We believe that our focus on characteristics, emerging health downside financial risk is appropriate participate successfully in value-based technologies and data capabilities, the care and payment models; and advance because the assumption of downside still-developing science of quality and financial risk may shift the incentives the goals of value-based care: Delivering performance measurement, and our that serve to influence those making the better health outcomes and maximizing desire not to chill beneficial innovation. referring and ordering decisions, the desirable efficiency in healthcare It is sometimes difficult to gauge fraud conduct at the center of the anti- delivery. For example, OIG’s recent and abuse risk in a rapidly evolving kickback statute. We solicit comments report entitled, ‘‘ACOs’ Strategies for environment of substantial innovation, on whether, for purposes of a final rule, Transitioning to Value-Based Care: experimentation, and deployment of other types of risk would have a Lessons From the Medicare Shared technology and digital data. In some comparable effect. We are particularly Savings Program,’’ 15 highlights the cases, innovations and the availability interested in fact patterns that illustrate tools—including care coordination of more actionable, transparent data how other types of risk would operate arrangements—that certain accountable may enhance program integrity and to change ordering or referring care organizations (ACOs) under the protect against fraud and abuse. There is behaviors of providers and suppliers Medicare Shared Savings Program have a compelling concern that uncertainty that might still be paid on an FFS basis deployed successfully to reduce costs and regulatory barriers—real or or otherwise help ensure that safe- and improve quality. Many of the perceived—could prevent the best and harbored arrangements would serve strategies discussed in this report most efficacious innovations from appropriate value-based purposes. involve care coordination, care emerging and being tested in the Remuneration has at least two management, and patient engagement, marketplace. Our goal is to craft safe dimensions relevant to this proposed harbors that, if finalized, would protect including: engaging beneficiaries to rulemaking: (i) Payments by payors; and arrangements that promote value, while (ii) remuneration exchanged between improve their own health, managing also protecting against fraud, abuse and clinicians, providers, suppliers, and beneficiaries with costly or complex associated harms. Over time, we expect others. Payor payments that drive care needs to improve their health that best practices in care coordination toward value include capitated outcomes, addressing behavioral health and value-based payment will emerge. payments and global budgets at one end needs and social determinants of health, of the ‘‘value-based payments’’ 3. Overview of Proposed Safe Harbors and using technology to increase spectrum; shared savings and bundled information sharing among providers.16 We are proposing safe harbors for payment mechanisms in the middle; Because care coordination often value-based arrangements, with greater and bonuses and reductions applied to involves arrangements between flexibilities available to parties as they FFS payments at the other end of the providers that refer Federal health care assume more downside financial risk for spectrum. Examples of remuneration program patients to one another and an the cost and quality of care. This exchanged among clinicians, providers, exchange of remuneration, the anti- ‘‘tiered’’ structure is intended to support suppliers, and others include sharing kickback statute may be implicated. the transformation of industry payment staff, such as care coordinators, or Moreover, providing patients with systems and takes into account that technology, such as data analytics tools, arrangements involving higher levels of remuneration to engage and support to improve quality or efficiency or to downside risk curb, at least to some them in achieving better health achieve other performance or outcomes degree, FFS incentives to order targets, whether set by payors or among outcomes may implicate both the anti- medically unnecessary or overly costly themselves. In some cases, these parties kickback statute and the beneficiary items and services. We propose these also may have value-based payment inducements CMP. safe harbors, recognizing that the arrangements among themselves, such transition from an FFS to a value-based as gainsharing or shared savings 15 OIG, ACOs’ Strategies for Transitioning to care and payment system will take time. agreements. Value-Based Care: Lessons From the Medicare Shared Savings Program (July 2019), available at Where parties may have both FFS and We are proposing a suite of safe https://oig.hhs.gov/oei/reports/oei-02-15-00451.pdf. value-based payment incentives, we harbors that, if finalized, would address 16 Id. believe assuming downside financial a variety of scenarios. Collectively, we

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believe these proposed safe harbors, in each proposed safe harbor are discussed individuals and entities that can engage combination with existing safe harbors, in detail below. in protected arrangements, provided all would provide pathways for protection As always, all safe harbor conditions conditions of a specific safe harbor are for most beneficial care coordination would need to be precisely met for safe squarely met. and value-based care and payment harbor protections to apply. Many Generally speaking, when read arrangements. In crafting these safe value-based arrangements and activities together, the proposed terminology and harbors, we have endeavored to be may qualify for existing safe harbor safe harbors are intended to protect care agnostic with respect to the composition protections, including under the coordination and support value-based of the value-based enterprise (VBE), a employees safe harbor (1001.952(i)), the arrangements where, as a threshold concept and defined term described EHR items and services safe harbor matter, the arrangements are under the further below, and scope of protected (1001.952(y)), the personal services and auspices of a VBE (of any size, and as value-based arrangements to allow for management contracts safe harbor further defined in proposed paragraph innovation and experimentation in the (1001.952(d)), the local transportation 1001.952(ee)) that is essentially a healthcare marketplace and to foster a safe harbor (1001.952(bb)), and the network of participants (such as level playing field for those seeking safe several safe harbors pertaining to health clinicians, providers, or suppliers) that harbor protection, whether they are plans and managed care organizations has agreed to collaborate to, for large health systems or individual set forth at 1001.952(l), (m), (t), and (u). example: (i) Put the patient at the center practitioners. The proposed safe harbors Many others may not raise anti-kickback of care through improved care would cover value-based arrangements issues at all if they do not relate to coordination, (ii) increase efficiencies in involving both publicly and privately Federal health care program the delivery of care, and (iii) improve insured patients. beneficiaries or are not tied in any way quality of care and health outcomes for The first proposed safe harbor, at to the volume or value of Federal health patients or populations. The VBE has 1001.952(ee), covers care coordination care program business. (Likewise, with value-based purposes and its arrangements to improve quality, health respect to compliance with the participants enter into value-based outcomes, and efficiency (‘‘care beneficiary inducements CMP, patient arrangements for value-based activities coordination arrangements’’ safe engagement and support arrangements to further those purposes. harbor). It covers certain in-kind and activities may fit in existing Wherever possible and appropriate, it remuneration, including services and exceptions to the CMP law, may be is our intent to align our proposed infrastructure. The second proposed within applicable nominal value limits, value-based terminology with those that safe harbor, at 1001.952(ff), with greater or may not raise concerns under that CMS proposes in its notice of proposed flexibility, covers certain in-kind and statute if they do not relate to Medicare rulemaking regarding the physician self- monetary arrangements where the VBE or Medicaid patients or are not likely to referral law, ‘‘Modernizing and is at substantial downside financial risk influence the selection of providers, Clarifying the Physician Self-Referral from a payor (as defined). The third practitioners, or suppliers.) Regulations.’’ Because of the close proposed safe harbor, at 1001.952(gg), is In the next section, we describe the nexus between the value-based for in-kind and monetary arrangements proposed definitions for several key terminology in our proposed rule and where the VBE is at full downside terms used in the proposed safe harbors CMS’s proposed terminology, we may financial risk from a payor and allows for value-based arrangements at also consider for purposes of making for even more flexibility. In addition, we proposed paragraphs 1001.952(ee), (ff), determinations for a final rule propose to protect certain outcomes- and (gg) for care coordination comments submitted about value-based based compensation (regardless of arrangements, value-based arrangements terminology in response to CMS’s whether it meets the criteria for with substantial downside financial proposed rule. substantial downside financial risk) risk, and value-based arrangements at We use the term ‘‘value-based’’ in our under the rubric of ‘‘outcomes-based full financial risk, respectively. We then proposed terminology in a non- payments’’ through proposed describe each proposed safe harbor in technical way to signal value produced modifications to the personal services detail. Related proposed modifications through improved care coordination, and management contracts safe harbor to the personal services and improved health outcomes, lower costs at 1001.952(d), as discussed in the management contracts safe harbor or reduced growth of costs for patients section III.J. below. (1001.952(d)) for outcomes-based and payors, and improved efficiencies We are mindful of the role patient payments (where there is no substantial in the delivery of care. We recognize engagement can play in improved downside financial risk) are described at that our use of the words ‘‘value’’ and coordination of patient care and health section III.J. The patient engagement ‘‘value-based’’ here do not necessarily outcomes. Thus, we are proposing a safe and support safe harbor is described at capture all dimensions of value in harbor at 1001.952(hh) for arrangements section III.F. The proposed safe harbor healthcare. We solicit comments on our for patient engagement and support to for CMS-sponsored models, including approach, as well as comments on improve quality, health outcomes, and Innovation Center models, is described whether we should define ‘‘value’’ efficiency (the ‘‘patient engagement and at section III.G. specifically in the final rule, and if so, support’’ safe harbor). We are further how best to define ‘‘value’’ as it pertains B. Proposed Value-Based Terminology proposing a separate safe harbor at to care coordination and value-based (1001.952(ee)) 1001.952(ii) for care delivery and payment. For example, we are payment arrangements as well as We propose definitions for key terms considering for the final rule whether beneficiary incentives pursuant to in paragraph 1001.952(ee). These terms ‘‘value’’ should be defined with certain CMS-sponsored models, are used consistently in several reference to financial arrangements including Innovation Center models. proposed safe harbors. The proposed under advanced APMs (whether HHS or This proposed safe harbor would defined terms are intended to work in other payor models). largely, if not entirely, replace OIG’s conjunction with one another to current model-by-model fraud and describe the universe of value-based 1. Value-Based Enterprise (VBE) abuse waiver process for CMS- arrangements potentially eligible for We propose to use the term ‘‘value- sponsored models. The requirements of proposed safe harbor protection and of based enterprise’’ to describe the

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network of individuals and entities that would serve as the ‘‘gatekeeper’’ to the the quality, integrity, privacy, and collaborate together to achieve one or VBE, with a process and criteria to security of data related to the more value-based purposes (as defined ensure that those admitted to the VBE arrangement (such as outcomes, quality, in proposed paragraph 1001.952(ee)). As after its formation as VBE participants and payment data). To facilitate defined in this rulemaking, and as a have a legitimate role in the VBE and in effective oversight, we are considering general matter, the VBE would delineate VBE arrangements and that VBE for the final rule whether VBEs should the universe of individuals and entities participants are not participants in be required to implement reporting participating in arrangements eligible name only. In addition to ensuring requirements for their VBE participants for safe harbor protection, if all safe operational and financial oversight, we or mechanisms for obtaining access to, harbor conditions are fully met. The believe the accountable body or and verifying, VBE participant data VBE also would be accountable for responsible person would be positioned concerning performance under any ensuring that such protected to identify program integrity issues and value-based arrangement. arrangements are conducted under the to initiate action to address them, as We welcome comments on this auspices of the VBE. necessary and appropriate. We are approach or any different or additional considering for the final rule, and solicit actions that may help ensure effective a. Two or More VBE Participants comment on, whether the VBE or its ongoing oversight. First, we propose that VBE would participants should be required to have We intend for VBEs to implement the mean two or more VBE participants (as a compliance program that covers at criterion regarding the accountable body defined in proposed paragraph least those value-based arrangements for or responsible person in a manner that 1001.952(ee)) that are collaborating to which safe harbor protection is sought is tailored to the complexity and achieve at least one value-based and whether the accountable body or sophistication of the VBE. For example, purpose. VBEs may take many different person should have responsibility for a VBE involving two physician practices forms, and we intend for the definition the compliance program. with a single value-based arrangement of ‘‘VBE’’ to be flexible. For example, a The arrangements that would be could designate one of the physician VBE could be as small as two individual protected by these proposed safe practices (or its compliance physician practices collaborating to harbors would not have the benefit of professional) as the individual coordinate care for shared patients. The programmatic oversight comparable to responsible for this oversight. Where the same term also could cover a formal or CMS-sponsored models. Accordingly, VBE is larger and involves numerous informal network of hospital systems, we view this accountability criterion as sophisticated entities, it might be post-acute care providers, and physician important to ensure that arrangements advisable and a best practice to create a practices. An accountable care operate for their designated value-based separate governing body to serve as the organization or health system comprised purpose(s) and as a key safeguard to accountable body, overseeing the VBE. of hospitals and physician practices, for ensure that value-based arrangements The proposed definition of ‘‘VBE’’ example, could also constitute a VBE. are aligned with at least one value-based does not require the VBE’s accountable purpose and not misused for purposes body or responsible person to be b. Party to a Value-Based Arrangement that raise program integrity concerns independent of the interests of Second, we propose that each VBE (e.g., arrangements that encourage individual VBE participants (which participant in the VBE must be a party providers to steer patients in ways that would preclude a VBE participant from to a value-based arrangement (as are not in the patients’ best interests or acting as the accountable body or defined below) with at least one other stint on medically necessary care). responsible person) or to have a distinct VBE participant from the same VBE. In The oversight role may include, duty of loyalty to the VBE. However, to the case of a VBE comprised of two VBE depending on the applicable proposed provide further assurances that a VBE’s participants, the two VBE participants safe harbor at 42 CFR 1001.952(ee), (ff), accountable body or responsible person would need to be engaged in a value- and (gg) and how the applicable VBE is acting in furtherance of the VBE’s based arrangement with each other. We effectuates safe harbor requirements, value-based purpose(s) and not any one intend for this criterion to ensure that monitoring whether VBE participants VBE participant’s individual interests, parties qualifying as part of a VBE are are performing under their value-based we are considering for the final rule contributing to a value-based arrangements in a manner that furthers imposing a standard requiring either arrangement. Consistent with our the coordination and management of independence or a duty of loyalty as a intention to provide flexibility for care for the target patient population. criterion of this definition or as a safe innovation, VBE participants could We are considering for the final rule a harbor requirement. We solicit engage in one or multiple value-based requirement that all VBE participants comments on the benefits, burdens, and arrangements, so long as all of the value- affirmatively recognize the oversight challenges of this approach. based arrangements further the value- role of the accountable body or d. Governing Document based purpose(s) of the VBE. responsible person and explicitly agree to cooperate with its oversight efforts Fourth, we propose that each VBE c. Accountable Body (e.g., by requiring the inclusion of a must have a governing document that Third, we propose that the VBE must statement to this effect in the applicable describes the VBE and how the VBE have an accountable body (such as a written agreement). participants intend to achieve its value- board of directors or other governing We also are considering for the final based purpose(s). The intent of this body) or person (which, depending on rule whether the accountable body or requirement is to provide transparency the size and scope of the VBE, may be responsible person (or some other party regarding the structure of the VBE, the an entity, such as a hospital or or parties to value-based arrangements VBE’s value-based purpose(s), and the physician practice that is among the addressed by the proposed safe harbors) VBE participants’ roadmap for achieving VBE participants, or an individual) should have more specific oversight such purpose(s). This document may responsible for financial and operational responsibilities, such as oversight include any other terms the VBE oversight of the VBE. As part of its related to utilization of items and participants deem important. The oversight role, we expect that the services, cost, quality of care, patient governing document need not be formal accountable body or responsible person experience, adoption of technology, and bylaws or in another specific format.

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Written documentation recording the 1001.952(ee)). That is, the value-based We are considering for the final rule terms of a value-based arrangement may arrangement, and its value-based and solicit comments on limiting the serve as the required VBE governing activities, must be tailored to meet the definition of ‘‘target patient population’’ document, provided it describes the needs of a defined patient population. to patients with a chronic condition, or enterprise and how the parties intend to This element further ties the value- alternatively, limiting any or all of the achieve its value-based purpose(s). based arrangement to care coordination proposed safe harbors that use the target patient population definition to value- e. VBE’s Assumption of Downside of patients and value-based goals. We based arrangements for patients with a Financial Risk note that the definition of ‘‘value-based arrangement’’ is broad enough to cover chronic condition. We might effectuate Lastly, we note that two of our commercial and private insurer this approach through changes to the proposed safe harbors require that a arrangements. scope of the target patient population VBE has assumed downside financial definition or other definitions, risk from a payor. We anticipate that 3. Target Patient Population including value-based activity, value- VBEs could contract with payors and We propose to define ‘‘target patient based arrangement, and value-based other entities in a variety of ways. For population’’ as ‘‘an identified patient purpose. example, a VBE comprised of a large population selected by the VBE or its This alternative proposal is in number of VBE participants across a VBE participants using legitimate and recognition that patients with chronic range of healthcare settings might create verifiable criteria that: (A) Are set out in conditions may be more susceptible to a standalone legal entity that enters into writing in advance of the comorbidities, requiring care across the contracts directly with payors on the commencement of the value-based health spectrum, and thus most likely to VBE participants’ behalf. Alternatively, arrangement; and (B) further the value- benefit from the care coordination one VBE participant might contract with based enterprise’s value-based central to this proposed rule. To the payors on behalf of other VBE purpose(s).’’ Our intent in defining this extent we include such a limitation in participants within the VBE. In the term is to protect value-based the final rule, either by definition or latter example, the VBE would still be arrangements that serve an identifiable through a safe harbor requirement, we required to be at risk, but it would be patient population for whom the value- are considering how to define ‘‘chronic through one of its VBE participants based activities likely would improve condition,’’ and whether OIG should rather than through a contract directly health outcomes or lower costs (or cross-reference other Medicare or with the payor. both). By using the terms ‘‘legitimate Medicaid program guidelines or rules 2. Value-Based Arrangement and verifiable,’’ we seek to ensure the related to chronic conditions. In target patient population selection particular, we are considering and seek The proposed safe harbors at 42 CFR comment on defining ‘‘chronic 1001.952(ee), (ff), and (gg) would protect process is transparent and that VBE participants select their target patient condition’’ as the list of 15 Special remuneration paid or exchanged Needs Plans (SNP)-specific chronic population in an objective manner pursuant to a ‘‘value-based conditions developed by the SNP based on criteria that further the arrangement’’ if all conditions are met. Chronic Condition Panel, as may be applicable value-based arrangement’s We propose to define a value-based modified from time to time.17 As new value-based purpose(s). If VBE arrangement as ‘‘an arrangement for the chronic conditions are identified, and as participants selectively include patients provision of at least one value-based existing conditions benefit from life- in a target patient population for activity for a target patient population prolonging technological advances, we purposes inconsistent with the between or among: (A) The value-based are mindful that any definition of objectives of a properly structured enterprise and one or more of its VBE ‘‘chronic condition’’ might need value-based arrangement (e.g., cherry participants; or (B) VBE participants in flexibility to expand to remain picking or lemon dropping patients), we the same value-based enterprise.’’ We appropriately inclusive and consistent intend for these requirements to ensure would not consider such a selection with clinical understandings. that each value-based arrangement is process to be based on ‘‘legitimate and As an additional alternative, we are aligned with the VBE’s value-based verifiable criteria that further the value- considering for purposes of the final purpose(s) and subject to its financial based enterprise’s value-based rule, and solicit comments on, limiting and operational oversight. Our proposed purpose(s).’’ the definition of ‘‘target patient definition is intended to capture This proposed definition is not population’’ to patients with a shared arrangements for care coordination and limited to Federal health care program disease state that would benefit from certain other value-based activities beneficiaries. For example, VBE care coordination. among VBE participants within the participants seeking to enhance access We seek comment on how best to same VBE. to, and usage of, primary care services address the need for flexibility in any Addressing each requirement of the for patients concentrated in a certain final rule, especially should we limit a definition in turn, we first propose to geographic region might base the target final safe harbor to patients with a require that the value-based patient population on ZIP Code or chronic condition or shared disease arrangement include at least one value- county of residence. If a value-based state. Moreover, we are interested in based activity (as defined in proposed arrangement is focused on enhancing feedback on impacts of such limitations paragraph 1001.952(ee)) to be care coordination for patients with a on the ability of VBE participants to undertaken by the parties. We would chronic disease, the target patient provide better coordinated care for other expect that many value-based population might be patients with that categories of patients, including patients arrangements would be comprised of disease (e.g., congestive heart failure). discharged from hospitals following multiple value-based activities. VBE participants might also, for acute care, patients requiring maternal Second, we propose that the value- example, use data to identify a target based arrangement’s value-based patient population at increased risk of 17 CMS, Chronic Condition Special Need Plans activities must be undertaken with developing a chronic disease for (C–SNP), List of Chronic Conditions, https:// www.cms.gov/Medicare/Health-Plans/ respect to a target patient population (as improved care coordination under a SpecialNeedsPlans/Chronic-Condition-Special- defined in proposed paragraph value-based arrangement. Need-Plans-C-SNP.html#s1.

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care, patients needing preventive care, activities set forth in the value-based Century Cures Act and the Office of the and patients with mental health arrangement are expected to further the National Coordinator for Health conditions. value-based purpose of the arrangement. Information Technology (ONC), HHS Additionally, we solicit comments on While this standard would not require Notice of Proposed Rulemaking ‘‘21st whether we should replace ‘‘legitimate that the value-based purpose actually be Century Cures Act: Interoperability, and verifiable’’ in this proposed achieved, we are considering whether to Information Blocking, and the ONC definition with language that would require in the final rule that the VBE Health IT Certification Program,’’ to the require VBE participants to have more participants entering into the value- extent such definition and exceptions parameters and structure with respect to based arrangement engage in an are finalized. their selection of the target patient evidence-based process to design value- 5. VBE Participant population and are considering whether based activities that they believe will use of the term ‘‘evidence-based’’ would reach such a goal. Our proposed We propose to define ‘‘VBE achieve this goal. (Our proposed interpretation of ‘‘evidence-based’’ for participant’’ as ‘‘an individual or entity interpretation of ‘‘evidence-based’’ is purposes of this proposed rule is that engages in at least one value-based addressed below in our discussion of addressed below in our discussion of activity as part of a value-based the proposed safe harbor for care the proposed care coordination enterprise.’’ Depending upon the terms coordination arrangements.) arrangements safe harbor. and requirements of the value-based Last, we are considering for the final With this definition, we acknowledge arrangement (and the conditions of the rule, and seek comments on, whether that a ‘‘value-based activity’’ may relevant safe harbor), ‘‘engaging in’’ a and if so how, parties other than VBE encompass not only affirmative actions value-based activity may be, for participants should or could be taken by VBE participants (e.g., example, (i) performing an action to involved in selecting the target patient providing care coordinators to help achieve certain quality or outcome population. For example, we are patients with complex needs navigate metrics and the providing or receiving considering for the final rule the role of the transition from a hospital to their of payment for such achievement, or (ii) payors in identifying or selecting the homes) but also instances of inaction coordinating care to achieve better target patient population or establishing (e.g., refraining from ordering certain outcomes or efficiencies (e.g., sharing outcome measures with respect to a items or services in accordance with a staff or infrastructure to improve the value-based arrangement. While payors medically appropriate care protocol that discharge planning and care follow-up might not be parties to a value-based reduces the number of required steps in process between two VBE participants). arrangement, we believe many care a given procedure). Under no Subject to the limitations proposed coordination and other value-based circumstances would simply making a below, such term would broadly include arrangements may be entered into in referral constitute a ‘‘value-based clinicians, providers, and suppliers, as order to achieve performance or activity.’’ well as other individuals and entities. outcome goals set by payors. We seek Lastly, we are considering for the final Potential VBE participants could be, by feedback on the potential benefit, rule expressly excluding from the way of example only, physician including any reduced program integrity definition of ‘‘value-based activity’’ any practices, hospitals, payors, post-acute risks, of allowing or requiring payors to activity that results in information providers, pharmacies, chronic care and select either or both the target patient blocking. Similar to the concerns disease management companies, and population and relevant outcome articulated in the section detailing our social services organizations. Given that measures and targets (for purposes of proposed modifications to the electronic our proposed definition may encompass the definitions, safe harbors, or both). If health records safe harbor, we seek to non-traditional healthcare entities, and there would be benefit in doing so, we preclude from protection under our our experience with respect to financial seek feedback on how best to implement proposed safe harbors at 42 CFR arrangements between such entities and such a permission or requirement. We 1001.952(ee), (ff), and (gg) any providers and suppliers is limited, we also seek feedback on whether, for arrangement that may, on its face, meet are considering for the final rule, and purposes of the final rule, we should our definition of ‘‘value-based activity’’ solicit comments on, any fraud and treat as a favorable factor that a value- but that ultimately is used to engage in abuse risks that financial arrangements based arrangement (or outcomes-based practices of information blocking (e.g., with these entities may present and payment arrangement) aligns its target the donation of health information what, if any, additional safeguards we patient population or its outcome technology that may facilitate care may need to place around these entities’ measures and targets with payor-driven coordination across providers participation in value-based incentives. participating in the VBE, but also arrangements under the proposed safe prevents or unreasonably interferes with harbors. 4. Value-Based Activity the exchange of electronic health For purposes of these safe harbors, we information with other providers in a. Entities Not Included as VBE propose that the term ‘‘value-based order to lock-in referrals between such Participants activity’’ would mean ‘‘any of the providers). Information blocking The ‘‘VBE participant’’ definition following activities, provided that the practices that may affect value-based expressly excludes pharmaceutical activity is reasonably designed to activities include, but are not limited to, manufacturers; manufacturers, achieve at least one value-based purpose (i) locking electronic health information distributors, or suppliers of durable of the value-based enterprise: (A) the into the VBE or keeping it only between medical equipment, prosthetics, provision of an item or service; (B) the VBE participants, or (ii) preventing orthotics or supplies (DMEPOS); and taking of an action; or (C) the refraining referrals or other electronic health laboratories. On the basis of our from taking an action.’’ ‘‘Value-based information from leaving the VBE or historical enforcement and oversight activity’’ does not include the making of being transmitted from a VBE experience, we are concerned that some a referral. participant to another healthcare companies within these types of We are considering for the final rule provider. This exclusion would be entities, which are heavily dependent whether to interpret ‘‘reasonably based on the definition and exceptions upon practitioner prescriptions and designed’’ to mean that the value-based for ‘‘information blocking’’ in the 21st referrals, might misuse the proposed

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safe harbors primarily as a means of proposed safe harbor for outcomes- personal services and management offering remuneration to practitioners based compensation under the personal contracts safe harbor that would be and patients to market their products, services and management contracts safe available, including greater flexibility rather than as a means to create value harbor should be included in the for part-time arrangements and for patients and payors by improving definition of ‘‘VBE participant’’ and arrangements in which the aggregate the coordination and management of potentially protected by the applicable compensation is not known in advance. patient care, reducing inefficiencies, or safe harbors. We are interested in These entities also would be eligible lowering health care costs. For example, comments with examples of how and under the proposed safe harbors for we are concerned that these entities the extent to which the entities we cybersecurity items and services and for might create arrangements styled as propose to exclude participate in the CMS-sponsored models, as well as for value-based arrangements that serve to coordination and management of care the proposed modifications to the tether clinicians or patients to the use of for patients and whether and how they warranties safe harbor. Further, we a particular product (e.g., a drug or may be involved in providing beneficial solicit comments on potential revisions implantable device, such as a device health technology, including digital to the reporting requirements in the with a mechanical or physical effect on technology, used to coordinate and warranties safe harbor that could the body) when a different product manage care and improve health accommodate outcomes-based warranty could be more clinically effective for the outcomes. We also are considering and arrangements that excluded patient. Moreover, pharmaceutical are interested in comments on manufacturers and suppliers may want manufacturers, and manufacturers, additional safeguards we could include to undertake. Lastly, we note that distributors, and suppliers of DMEPOS, in the safe harbors to: (i) Prevent pharmaceutical manufacturers or other and laboratories are less likely to be on abusive marketing practices with entities we propose to exclude from the the front line of care coordination and respect to the items and services these definition of ‘‘VBE participant’’ may use treatment decisions in the same way as entities (or other entities, not excluded the OIG’s advisory opinion process for other types of proposed VBE entities, from the proposed definition of ‘‘VBE value-based or other arrangements they such as hospitals, physicians, and participant’’) sell to patients, payors, may want to undertake. remote monitoring companies that and providers (e.g., practices that We are considering for the final rule, provide care coordination and include payments to physicians, and seek comments on, whether we management tools and services directly hospitals, or patients to reward them for should exclude other entities from the to patients. We solicit comments on ordering the entity’s products); (ii) definition of ‘‘VBE participant.’’ For whether this assumption is correct, protect clinical decision-making about example, we are considering excluding along with examples of the specific products that are in the patient’s best pharmacies (including compounding roles played by these entities in medical interests and patient freedom of pharmacies) from the definition of ‘‘VBE coordinating and managing care for choice; and (iii) reduce the risk of participant.’’ We acknowledge that some patients. inappropriate cost-shifting to Federal pharmacies (and pharmacists) have the We note that we received comments health care programs and inappropriate in response to the OIG RFI from potential to contribute to the type of increased costs to Federal health care beneficial value-based arrangements this pharmaceutical manufacturers seeking programs. We are considering whether safe harbor protection for a variety of rulemaking is designed to foster (e.g., to include a safeguard, in the applicable through medication adherence programs emerging outcomes-based and value- proposed safe harbors, that would based contracting practices for their or educational services for patients with preclude protection for value-based pharmaceutical products, as well as diabetes). However, pharmacies, like the arrangements and outcomes-based related patient medication adherence entities we propose to exclude from the payments that include exclusivity and similar programs. We also definition of ‘‘VBE participant,’’ requirements, such as a requirement acknowledge that some pharmaceutical primarily provide items, and we are that the VBE participant is the exclusive manufacturers may help facilitate care concerned that their participation in provider of care coordination items or coordination and management of care value-based arrangements may not services or the exclusive provider of a through, for example, data analytics further the care coordination purposes reimbursable item or service. We are associated with their pharmaceutical of this rulemaking. We seek comments further considering whether to impose products furnished to purchasers of on beneficial arrangements pharmacies their products. These kinds of certain heightened standards and may want to undertake under the new manufacturer arrangements raise conditions on certain entities that value-based framework and any different program integrity issues from would receive safe harbor protection, safeguards we could implement in the those addressed in this rulemaking and such as enhanced monitoring, reporting, final rule if we were to allow such would likely require different or data submission requirements or entities to participate in value-based safeguards. We are considering some or all of the conditions presented arrangements eligible for safe harbor pharmaceutical manufacturers’ role in in the discussion of proposed protection. We are further considering coordination and management of care 1001.952(ee) below. for the final rule whether specific types and may address it in future While pharmaceutical manufacturers of pharmacies, such as compounding rulemaking. We may also consider and other listed entities would not be pharmacies, should be excluded as VBE specifically tailored safe harbor eligible for protection under the participants even if others, such as retail protection for value-based contracting proposed safe harbors for value-based and community pharmacies, are and outcomes-based contracting for the arrangements, patient engagement and included. In particular, we are purchase of pharmaceutical products support, and revisions related to concerned that pharmacies that (and potentially other types of products) outcomes-based payments included in specialize in compounding in future rulemaking. the personal services and management pharmaceuticals may pose a heightened We are considering for the final rule contracts safe harbor, other elements of risk of fraud and abuse, as evidenced by whether some or all of the entities we this proposed rule would be available to our enforcement experience, and would propose to exclude from the definition them. As explained below, we propose not play a direct role in patient care of a ‘‘VBE participant’’ and from the certain other modifications to the coordination.

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We also are considering for the final We are further aware that mobile To address these concerns, we are rule excluding pharmacy benefits health and digital health technology considering for the final rule the managers (PBMs), wholesalers, and companies may be newer entrants to the exclusion of some or all device distributors from the definition of ‘‘VBE healthcare marketplace or they may be manufacturers under the definition of participant’’ for reasons comparable to existing companies. In some cases, they ‘‘VBE participant’’ and from protection those for excluding pharmaceutical are existing healthcare companies that under the various proposed safe manufacturers.18 We may further have developed new lines of business in harbors, including the exclusion from consider the role of these entities in care digital health technology. For example, participation in outcomes-based coordination and management in future in some cases, they are companies that payment arrangements under proposed rulemaking. We are aware that PBMs are have historically manufactured medical 1001.952(d)(2) and (3). As with increasingly providing services related devices reimbursed by Federal health pharmaceutical manufacturers, it is not to the coordination of care for patients. care programs and have developed clear that all device manufacturers play We are interested in comments with digital technologies that are used in a comparable role in the coordination examples demonstrating how PBMs conjunction with medical devices, such and management of patient care as those engage in care coordination and as pacemakers. It is our understanding entities proposed to come within the management with healthcare providers that, depending on the company’s definition of a VBE participant. We and suppliers, as well as insights into business model, what is included as solicit comments about this assumption the risks and benefits of including PBMs part of the Food and Drug and the roles that traditional device as VBE participants eligible to enter into Administration (FDA)-approved device, manufacturers play in care coordination value-based arrangements that could and payor coverage determinations, the and management. Also, as with issues qualify for safe harbor protection if all digital technologies and associated raised by arrangements involving conditions are satisfied. functionalities may be included as part pharmaceutical manufacturers, we are considering future safe harbor b. Health Technology Companies of the customer’s cost of the medical device, or they may be part of a separate rulemaking to address specifically We are mindful that a growing services arrangement. tailored protection for value-based and number of companies are providing These technologies hold promise for outcomes-based contracting for device mobile health and digital technologies improving care coordination and health manufacturers. This proposed rule to physicians, hospitals, patients, and outcomes through monitoring of real- focuses primarily on arrangements to others for the coordination and time patient data and detection and coordinate and manage the care of management of patients and their prevention of health problems. We are patients, and does not, for example, healthcare, and such companies are concerned, however, and solicit public address purchase and sale arrangements eligible to be VBE participants under the comments, about the risk that some for covered items and services. We may proposed definition. These companies companies that manufacture medical take up the issue of purchase and sale provide a range of services such as devices covered by Federal health care arrangements, including consideration remote monitoring, predictive analytics, programs, particularly implantable of modifications to the discount safe data analytics, care consultations, devices used in a hospital or ambulatory harbor or additional modifications to patient portals, and telehealth and other surgical center setting, might misuse the warranties safe harbor, in future communications that may be used by value-based arrangements to disguise rulemaking. providers, clinicians, payors, patients, improper payments for care We recognize that defining a universe and others to coordinate and manage coordination intended as kickbacks to of device manufacturers that would be care, improve the quality and safety of purchase the medical devices they excluded would present difficulties, and care, and increase efficiency. These manufacture. This concern arises from we are interested in public feedback on companies also furnish a variety of historical law enforcement experience, the following issues. First, there is no devices, technologies, software, and including large False Claims Act specific definition of a device applications that support their services, settlements involving kickbacks paid to manufacturer or medical device are used by customers to coordinate and physicians, hospitals, and ambulatory manufacturer in the Medicare program. monitor patient care and health surgery centers to market various As explained below, in the absence of outcomes (for individuals and medical devices, such as devices used a Medicare definition, we are populations), or are used directly by for invasive procedures; in some cases, considering several other approaches. patients and their caregivers to monitor these schemes resulted in patients Second, any definition of the term their health, manage treatment, and getting medically unnecessary surgeries. ‘‘device manufacturer’’ may be so broad communicate and access patient OIG also has longstanding anti-kickback as to sweep in virtually any kind of medical information. For example, we concerns about physician-owned device or health technology, including are aware of companies that provide distributorships because the financial the kinds of digital and remote monitoring technology that may support diabetes management services, incentives physician-owned and improve care coordination. leveraging devices that can be worn or distributorships offer to their physician- Relatedly, given that many companies attached to the body to monitor blood owners may induce the physicians both pursue multiple lines of business and sugar levels and transmit that data, to perform more procedures (or more that digital technologies are being through an application to a cloud extensive procedures) than are integrated into traditional medical storage service, for review by patients medically necessary and to use the devices, it may not be possible to and the clinicians managing the devices the physician-owned distinguish clearly a traditional medical patients’ diabetes care. distributorships sell in lieu of other, device manufacturer from a health potentially more clinically appropriate, 18 Note that, should we adopt, as discussed 19 technology company. below, the definition of ‘‘applicable manufacturer’’ devices. OIG is considering for the final rule, set forth in 42 CFR 403.902, such definition would and seeks comments regarding, whether include distributors and wholesalers (which 19 OIG, Special Fraud Alert: Physician-Owned include re-packagers, re-labelers, and kit Entities (Mar. 26, 2013), available at https:// to define medical device manufacturers assemblers) that hold title to a covered drug, device, oig.hhs.gov/fraud/docs/alertsandbulletins/2013/ using CMS’s definition of ‘‘applicable biological, or medical supply. POD_Special_Fraud_Alert.pdf. manufacturer’’ in 42 CFR 403.902,

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which relates to the ‘‘Sunshine’’ reduce the risk of inappropriate cost- based on enforcement experience, provisions of the ACA (section 6002 of shifting or inappropriately increasing CMS’s experience administering the ACA, which added section 1128G to costs to Federal health care programs. provider enrollment, claims analysis, the Act). We also are considering, and We are considering whether to include and other data sources. We are seek comment on, whether any a safeguard in the final rule that would interested in feedback on which kinds definition of ‘‘device manufacturer’’ preclude protection for value-based of products or arrangements, if any, should include an entity that arrangements that include exclusivity should be excluded from safe harbor manufacturers any item that requires requirements, such as a requirement protection based on heightened fraud premarket approval by, or premarket that the VBE participant is the exclusive risk and examples of such arrangements. notification to, the FDA or that is provider of care coordination items or As another alternative to finalizing classified by the FDA as a medical services or the exclusive provider of a specific exclusions in the definition of device. We are further considering reimbursable item or service. We are ‘‘VBE participant,’’ we are considering whether we could define a device furthering considering whether excluding entities under the proposed manufacturer, in whole or in part, with heightened standards and conditions paragraphs (ee), (ff), (gg), and (hh). respect to whether the item it could include enhanced monitoring, These paragraphs could each include a manufactures is eligible for separate or reporting, or data submission condition excluding certain specified bundled payment from a Federal health requirements or some or all of the entities from protection under the safe care program or other payor or is used conditions presented in the proposed harbor. Specifically, we would consider in a test that is eligible for separate or rule’s discussion of proposed excluding from each of these safe bundled payment from a Federal health 1001.952(ee). harbors one or more of the following care program or other payor. We are entities: Pharmaceutical manufacturers; c. Alternatives to ‘‘VBE Participant’’ manufacturers, distributors, or suppliers considering whether the definition of a Exclusion List device manufacturer should include of DMEPOS; laboratories; pharmacies distributors or wholesalers when they We are interested in comments on (including compounding pharmacies or are distributing or selling devices whether, instead of excluding broad only compounding pharmacies); device manufactured by a device manufacturer. categories of entities from the definition manufacturers; PBMs; pharmaceutical With respect to these proposed of ‘‘VBE participant,’’ we should wholesalers; and pharmaceutical definitional approaches, we solicit distinguish among entities that would distributors. If we include safe harbor- be included or excluded from the public comments on whether the specific conditions excluding certain definition on the basis of factors such as proposals would be too broad or too specified entities from protection under product type, company structure, narrow, including whether they would each of (ee), (ff), (gg), and (hh), the heightened fraud risk, or other features. have the effect of excluding from the entities excluded from each safe harbor We solicit similar input with respect to safe harbors companies that develop could differ. exclusions from the proposed revisions We also solicit public comment on and provide digital or other health to the personal services and how best to treat hospitals, health technologies for care coordination and management contracts safe harbor systems, and other types of entities that patient engagement. We are interested related to outcomes-based payments. we have not proposed to exclude under in other recommended definitions that Making distinctions by product or the definition of ‘‘VBE participant’’ would exclude medical device arrangement type might alleviate some when they own or operate an entity that manufacturers without limiting of the difficulty presented by the we propose to exclude, such as a beneficial digital technologies, or increasing integration of healthcare DMEPOS supplier or laboratory. For recommended factors that we should company business lines and the example, we are considering for the consider if we were to craft a definition movement of traditional healthcare final rule whether the exclusion should of ‘‘device manufacturer’’ or ‘‘medical companies into digital health apply only to independent or free- device manufacturer.’’ technology. In this regard, we are standing DMEPOS suppliers and Finally, apart from excluding device considering for the final rule whether to laboratories and to DMEPOS suppliers manufacturers, we are considering, and address program integrity concerns and laboratories owned or operated in solicit comments on, whether to include regarding potentially abusive drug, whole or part by another entity additional safeguards in the final safe device, DMEPOS, and laboratory excluded as a VBE participant. For the harbors to mitigate risks of abuse. These arrangements by regulating the type of final rule, we are considering, and safeguards might apply specifically to items, goods, or services that can be solicit comments on, how best to treat arrangements involving VBE included in an arrangement eligible for health systems and others that may be participants that are health technology safe harbor protection (under any of the entering into the device or technology companies or device manufacturers or proposed safe harbors) rather than development arenas. more broadly to all VBE participants. regulating the types of entities included Specifically, as stated above, we are and excluded. For example, we might 6. Value-Based Purpose considering and are interested in include arrangements involving the use We propose to define a ‘‘value-based comments on safeguards that (i) prevent of mobile or digital technology to purpose’’ as: (i) Coordinating and abusive marketing practices with coordinate care or achieve outcomes- managing the care of a target patient respect to the items and services these based payments but exclude population; (ii) improving the quality of the companies sell to patients, payors, arrangements for the sale or distribution care for a target patient population; (iii) and providers (e.g., practices that of implantable medical devices (e.g., appropriately reducing the costs to, or include payments to physicians, devices with a mechanical or physical growth in expenditures of, payors hospitals, or patients to reward them for effect on the body) or durable medical without reducing the quality of care for ordering the company’s products); (ii) equipment. In determining for a final a target patient population; or (iv) protect independent clinical decision rule which products or arrangements transitioning from healthcare delivery making about products that are in the would be included and excluded from and payment mechanisms based on the patient’s best medical interests and safe harbor protection, we would take volume of items and services provided patient freedom of choice; and (iii) into account any heightened fraud risk to mechanisms based on the quality of

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care and control of costs of care for a population.’’ 20 For example, such health care program reimbursement target patient population. With respect coordination might occur between payment systems. to purpose (iii), we are considering hospitals and post-acute care providers, We are considering for the final rule, whether appropriately reducing the between specialists and primary care and solicit comments on, ways in which costs to, or growth in expenditures of, physicians, or between hospitals or we could revise the definition of the payors should be a value-based purpose physician practices and patients. ‘‘coordination and management of care’’ only when there is improvement in Coordinating and managing care could or additional elements we could include patient quality of care or the parties are include using care managers, providing in the definition to protect against maintaining an improved level of care. care or medication management, fraudulent and abusive practices that parties attempt to characterize as the We intend for this definition to creating a patient-centered medical home, helping with transitions of care, coordination and management of patient include infrastructure investment and sharing and using health data to care. operations necessary to redesign care improve outcomes, or sharing One approach we are considering for delivery to better coordinate care for accountability for the care of a patient the final rule to address these concerns patients across settings, including across a continuum of care.21 would be to preclude some or all technology, data analytics, and training. Importantly, our proposed definition of protection under the proposed safe For example, this could include ‘‘coordination and management of care’’ harbors for arrangements between investing in application programming relates only to the application of the entities that have common ownership. interface (API) technology that proposed safe harbor regulations. We might do this through refinements to facilitates the exchange of data between Although other laws and regulations, the definition of ‘‘value-based VBE participants regarding the target including the physician self-referral law arrangement’’ or by adding restrictions patient population. and associated regulations, may utilize to one or more of the proposed safe Each of our proposed safe harbors at the same or similar terminology, the harbors at paragraphs (ee), (ff), (gg), or 1001.952(ee), (ff), and (gg) requires that definition and interpretations proposed (hh). We recognize that while this the protected arrangement include here would not affect CMS’s (or any approach might protect against abusive value-based activities that directly other governmental agency’s) cycling of patients for financial gain further the first of the four value-based interpretation or ability to interpret such among entities with common purposes: The coordination and term. ownership, it might also preclude management of care for the target Through the proposed definition of protection for care coordination patient population. We are considering ‘‘coordination and management of arrangements among entities in for the final rule, and seek comments care,’’ we seek to distinguish between integrated health systems that could on, whether we should include other referral arrangements, which would not otherwise qualify for proposed safe objectives in the definition of ‘‘value- be protected, and legitimate care harbor protection. We solicit comments based purpose’’ to reflect our goal of coordination arrangements, which on this potential exclusion, and promoting care coordination and the naturally involve referrals across specifically, how best to (i) define shift toward value-based care and provider settings but include beneficial ‘‘common ownership’’; and (ii) whether any other or different objectives activities beyond the mere referral of a appropriately demarcate beneficial should be prerequisites to protection patient or ordering of an item or service. versus problematic financial under our proposed safe harbors. We We are particularly concerned about arrangements between commonly also are considering for the final rule, distinguishing between coordinating owned entities. We are interested in and solicit comments on, whether, and managing patient care transitions feedback on the extent to which instead of requiring that some value- for the purpose of improving the quality integrated health systems believe they based activities directly further the of patient care or appropriately reducing need new safe harbor protection for care coordination and management of care, costs, on one hand, and churning coordination arrangements in light of we require only that value-based patients through care settings to currently available protections. activities be directly connected to, or be capitalize on a reimbursement scheme We would not consider the provision reasonably designed to achieve, any of or otherwise generate revenue, on the of billing or administrative services to the value-based purposes. other. For example, the coordination be the management of patient care for and management of care of a target purposes of this proposed rulemaking; We propose that the first value-based patient population would not include we would consider the sharing or use of purpose in the definition is the cycling patients through skilled nursing health information technology and data coordination and management of care facilities (SNFs) and assisted living to identify a target patient population, for a target patient population. This facilities for the purpose of maximizing coordinate care, or measure outcomes to purpose may include taking significant revenue under any applicable Federal fit our definition. steps to prepare or position oneself to We solicit comments on the unique coordinate and manage the care of 20 See, e.g., Agency for Healthcare Research and intersection between cybersecurity and patients effectively. We propose to Quality, Care Coordination Measures Atlas 6 (2014) the coordination and management of define ‘‘coordination and management (citing K. McDonald et al., Closing the Quality Gap: care, and specifically, whether of care’’ and ‘‘coordinating and A Critical Analysis of Quality Improvement Strategies (2007)), https://www.ahrq.gov/sites/ remuneration in the form of managing care’’ synonymously to mean, default/files/publications/files/ccm_atlas.pdf. cybersecurity items or services could for purposes of the anti-kickback statute 21 See, e.g., NEJM Catalyst, What is Care ever meet definition of the safe harbors, the deliberate organization Coordination? (Jan. 1, 2018), https:// ‘‘coordination and management of care’’ of patient care activities and sharing of catalyst.nejm.org/what-is-care-coordination/ (providing examples and noting that ‘‘[c]are for a target patient population. For information between two or more VBE coordination synchronizes the delivery of a example, we solicit feedback on participants or VBE participants and patient’s health care from multiple providers and whether we should consider patients, tailored to improving the specialists. The goals of coordinated care are to cybersecurity items or services to only health outcomes of the target patient improve health outcomes by ensuring that care from disparate providers is not delivered in silos, and to meet this defined term when such population, in order to achieve safer and help reduce health care costs by eliminating remuneration is donated and used in more effective care for the target patient redundant tests and procedures.’’). conjunction with health information

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technology that meets this definition of (ii), as well as the proposed must be grounded in legitimate, ‘‘coordination and management of modifications to the personal services verifiable data or other information, care.’’ As entities engage in care and management safe harbor at whether the information is internal to coordination, increased connectivity 1001.952(d) for outcomes-based one or more of the VBE participants or and information exchanges may further payment arrangements.) from a credible external source, such as the need for donating or sharing Under this proposal, each offer of a medical journal, social sciences cybersecurity technology or services to remuneration must be analyzed journal, scientific study, an established ensure that appropriate cybersecurity separately for compliance with the safe industry quality standards organization, safeguards are used to address the harbor. For example, in a value-based or results of a payor- or a CMS- cybersecurity risks arising from arrangement between a hospital and a sponsored model or quality program. connections among the entities engaged SNF, the hospital might provide a For example, a specific evidence-based, in care coordination. We recognize the behavioral health nurse to follow valid outcome measure in the context of patient safety risks and risk of harm designated inpatients with mental a hospital’s provision of a care attributed to cybersecurity health disorders in the event of coordinator to a SNF could be an vulnerabilities and threats.22 We also discharge to the SNF. In turn, the SNF increase in the target patient solicit comments on whether parties might provide certain staff to assist the population’s average mobility functional should simply seek protection for hospital in coordinating designated score by a certain percentage over the cybersecurity items or services under patients’ care through the discharge course of a year, contributing to earlier, the proposed cybersecurity safe harbor planning process or might provide office medically appropriate discharges of at 1001.952(jj) explained below. space for the behavioral health nurse. patients to their homes and fewer In addition to undertaking value- The hospital’s offer of the behavioral readmissions to acute care. We do not based activities that are directly health nurse to the SNF must be consider measures related to patient connected to the coordination and analyzed separately from the SNF’s offer satisfaction or convenience (e.g., management of care for the target of certain staff members or office space timeliness of appointments) to be valid patient population, our proposed to the hospital. outcome measures for purposes of this definition of ‘‘value-based purpose’’ This proposed safe harbor does not proposed requirement because we are recognizes that a VBE could have require parties to bear or assume concerned that such measures may not additional value-based purposes and downside financial risk. We are reflect actual improvement in the qualify under the value-based concerned that the offer or provision of quality of patient care, health outcomes, framework, namely to: (i) Improve the remuneration under value-based or efficiency in the delivery of care. We quality of care for a target patient arrangements could present solicit comments on whether there are opportunities for the types of fraud and population; (ii) appropriately reduce the categories of evidence-based outcomes abuse traditionally seen in the FFS costs to, or growth in expenditures of, measures in the areas of patient system, particularly where the parties payors without reducing the quality of satisfaction or convenience that we offering or receiving the remuneration care for a target patient population; and should permit in the final rule because have not assumed downside financial (iii) transition from healthcare delivery they reflect quality or efficiency of care. risk for the care of the target patient and payment mechanisms based on the Any identified evidence-based, valid population. For this reason and to volume of items and services provided outcome measures against which the ensure that the safe harbored recipient of remuneration will be to mechanisms based on the quality of arrangements operate to achieve their measured should not simply reflect the care and control of costs. value-based purposes, we propose the status quo. Consequently, we are C. Care Coordination Arrangements to conditions and safeguards described considering for the final rule an express Improve Quality, Health Outcomes, and below. requirement that outcome measures be Efficiency Safe Harbor (42 CFR designed to drive meaningful 1. Outcome Measures 1001.952(ee)) improvements in quality, health We propose to require that parties to The first proposed safe harbor for outcomes, or efficiencies in care a value-based arrangement establish one delivery. We intend to provide value-based arrangements would protect or more specific evidence-based, valid certain care coordination arrangements. flexibility given the range of outcome measures against which the arrangements that may be covered by Numerous commenters to the OIG RFI recipient of remuneration will be the proposed safe harbor. For example, noted that individuals and entities may measured, and which the parties an outcome measure may drive promote value-based care and facilitate reasonably anticipate will advance the meaningful improvements if it drives care coordination even when assuming coordination and management of care of improvements that are measurable or no financial risk. We agree. This the target patient population. We intend that are more than nominal in nature. proposed safe harbor would protect in- for the outcome measures to serve as Additionally, we are considering for the kind remuneration exchanged between benchmarks for assessing the recipient’s final rule, and solicit comment on, qualifying VBE participants with value- performance under the value-based whether the outcome measures based arrangements that squarely satisfy arrangement and advancement toward requirement should be broader or all of the proposed safe harbor’s achieving the coordination and narrower than the standard we are requirements. (Certain monetary management of care for the target proposing. remuneration associated with care patient population. Accordingly, we We also are considering for the final coordination or other value-based expect such outcome measures to have rule, and solicit comments on, whether activities may be protected under other a close nexus to the value-based to require parties to rebase the outcome proposed safe harbors, including those activities undertaken by the parties to measures (i.e., reset the benchmark used at proposed 42 CFR 1001.952(ff), (gg), the value-based arrangement and to the to determine whether the outcome needs of the target patient population. measure was achieved) where rebasing 22 See, e.g., Health Care Industry Cybersecurity Task Force Report, available at https:// For purposes of this proposed rule, is feasible. We are considering whether www.phe.gov/preparedness/planning/cybertf/ we would consider ‘‘evidence-based’’ to parties should rebase measures (or documents/report2017.pdf. mean the selected outcome measures determine whether rebasing is feasible)

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periodically or pursuant to a specified the parties must terminate the Lastly, we are considering for the final timeframe, such as at least every 1 year, arrangement within 60 days of such a rule adding the following safeguards for 3 years, or other time period. We are determination or lose safe harbor the exchange of information technology: interested in comments addressing protection thereafter. (i) The requirements set forth in whether and, if so, why the appropriate We recognize that it may be difficult paragraph (4) of the current electronic time frame for rebasing should depend for parties giving information health records items and services safe on the type of outcome measure or technology pursuant to a value-based harbor (1001.952(y)), prohibiting nature of the arrangement, and what arrangement to establish an outcome making the receipt of items or services rebasing time periods would be best for measure upon which to assess the a condition of doing business with the different types of measures or recipient’s performance that is offeror); (ii) a requirement limiting the arrangements. We are interested in ‘‘evidence-based’’ as we propose to time frame during which a recipient can feedback on whether rebasing should be interpret the term. For this reason, we receive information technology to, for tied to any relevant requirements set by are considering for the final rule example, 1, 3, or 5 years, after which payors. We further solicit comments on imposing a requirement that time the recipient would be required to whether we should specify a particular information technology meet a different pay fair market value for the continued party that should be responsible for standard than the proposed specific use of the information technology; and implementing the rebasing and which evidence-based, valid outcome (iii) a remedy for the failure to achieve party would be best positioned to do so measures standard. Specifically, we may the applicable standard, such as (e.g., the VBE or the offeror of the require an adoption and use standard discontinued use of the information remuneration). We would anticipate any (i.e., has the technology been adopted technology. rebasing requirement would align with and used in a meaningful way for the 2. Commercial Reasonableness the rebasing proposal set forth in our intended purposes, such that it We propose to require that the value- proposed modifications to the personal advances the coordination and based arrangement is commercially services and management contracts safe management of care for the target reasonable, considering both the harbor related to outcomes-based patient population), a performance arrangement itself and all value-based payments. standard (i.e., has the technology been arrangements within the VBE. By way of If parties to a value-based used to achieve a certain result, such as arrangement revise the evidence-based, example with respect to the first prong efficiencies), or a similar standard that of the commercial reasonableness valid outcome measure(s) through an serves as a benchmark for assessing a amendment during the term of the requirement, if VBE participants enter recipient’s use of remuneration without arrangement, the revised outcome into a value-based arrangement to requiring the parties to establish measure(s) would need to continue to facilitate the sharing of patient-outcome evidence-based outcome measures to incentivize the recipient of the data, it may be commercially reasonable measure performance. As part of this remuneration to make meaningful for a hospital VBE participant to donate adoption and use, performance, or improvements. Were parties technology to a group practice VBE similar standard, we are considering retrospectively to revise their outcome participant to facilitate this process. requiring parties to a value-based measures (e.g., modify the outcome However, it may not be commercially arrangement for the provision of measures and make such modifications reasonable for that same hospital VBE information technology to set forth, in a effective 6 months prior), such revisions participant to donate technology would raise questions regarding signed writing, the specific reasons for substantially more sophisticated, or whether the modified measures were which the technology is being provided, with enhanced functionality, beyond designed to obscure a lack of which would be required to directly that necessary for communicating data meaningful improvement by the relate to health outcomes, patient care on shared patients between the two recipient of the remuneration. For quality improvements, or the parties. (We note that nothing would purposes of the final rule, we are appropriate reduction in costs to, or prevent the donation of technology with considering whether to incorporate the growth in expenditures of, payors or enhanced functionality when a value- CMS Quality Payment Program patients. For example, parties giving based arrangement requires that measures into the requirement to information technology, such as capability or when technology without establish outcome measures. accessibility to a patient portal or data that functionality is not practicable.) As described below, the parties to the analytics platform, would be required to With respect to the second prong of the arrangement also must include a have health-outcome, quality-related, or commercial reasonableness assessment, description of the outcome measure(s) efficiency-related reasons, such as again by way of example, a single value- in a signed writing, and the VBE, the improving efficiencies by increasing based arrangement in which a hospital VBE’s accountable body or responsible patient access to health information. VBE participant provides a necessary person, or a VBE participant in the In addition, under an adoption and number of care coordinators for the value-based arrangement acting on the use, performance, or similar standard, target patient population to a SNF VBE VBE’s behalf must monitor and assess we may require that the parties set forth participant may be commercially the recipient’s progress toward specific, meaningful measures that reasonable. However, if a VBE includes achieving the outcome measure(s). In relate to the remuneration’s intended multiple similar value-based addition, as described below, should the purpose against which the recipient will arrangements, each of which involves VBE’s accountable body or responsible be measured. For example, under an the same hospital VBE participant person determine through monitoring or adoption and use standard, parties to a furnishing care coordinators to the same otherwise that the value-based value-based arrangement may set a SNF VBE participant for the same or a arrangement is (i) unlikely to achieve percentage adoption and use measure similar target patient population, the the evidence-based, valid outcome for a patient portal platform, pursuant to commercial reasonableness of the measure(s) or further the coordination which the recipient would be measured remuneration exchanged within the and management of care for the target by its adoption and use of the patient value-based arrangements in the patient population or (ii) has resulted in portal for a specified percentage of the aggregate may be suspect if it lacks a material deficiencies in quality of care, target patient population. legitimate business purpose.

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We are considering for the final rule 4. Limitations on Remuneration by the parties in the value-based whether to define ‘‘commercially a. In-Kind Remuneration arrangement. reasonable arrangement’’ as an We recognize that in-kind arrangement that would make We propose to protect only in-kind, remuneration exchanged for value-based commercial sense if entered into by non-monetary remuneration, provided activities may indirectly benefit patients reasonable entities of a similar type and all other conditions of the safe harbor outside of the scope of the value-based size, even without the potential for are met. (While monetary remuneration arrangement, and furthermore, that referrals. We solicit comments on the is not protected by this proposed safe parties may find it difficult to anticipate need for a definition of ‘‘commercially harbor, certain outcomes-based payment or project the scope or extent of such reasonable arrangement,’’ and if we arrangements may be protected by ‘‘spillover’’ benefits. This, in and of incorporate a definition, whether we proposed modifications to the personal itself, would not result in the loss of safe should select this particular definition services and management contracts safe harbor protection, provided the parties or an alternative definition. harbor, as subsequently addressed.) We primarily use the remuneration for its further propose that this safe harbor intended purposes (i.e., the specific 3. Writing would exclude protection for gift cards, value-based activities for which the regardless of whether they may be To promote transparency and remuneration is being provided, as set considered cash equivalents. By way of accountability, we propose a forth in the parties’ signed writing). We example, we intend for this safe harbor requirement that the value-based are mindful of the need to provide to allow a VBE participant to share a arrangement be set forth in a writing. parties with sufficient flexibility, while care coordinator with another VBE We propose that the writing be signed also minimizing the risks of potentially participant if the conditions of this safe by the parties and established in abusive arrangements that disguise harbor are met (including the proposed advance of, or contemporaneous with, remuneration unrelated to the contribution requirement). However, coordination and management of care the commencement of the value-based this safe harbor would not protect cash arrangement or any material change to for the target patient population. provided from one VBE participant to For purposes of the final rule, as an the value-based arrangement. We another to hire a care coordinator. propose that the writing state, at a alternative to the requirement that Lastly, we note that by virtue of our remuneration exchanged between VBE minimum: (i) The value-based activities exclusion of monetary remuneration, participants be used primarily to engage to be undertaken by the parties to the the proposed safe harbor would not in value-based activities, we are value-based arrangement; (ii) the term of protect an ownership or investment considering requiring that the the value-based arrangement; (iii) the interest in the VBE or any distributions remuneration exchanged be limited to target patient population; (iv) a related to an ownership or investment value-based activities that only benefit description of the remuneration; (v) the interest. In addition to our long-standing the target patient population. Under this offeror’s cost for the remuneration; (vi) view that the exchange of monetary approach, arrangements with the percentage of the offeror’s costs remuneration poses heightened and ‘‘spillover’’ benefits would not be contributed by the recipient; (vii) if different fraud and abuse risks and thus protected by the safe harbor. We solicit applicable, the frequency with which should be subject to safeguards such as comments on this alternative approach. the recipient will make payments for a fair market value requirement, we do ongoing costs; and (viii) the specific not view the offer or receipt of c. No Furnishing of Medically evidence-based, valid outcome ownership or investment interests as Unnecessary Items or Services or measures against which the recipient integral to the coordination and Reduction in Medically Necessary Items would be measured. In the final rule, we management of care for a target patient or Services would align the writing requirements in population. We propose to require that the (v) and (vi) with the requirements for remuneration exchanged not induce the b. Primarily Engaged in Value-Based the contribution requirement described parties to furnish medically unnecessary Activities below; in other words, if we were to items or services or reduce or limit change the contribution requirements, We propose to require that the medically necessary items or services we would correspondingly change the remuneration provided by, or shared furnished to any patient. Remuneration writing requirement. among, VBE participants be used that induces a provider to order or We believe that a writing, setting forth primarily to engage in value-based furnish unnecessary care is inherently the above terms in advance of, or activities that are directly connected to suspect. In addition, a reduction in contemporaneous with the the coordination and management of medically necessary services would be commencement of or any material care of the target patient population. As contrary to the goals of this rulemaking change to the value-based arrangement, set forth in proposed paragraph and, in some instances involving constitutes a key safeguard to ensure 1001.952(ee), we propose to define a hospitals and physicians, could be a that VBE participants are not using the ‘‘value-based activity’’ as ‘‘any of the violation of the CMP law provision value-based arrangement merely to following activities, provided that the relating to gainsharing arrangements at incentivize and reward referrals of activity is reasonably designed to sections 1128A(b)(1) and (2) of the Act business. We are interested in achieve at least one value-based purpose (42 U.S.C. 1320a–7a(b)(1) and (2)). comments regarding whether a of the value-based enterprise: (i) the requirement to have a single writing provision of an item or service; (ii) the d. No Remuneration From Individuals signed by all parties may be taking of an action; or (iii) the refraining or Entities Outside the Applicable VBE burdensome, especially for large-scale from taking an action.’’ In the definition We propose that this safe harbor arrangements, and whether we should of ‘‘value-based activity’’, we specify would not protect any remuneration instead permit a collection of writings that it does not include the making of funded by, or otherwise resulting from provided that every party to the a referral. We also propose to require the contributions of, an individual or arrangement has signed a writing that the value-based arrangement be set entity outside of the applicable VBE. acknowledging consent to the forth in a signed writing stating the This proposal is intended to ensure that arrangement. value-based activities to be undertaken protected arrangements are closely

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related to the VBE, that VBE of patients or business not covered patient population. We are proposing a participants are committed to the VBE under the value-based arrangement recipient contribution requirement as a and striving to achieve the coordination (sometimes called ‘‘swapping’’ safeguard to help ensure that the use of and management of care of the target arrangements). any remuneration exchanged pursuant patient population, and that non-VBE This requirement would exclude safe to this safe harbor would be for the participants cannot indirectly use the harbor protection for any remuneration coordination and management of the safe harbor to protect arrangements that that is explicitly or implicitly offered, target patient population’s care. are designed to influence the referrals or paid, solicited, or received in return for, Specifically, the proposed rule would decision making of VBE participants. or to induce or reward, any referrals or condition safe harbor protection on the For example, a pharmaceutical other business generated outside of the recipient’s payment of at least 15 manufacturer could not circumvent the value-based arrangement. Under our percent of the offeror’s cost for the in- proposed exclusion of pharmaceutical proposal, VBE participants could kind remuneration. This requirement is manufacturers from the definition of encourage referrals of the target patient intended to mirror that set forth in the ‘‘VBE participant’’ by providing funds to population as part of value-based current electronic health records items a third-party entity and then directing or activities (e.g., a hospital could develop and services safe harbor, 1001.952(y). otherwise controlling any aspect of the a ‘‘preferred network’’ of post-acute care We are considering for the final rule, third-party entity’s participation as a providers that meet certain quality and solicit comments on, whether we VBE or a VBE participant. We solicit criteria). However, VBE participants should require a more specific comments on this approach and could not offer remuneration in methodology for determining value, whether there may be defined, limited connection with the preferred network such as either the fair market value of circumstances in which non-VBE to induce business or the referral of the remuneration to the recipient or the participants should be able to contribute patients that fall outside the scope of the reasonable value of the remuneration to to a value-based arrangement eligible for value-based arrangement. the recipient. If we were to require that safe harbor protection. In lieu of the proposed requirement parties assess the fair market value of As a corollary to this requirement, we that prohibits the offeror of the the remuneration to the recipient in are considering for the final rule remuneration from taking into account order to determine the required whether to require that remuneration be the volume or value of, or conditioning contribution amount(s), we would not provided directly from the offeror to the an offer of remuneration on: (i) Referrals require parties to obtain an independent recipient. This requirement would of patients that are not part of the value- fair market valuation. We are interested prohibit the involvement of individuals based arrangement’s target patient in feedback on whether the method for or entities other than the VBE or a VBE population, or (ii) business not covered determining the contribution participant in the exchange of under the value-based arrangement, we requirement should be different for remuneration under a value-based are considering for the final rule, and services than for goods. arrangement, including, potentially, solicit comments on, an alternative We believe that requiring financial third-party vendors and contractors. We requirement that would require that the participation by a recipient should: solicit comments on any practical aggregate compensation paid by the Increase the likelihood that the recipient impediments such as restriction would offeror is not determined in a manner actually would use the care create. that takes into account the volume or coordination items and services, ensure value of referrals or business generated that the remuneration is well-tailored to 5. The Offeror Does Not Take Into between the parties for which payment the recipient, and promote the Account the Volume or Value of, or may be made by a Federal health recipient’s vested interest in achieving Condition Remuneration on, Business or program. While we believe that this the intended purpose of the value-based Patients Not Covered Under the Value- condition could potentially better arrangement, namely, furthering the Based Arrangement protect against bad actors who may seek coordination and management of care of We propose a requirement that to use the care coordination the target patient population. prohibits the offeror of the remuneration arrangements safe harbor as an In proposing this contribution from taking into account the volume or affirmative defense for an unlawful requirement, we solicit feedback on the value of, or conditioning an offer of referral arrangement or to disguise proposed contribution amount, whether remuneration on: (i) Referrals of patients arrangements that result in unnecessary certain recipients, such as rural that are not part of the value-based increases in utilization and providers, small providers, Tribal arrangement’s target patient population, expenditures, we seek comments on providers, providers who serve or (ii) business not covered under the whether and to what extent this underserved populations, or critical value-based arrangement. This proposal requirement might impede to goal of access hospitals should be exempted is modeled on a similar safeguard this rulemaking, namely to remove from the contribution requirement or contained in the existing safe harbor at barriers for beneficial care coordination pay a lower contribution percentage and paragraph 1001.952(t)(1)(ii)(B), which and value-based arrangements. We are if so, why. We are considering for the provides that ‘‘neither party gives or interested in specific examples of final rule alternative contribution receives remuneration in return for or to arrangements that would be unable to amounts ranging from 5 percent to 35 induce the provision or acceptance of use this safe harbor were we to adopt percent and solicit comments on an business (other than business covered this requirement. appropriate amount (or amounts) that by the agreement) for which payment would invest recipients in using the may be made in whole or in part by a 6. Contribution Requirement remuneration they receive to advance Federal health care program on a fee-for- The goal of this proposed rulemaking the coordination and management of service or cost basis.’’ Our purpose in is to remove barriers to improved care care of the target patient population, proposing this requirement is to coordination and to promote efficient, while still allowing flexibility for parties prohibit protection for remuneration value-driven care. To this end, it is with fewer financial resources to engage offered under the guise of a value-based important that protected remuneration in value-based arrangements. We are arrangement when that remuneration be used to facilitate the coordination considering whether we should require actually is intended to induce referrals and management of care for the target different contribution amounts for

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different types of remuneration (e.g., a 1001.952(y). We recognize that this expresses a preference for a different higher or lower contribution amount for alternative option may affect practitioner, provider, or supplier; (ii) technology and a higher or lower contribution requirements only for the patient’s payor determines the contribution amount for care technology-based remuneration that is provider, practitioner, or supplier; or coordinators or other services most likely to need upgrades, updates, (iii) such direction or restriction is arrangements). and patches to continue operating as contrary to applicable law or regulations We also are considering whether in intended. under titles XVIII and XIX of the Act. the final rule we should impose This provision is intended, in part, to different contribution requirements for 7. Requirements of a Value-Based preserve patient freedom of choice different recipients. Because a Arrangement among healthcare providers and ensure contribution requirement may impose a a. Direct Connection to the Coordination the VBE’s and VBE participants’ significant financial burden on certain and Management of Care independent medical or professional recipients, we are considering for the We propose that the value-based judgment is not unduly restricted. That final rule, and solicit comments on, arrangement has a direct connection to being said, we do not intend for this whether a lower contribution amount, the coordination and management of criterion to bar VBEs or VBE or no contribution amount, would be participants from communicating the care for the target patient population. appropriate for arrangements involving benefits of receiving care from other We interpret this requirement to mean certain providers with financial VBE participants in the VBE. that any remuneration offered pursuant constraints, such as providers in rural or underserved areas, providers serving to a value-based arrangement has a close c. No Marketing of Items or Services or underserved populations, small nexus to the coordination and Patient Recruitment Activities providers, Tribal providers, and critical management of care for the target We propose to exclude safe harbor access hospitals. patient population, as opposed to the protection for value-based arrangements For consideration of this potential VBE participants’ referral patterns and that include marketing items or services contribution requirement condition, and business generated. By way of example to patients or patient recruitment whether a lower contribution amount, only, arrangements where VBE activities. Our enforcement experience or no contribution amount, is participants offer, or are required to demonstrates that fraud schemes often appropriate for arrangements involving provide, remuneration to receive involve the purchase of beneficiaries’ such providers, we cross-reference the referrals or to be included in a medical identity or other inducements proposals discussed more fully in ‘‘preferred provider network’’ (i.e., to lure beneficiaries to obtain relation to the electronic health records ‘‘pay-to-play’’ arrangements) would not unnecessary care. This proposed safe arrangements safe harbor’s 15 percent have a direct connection to the harbor condition would protect contribution requirement. We will coordination and management of care. beneficiaries and make clear that such review and consider comments received We are considering for purposes of the coercive arrangements are not value- about those proposals in relation to our final rule, and solicit comments on, based arrangements protected by the consideration of this potential whether we should use alternative proposed safe harbor. Accordingly, the condition. Based on feedback on the language to ‘‘direct connection’’ (e.g., proposed safe harbor would offer contribution requirement in our existing ‘‘reasonably related and directly tied’’) flexibility to improve quality of care, electronic health records safe harbor, we in order to better convey the close nexus health outcomes, and efficiency while are mindful of the potential that this safe harbor requires between limiting the risk of the value-based administrative burdens of a contribution each value-based arrangement and the arrangement being used as a marketing requirement and seek comments on this coordination and management of care of or recruiting tool to generate federally issue. a target patient population. payable business for a VBE participant. We also solicit comments on how to b. No Limitation on Decision Making; Specifically, this requirement would apply the contribution requirement for Restrictions on Directing or Restricting restrict any party to a value-based ongoing costs and unexpected ‘‘add- Referrals arrangement, or such party’s agent, from ons’’ (e.g., updates or upgrades to marketing, or engaging in patient software that trigger additional costs). We propose that the value-based recruitment activities related to, any Under the proposed contribution arrangement must not limit parties’ items or services offered or provided to requirement, if the remuneration ability to make decisions in the best patients in the target patient population represents a one-time cost, the recipient interests of their patients. That is, VBEs under a value-based arrangement. would be required to make a and VBE participants to a value-based We do not intend for this limitation contribution in advance of receiving the arrangement must maintain their to prohibit a VBE participant that is a remuneration. However, for any ongoing independent, medical, or other party to a value-based arrangement from costs, the proposed rule would require professional judgment. Additionally, we educating patients in the target patient that the recipient make any are aware that some payors and others, population regarding permissible value- contributions on reasonable, regular such as employers, direct or restrict based activities. For example, if a SNF intervals, with the frequency of such where their networks or employees refer or home health agency placed a staff payments documented in writing. We patients; moreover, we are aware that member at a hospital to assist patients are considering for the final rule, and under some value-based arrangements, in the discharge planning process, and seek comment on, an alternative referrals would be directed within a in doing so, the staff member educated requirement for the recipient to make a network or continuum of preferred patients regarding care management contribution with respect to the initial providers (based on quality and other processes used by the SNF or home provision of remuneration but not with legitimate considerations). We propose health agency, this would not constitute respect to any update, upgrade, or patch that, in addition to not limiting parties’ marketing of items and services of the remuneration already provided. ability to make referral decisions in the (provided the staff member only worked This is similar to an option being patients’ best medical interests, value- with patients that had already selected considering for the electronic health based arrangements cannot direct or the SNF or home health agency and SNF records arrangements safe harbor, restrict referrals if: (i) A patient or home-health agency care was

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medically appropriate for such patient). achieve the evidence-based, valid information regarding the arrangement, However, if the SNF or home health outcome measure(s), the parties such as its duration. This data could be agency placed a staff member at a terminate the arrangement within 60 used, for example, by the government hospital to market its services to days of such a determination. To the for data analysis to understand whether hospital patients, the arrangement extent the parties do not terminate an value-based arrangements are associated would not comply with this proposed arrangement within 60 days of such with increased or decreased utilization requirement. We solicit comments on determination, the parties would lose or outlier levels of utilization (taking this approach. safe harbor protection under this into account that in some value-based proposal. We solicit comments on 8. Monitoring and Assessment arrangements one would expect to see whether to adopt a longer or shorter increased utilization of some types of We propose a requirement that the timeframe for termination; our goal is a items and services and decreases in VBE, a VBE participant in the value- reasonable but also prompt termination others). Should we adopt this approach, based arrangement acting on the VBE’s of arrangements that are no longer information would be submitted in a behalf, or the VBE’s accountable body or serving the goals for which safe harbor form and manner and at times specified responsible person monitors and protection is offered. In addition, we are by the Secretary in guidance. We solicit assesses, no less frequently than considering for the final rule and seek comments on the types of data that the annually, or once during the term of the comment regarding whether, in lieu of parties availing themselves of safe value-based arrangement for the proposed termination requirement harbor protection should be required to arrangements with terms of less than 1 for the above subsections (i) through submit to the Department, potential year: (i) The coordination and (iii), the safe harbor should instead management of care for the target reporting and compliance burdens for allow for remediation—within a small and large value-based enterprises, population in the value-based reasonable timeframe—before any arrangement, (ii) any deficiencies in the and any different or additional actions required termination. that may help ensure appropriate delivery of quality care under the value- We are not proposing to define oversight. based arrangement, and (iii) progress ‘‘material deficiency in quality of care.’’ toward achieving the evidence-based, We believe that such ‘‘material 9. No Diversion, Resell, or Use for valid outcome measure(s) in the value- deficiency’’ may vary depending on the Unlawful Purposes based arrangement. We further propose nature of the VBE and the value-based to require that the party conducting arrangements of its VBE participants. We propose that the exchange of such monitoring and assessment reports Examples of a ‘‘material deficiency in remuneration under this safe harbor such monitoring and assessment to the quality of care’’ may include, but are not would not be protected if the offeror VBE’s accountable body or responsible limited to, identified instances of knows or should know that the person (if the VBE’s accountable body or potential patient harm or a pattern of remuneration is likely to be diverted, responsible person is not itself diminished quality of care. resold, or used by the recipient for an conducting the monitoring and Our proposals with respect to unlawful purpose. Here, we state assessment). Through this proposal, we monitoring and assessment stem from a expressly what is otherwise implicit in seek to ensure that the VBE’s recognition that most arrangements the design of a value-based arrangement accountable body or responsible person protected by this proposed care under this proposed safe harbor: The periodically assesses the parties’ coordination arrangements safe harbor exchange of remuneration that the performance of certain key metrics would not be subject to governmental offeror knows or should know is likely under each value-based arrangement. programmatic requirements, oversight, to be diverted, resold, or used by the We note that this proposal does not or monitoring comparable to CMS- recipient for purposes other than the mandate how this monitoring should be sponsored models. Accordingly, to aid coordination and management of care of performed. We intend for the in protecting against abusive a target patient population would not be monitoring to be tailored based on the arrangements, to further facilitate the protected. complexity and sophistication of the government’s understanding and VBE participants, the VBE, and the awareness of value-based arrangements 10. Materials and Records value-based arrangement and available and their impacts on Federal health care resources. We are considering for the program beneficiaries and expenditures, To ensure transparency, we propose a final rule, and solicit comments on, and to create incentives for VBEs to requirement that VBE participants or the whether to require that both the party exercise due diligence when VBE make available to the Secretary, offering the remuneration and its establishing them, we are considering upon request, all materials and records recipient jointly conduct monitoring for the final rule requiring VBEs to sufficient to establish compliance with and assessment responsibilities. We submit certain data to the Department the conditions of this safe harbor. We further solicit comments on the role that would identify the VBE, VBE are not proposing parameters regarding monitoring of utilization, referral participants, and value-based the creation or maintenance of patterns, and expenditure data could arrangements, as a requirement for safe documentation to allow VBE play in ensuring that the potential for harbor protection. We solicit comments participants the flexibility to determine abuses or gaming is reduced. on whether such a requirement would what constitutes best documentation The proposed rule would further present compliance or operational practices, but welcome comments on require that if the VBE’s accountable burdens for VBEs seeking the protection whether such parameters may be body or responsible person determines, of this safe harbor. needed. In particular, we seek comment through reports of monitoring and Were such a proposal finalized, regarding whether we should require, in assessment, that the value-based required data might include the the final rule, a requirement that parties arrangement (i) is unlikely to further the National Provider Identifier (NPI) maintain materials and records coordination and management of care number or other identifying information sufficient to establish compliance with for the target patient population, (ii) has of each VBE participant in the VBE, the conditions of this safe harbor for a resulted in material deficiencies in each party participating in the value- set period of time (e.g., at least 6 years quality of care, or (iii) is unlikely to based arrangement, as well as or 10 years).

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11. Possible Additional Safeguards integrity safeguards. However, fair volume or value of referrals or other a. Bona Fide Determination market value requirements and business generated between the parties). restrictions that prohibit paying d. Additional Requirements for Dialysis We are considering for the final rule remuneration based on the volume or Providers a condition that would require that, in value of referrals help ensure that advance of, or contemporaneous with, protected payments are for legitimate Dialysis providers furnish vital the commencement of the applicable purposes and are not kickbacks. We services to patients with critical and value-based arrangement, the VBE’s have endeavored to draft this safe extensive care needs. Patients with end accountable body or responsible person harbor to distinguish between beneficial stage renal disease (ESRD) stand to make two bona fide determinations with care coordination arrangements and benefit substantially from better respect to the value-based arrangement. payment-for-referral schemes that do coordinated, more efficient care as First, we are considering a condition not serve, and may be contrary to, the envisioned by this proposed rule. requiring that the accountable body or goals of coordinated care and the shift Dialysis providers play a central role in responsible person make a bona fide to value. We solicit comments from coordinating the care of individuals determination that the value-based stakeholders for safeguards that may with ESRD. However, the dialysis arrangement is directly connected to the help distinguish payments to reward or industry has unique attributes—in coordination and management of care induce referrals from remuneration particular, market dominance by a for the target patient population. provided to promote or support limited number of dialysis providers— Second, we are considering a condition legitimate care coordination activities. that may increase fraud and abuse risks requiring that the accountable body or To this end, we are considering as an attendant to financial relationships responsible person make a bona fide alternate proposal for the final rule’s between dialysis providers and others. determination that the value-based care coordination arrangements safe We are concerned that present levels of arrangement is commercially harbor: (i) Whether we should include market consolidation could impact reasonable, considering both the a fair market value requirement on any access to dialysis care, quality of care, arrangement and all value-based remuneration exchanged pursuant to a and associated health outcomes.23 In arrangements within the VBE. value-based arrangement, and (ii) addition, we are concerned that, b. Cost-Shifting Prohibition whether we should include a further or because of the aforementioned market alternate requirement prohibiting VBE dominance of a limited number of We are considering for the final rule, providers, the conduct that would be and seek comment on, a condition participants from determining the amount or nature of the remuneration protected by this proposed safe harbor prohibiting VBEs or VBE participants could lead to a decrease in competition from billing Federal health care they offer, or the VBE participants to whom they offer such remuneration, in among dialysis providers. We seek programs, other payors, or individuals comment on whether and how the for the remuneration; claiming the value a manner that takes into account the volume or value of referrals or other potential protection of financial of the remuneration as a bad debt for arrangements between dialysis payment purposes under a Federal business generated, including both business or patients that are part of the providers and others under this health care program; or otherwise proposed safe harbor could affect the shifting costs to a Federal health care value-based arrangement and those that are not. To the extent these concentration of the dialysis market, program, other payors, or individuals. access to care, quality of care, and This proposal would not exclude requirements would impede value- associated health outcomes. We are arrangements from safe harbor based and care coordination considering whether to include in the protection that involve legitimate arrangements, we are interested in final rule certain conditions specific to shifting of some costs that result from feedback on potential, alternative safe dialysis providers to further ensure that achieving care coordination goals or harbor conditions that might mitigate their care coordination arrangements other value-based purposes. For such effects. operate to improve the management and example, depending on the We are further considering for the care of patients and are not pay-for- arrangement, one might expect to see final rule whether we could best achieve referral schemes. These conditions increases in primary care costs or costs the goals of this rulemaking through a could include enhanced monitoring, for care furnished in home and safe harbor design that requires value- reporting, or data submission community settings paired with based arrangements to be fair market requirements or some of the conditions reductions in unnecessary value but that does not prohibit discussed in sections a., b., and c. hospitalizations, duplicative testing, determining the amount or nature of the directly above, including fair market and emergency room visits; one also remuneration on the volume or value of value requirements and restrictions that might see increases in remote referrals or other business generated. prohibit paying remuneration based on monitoring or care management This approach would recognize the anti- the volume or value of referrals. services. kickback statute compliance challenge that the restriction on the volume or 12. Example of a Value-Based c. Fair Market Value Requirement and value of referrals or other business Arrangement Analyzed Under the Restriction on Remuneration Tied to the generated poses for arrangements that Proposed Care Coordination Volume or Value of Referrals inherently reflect the volume of patients Arrangements Safe Harbor Commenters to the OIG RFI pointed to for whom care is coordinated or the fair market value requirements and value of services offered under a value- The following example demonstrates restrictions on remuneration based on based arrangement. In addition, or as an how parties might analyze the proposed the volume or value of business in alternative, we are considering a care coordination arrangements safe existing safe harbors as barriers to restriction that would prohibit harbor’s various requirements with arrangements that facilitate coordinated remuneration based directly on the 23 volume or value of business generated See Kevin F. Erickson et al., Consolidation in and value-based care, so we have crafted the Dialysis Industry, Patient Choice, and Local this proposed safe harbor without them, between the parties (thus permitting Market Competition, 28 Clinical J. of the American relying instead upon other program remuneration based indirectly on the Society of Nephrology 3 (Mar. 7, 2017).

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respect to the following fact pattern: To include: (i) The term of the value-based provider, practitioner, or supplier; or coordinate care between an acute care arrangement; (ii) the value-based (iii) such direction or restriction is hospital and a SNF for mental health activities to be undertaken; (iii) the contrary to applicable law or regulations patients, the hospital and SNF enter into target patient population; (iv) a under titles XVIII and XIX of the Act. a care coordination arrangement under description of the remuneration (e.g., For example, the hospital could not which the hospital engages in the value- the assignment of a full-time nurse to require physicians on its medical staff to based activity of providing a behavioral the SNF and the cost of the nurse’s refer patients in the target patient health nurse for to the SNF to follow services to the offeror); (v) the offeror’s population to the SNF if a patient designated inpatients with certain cost of the remuneration; (vi) the expresses a preference for a different mental health disorders for a 1-year time percentage of the offeror’s cost facility or if the patient’s payor does not period, who comprise the target patient contributed by the recipient; (vii) if cover services at the SNF. population, following discharge from applicable, the frequency of the Eighth, the arrangement must not the hospital and during admission to recipient’s contribution payments for include marketing to patients of items or and while receiving care at the SNF. In ongoing costs; and (viii) set forth the services or engaging in patient this example, both the hospital and the specific, evidence-based valid outcome recruitment activities. SNF stand to benefit from this measure(s) against which the SNF Ninth, the VBE (or alternatively, the arrangement because they participate in would be measured. SNF or hospital acting on the VBE’s a value-based payment arrangement that Fourth, the remuneration must: (i) Be behalf), or the VBE’s accountable body offers them shared savings payments for in-kind; (ii) be used primarily to engage or responsible person must monitor and improved quality and patient outcomes in one or more value-based activities assess at least annually (or once during and reduced emergency room visits. The that have a direct connection to the the agreement’s term if the agreement is hospital and SNF are the only VBE coordination and management of care for less than a year): (i) The participants in a VBE that is designed to for the target patient population; and coordination and management of care of accomplish the value-based purpose of (iii) not induce VBE participants to the target patient population; (ii) any coordinating and managing the care of furnish medically unnecessary items or deficiencies in the delivery of quality patients with mental health disorders services or reduce or limit medically care under the value-based arrangement; (namely, by improving the quality of necessary items and services furnished and (iii) progress toward achieving the care they receive during the care to any patient. In addition, the hospital evidence-based, valid outcome transition process from acute care to could not provide the nurse to the SNF measure(s) in the value-based skilled nursing care and during their if any part of the cost of the nurse would arrangement. If, through monitoring and SNF stay). be funded by, or otherwise result from assessment, the VBE’s accountable body This proposed arrangement would the contributions of, an individual or or responsible person determines that implicate the anti-kickback statute, entity outside of the VBE, such as a the value-based arrangement is: (i) Is because the hospital would be providing pharmaceutical or medical device unlikely to further the coordination and the SNF with remuneration (the manufacturer. management of care for the target behavioral health nurse services) and Fifth, the hospital’s provision of the patient population, (ii) has resulted in the SNF could refer Medicare, nurse to the SNF must not take into material deficiencies in quality of care, Medicaid, or other Federal health care account the volume or value of, or or (iii) is unlikely to achieve the program patients to the hospital. Safe condition the remuneration on, referrals evidence-based, valid outcome harbor protection is afforded only to of patients who are not part of the target measure(s), the parties terminate the those arrangements that precisely meet patient population and business not arrangement within 60 days of such a all of a safe harbor’s conditions. covered under the value-based determination. Consequently, the hospital and SNF arrangement. Tenth, the hospital does not, and might engage in the following analysis Sixth, the SNF must pay for at least should not, know that the behavioral to determine whether their proposed 15 percent of the hospital’s cost of the nurse’s services are likely to be arrangement satisfies the proposed care care coordination services provided by ‘‘diverted’’ by the SNF (e.g., used by the coordination arrangements safe harbor’s the nurse over the arrangement’s one- SNF to perform tasks unrelated to the requirements. year term. Assuming the nurse provides care coordination and management of First, the hospital and SNF must periodic services throughout the year, the target patient population) or used for establish specific evidence-based, valid the SNF must pay its required an unlawful purpose (e.g., the provision outcome measures against which the contribution amount at reasonable, of medically unnecessary services). SNF will be measured throughout the regular intervals, such as on a monthly Finally, the VBE participants must arrangement, and which the parties basis. provide documentation, such as the reasonably anticipate will advance the Seventh, the value-based arrangement signed writing, to the Secretary, upon coordination and management of care must be directly connected to the request, showing that the parties for the target patient population. coordination and management of care of complied with the safe harbor Second, the parties must ensure that the target patient population. In provisions. devoting one full-time nurse to oversee addition, the value-based arrangement these patients would be commercially must not place any limitation on the 13. Alternative Regulatory Structure reasonable, considering both the VBE participants’ ability to make This proposed rule provides arrangement itself and all value-based decisions in the best interest of their protections for certain care coordination arrangements in the VBE. patients. Further, if the value-based and value-based arrangements through a Third, the hospital and SNF must arrangement restricts or directs referrals, combination of proposed revisions to execute a signed writing documenting the value-based arrangement may not the personal services and management the terms of the value-based require referrals to a particular provider, contracts safe harbor at 1001.952(d), the arrangement prior to, or practitioner, or supplier: (i) If a patient proposed care coordination contemporaneous with, its expresses a preference for a different arrangements safe harbor at commencement or any material changes practitioner, provider, or supplier; (ii) if 1001.952(ee), the proposed substantial to the arrangement. The writing must the patient’s payor determines the downside financial risk safe harbor at

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1001.952(ff), and the full downside current proposal to add new protections equivalent to the protection collectively financial risk safe harbor at for outcomes-based payments at proposed under paragraphs 1001.952(gg). As an alternative to this proposed new paragraph 1001.952(d)(2). 1001.952(ee) and (ff); and (ii) how suite of protections, we are considering Third, for parties that meet the parties would determine that a payment for the final rule a different regulatory requirements of the value-based for quality outcomes is consistent with structure and approach to protect care framework and also assume substantial fair market value. As with the second coordination and other value-based downside financial risk (as defined in tier described above, to ensure that arrangements that are not at full proposed 1001.952(ff)), we would protected arrangements meet their financial risk (as defined at proposed provide increased flexibility under the value-based purposes, we might 1001.952(gg)) and are not part of a CMS- personal services and management incorporate additional accountability sponsored model (as defined at contracts safe harbor for their and transparency requirements, such as proposed 1001.952(ii)). For this arrangements by removing the those proposed for new safe harbor alternate approach, we would rely requirements that the aggregate 1001.952(ee). solely on the personal services and compensation: (i) Be set in advance (but We are also interested in comments management contracts safe harbor at requiring that the compensation regarding any special problems a fair paragraph 1001.952(d) as a platform to methodology be set in advance); (ii) not market value requirement would pose create tiered protection for value-based be determined in a manner that takes for providers in rural or underserved arrangements, each step of which would into account the volume or value of any areas, providers serving underserved remove additional conditions of referrals; and (iii) be consistent with fair populations, or others. With respect to paragraph 1001.952(d) to allow greater market value in arm’s-length other proposed safe harbors where we flexibility for innovation as the transactions. This additional flexibility have indicated that we are considering arrangements become more closely would be afforded in recognition of the including in the final rule a restriction aligned with value-based purposes (as parties’ assumption of downside related to the volume or value of defined in proposed paragraph financial risk. referrals and other business generated or 1001.952(ee)) and the parties take on With respect to the volume or value a requirement for fair market value, we more downside financial risk. requirement, we are considering for the will consider comments to this First, as proposed and described in final rule several alternative ways we alternative regulatory structure our proposed modifications to the might remove it in the second and third addressing how these criteria would personal services and management steps of this approach. We might operate in connection with value-based contracts safe harbor, we would remove remove it entirely or remove it in part arrangements. the requirement that aggregate by retaining a requirement that the D. Value-Based Arrangements With compensation under service compensation not relate directly to the Substantial Downside Financial Risk arrangements be set forth in advance, volume or value of referrals or other (1001.952(ff)) substituting a requirement that the business generated between the parties methodology for determining the (allowing for indirect correlations). With We are proposing a new safe harbor compensation be set in advance. This respect to a fair market value for certain value-based arrangements would offer broader protection for requirement, we might remove it involving VBEs that assume substantial certain outcomes-based payment entirely; remove it only for monetary downside financial risk (as defined in arrangements that are fair market value remuneration or only for in-kind the proposed regulation) from a payor. and do not take into account the volume remuneration; or remove it where the We propose to incorporate the or value of referrals or other business. non-fair market value arrangement definitions of ‘‘coordination and Protected arrangements would not be primarily benefits the offeror of the management of care,’’ ‘‘target patient required to meet the proposed definition remuneration, with such benefit population,’’ ‘‘value-based activity,’’ of ‘‘value-based arrangement.’’ independent of any increase in the ‘‘value-based arrangement,’’ ‘‘value- Second, for value-based arrangements volume or value of referrals (e.g., a based enterprise,’’ ‘‘value-based that meet applicable requirements of the hospital offering care managers to a purpose,’’ and ‘‘VBE participant’’ found VBE framework previously outlined post-acute care facility to better in proposed paragraph 1001.952(ee). (e.g., the parties to the arrangement are coordinate care and prevent avoidable This safe harbor, which would protect VBE participants in a VBE), we would readmissions for which the hospital both monetary and in-kind provide additional flexibility under the might be penalized). We might also remuneration, would offer greater personal services and management permit a broader set of free or below fair flexibility than the safe harbor for care contracts safe harbor by removing the market value arrangements for providers coordination arrangements in requirements that the aggregate coordinating care in rural or recognition of the VBE’s assumption of compensation: (i) Be set in advance (but underserved areas or providers serving substantial downside financial risk. It requiring that the compensation underserved populations. could apply, for example, to an methodology be set in advance); and (ii) We are cognizant that this alternative arrangement between an accountable not be determined in a manner that approach may present operational care organization that is a VBE and a takes into account the volume or value challenges for parties, particularly with network provider to share savings and of referrals. We may also incorporate respect to determining fair market value losses earned or owed by the safeguards from our proposed care for value-based arrangements. Moreover, accountable care organization, or coordination arrangements safe harbor we solicit comments on this approach as between a VBE that has contracted with (e.g., the monitoring requirement). To a whole and, in particular, on the a payor for an episodic payment and a ensure that protected arrangements meet following: (i) How to include in any safe hospital and post-acute care provider their value-based purposes, we might harbor finalized consistent with this that would be coordinating care for incorporate additional accountability approach protection for the exchange of patients under the episodic payment. and transparency requirements, such as information technology and However, as proposed, this safe harbor those proposed for new safe harbor infrastructure that might not be part of would apply only to the exchange of 1001.952(ee). We envision this a personal services or management remuneration between VBEs that have framework would be similar to our contract, with a scope of protection assumed substantial downside financial

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risk and VBE participants that substantial downside financial risk from the extent such data is unavailable, meaningfully share in the VBE’s a payor for providing or arranging for evidence-based, comparable downside financial risk (as further the provision of items and services for expenditures; described below). a target patient population. The VBE can (iii) A prospectively paid population- In other words, where a VBE assume this risk directly if the VBE is based payment for a defined subset of participant agrees to spread the VBE’s an entity or through a VBE participant the total cost of care of a target patient financial risk and coordinate care, acting as an agent of, and accountable population, where such payment is additional safe harbor flexibility would to, the VBE. (We note, to the extent a determined based upon a review of be available. For the same reasons VBE participant wholly assumes risk on historical expenditures, or to the extent articulated in our discussion of the care behalf of the VBE, it may act in both its such data is unavailable, evidence- coordination arrangements safe harbor, capacity as a VBE participant and an based, comparable expenditures; or we propose that this safe harbor would agent of the VBE.) (iv) A partial capitated payment from not protect an ownership or investment To balance the need to protect start- the payor for a set of items and services interest in the VBE or any distributions up arrangements while also limiting for the target patient population where related to an ownership or investment potential program integrity risks, this such capitated payment reflects a interest. We solicit comments on this safe harbor would protect arrangements discount equal to at least 60 percent of approach and, in particular, whether between the VBE and the VBE the total expected FFS payments based this proposal presents any operational participant during the 6 months prior to on historical expenditures, or to the challenges with respect to the creation the date by which the VBE must assume extent such data is unavailable, of a VBE as a separate legal entity. We substantial downside financial risk (as evidence-based, comparable are considering for the final rule defined below). We solicit comments on expenditures of the VBE participants to whether this safe harbor should protect whether 6 months is a sufficient the value-based arrangements.25 ownership or investment interests with timeframe, and if not, what longer or We are soliciting comments on this respect to VBEs that must contract with shorter timeframe would be appropriate. proposed definition of ‘‘substantial a payor on behalf of VBE participants For purposes of this safe harbor, we downside financial risk,’’ including for purposes of value-based are proposing specific methodologies whether: (i) These benchmarks should arrangements with substantial downside that would qualify as substantial be higher or lower to ensure appropriate financial risk. downside financial risk. Under any of incentives; (ii) there are other Additionally, for the same reasons our proposed methodologies, the VBE methodologies not captured by this list articulated in our discussion of the care would assume risk from a payor for the that should qualify as substantial coordination arrangements safe harbor, provision of items and services to a downside financial risk, such as those we propose that this safe harbor would target patient population for the entire listed under 42 CFR not protect any remuneration funded by, term of the value-based arrangement. 1001.952(u)(1)(i)(C); and (iii) some or all or otherwise resulting from Our intent is for such risk to be of a of these benchmarks should be omitted contributions by, an individual or entity degree likely to ensure that the value- from this rule or modified to better outside of the applicable VBE. based arrangements of the VBE are capture true assumption of substantial We are considering for the final rule designed to appropriately reduce (or downside financial risk for items and whether, and if so, how, to extend this slow the growth of) costs, improve services furnished to patients. With safe harbor to remuneration that passes efficiencies, or improve health outcomes respect to (i) through (iii), we are from one VBE participant to another for the target patient population (and are considering and solicit comments on (without the risk-bearing VBE being not likely to increase over- or under- whether the requirement to compare party to the arrangement) when the VBE utilization or costs to payors or losses to, or determine payments based has assumed substantial downside patients). We propose that a VBE would on, historical expenditures or evidence- financial risk from a payor. We are be at substantial downside financial risk based, comparable expenditures and concerned that under many such if it is subject to risk pursuant to one of whether additional means to establish a downstream arrangements, the VBE the following methods, drawn from the baseline against which to measure participant receiving the remuneration Department’s experience: 24 losses or payments is feasible for new or may have assumed little or no financial (i) Shared savings with a repayment small VBEs or whether new or small risk and may be billing for his or her obligation to the payor of at least 40 VBEs should be allowed additional services on an FFS basis, thus retaining percent of any shared losses, where loss means to establish a baseline, such as FFS incentives with respect to ordering is determined based upon a comparison or arranging for items and services for allowing new or small VBEs to establish of costs to historical expenditures, or to such baselines after a reasonable period patients. We note the proposed care the extent such data is unavailable, coordination arrangements safe harbor, of operation, such as 1 year. We also evidence-based, comparable solicit comments on whether the with its additional safeguards, may be expenditures; available for such arrangements, where assumption of substantial downside (ii) A repayment obligation to the financial risk by the VBE as they involve only in-kind remuneration, payor under an episodic or bundled and the personal services and contemplated here, in combination with payment arrangement of at least 20 the safeguards proposed for this safe management safe harbor’s proposed percent of any total loss, where loss is modifications for outcomes-based harbor, results in meaningful determined based upon a comparison of protections that will ensure that the payments may be available for monetary costs to historical expenditures, or to remuneration. 25 To afford VBE participants flexibility, we are This proposed safe harbor would 24 For clarity, we note that we would not consider not prescribing how parties may determine the protect remuneration exchanged a prospective payment system for acute inpatient basis for shared savings, shared losses, population- between a VBE and a VBE participant hospitals, home health agencies, hospice, outpatient based payments, or partial capitation payments. pursuant to a value-based arrangement hospitals, inpatient psychiatric facilities, inpatient However, we expect any such approach will reflect rehabilitation facilities, long-term-care hospitals, a legitimate compensation methodology, not one if several standards are met. First, the and SNFs, or other like payment methodologies to that simply manipulates numbers to artificially VBE must have assumed, or be meet any of the prongs of our proposed definition inflate savings or decrease losses, as may be contractually obligated to assume, of ‘‘substantial downside financial risk.’’ applicable.

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benefits of the arrangements that would requirements of the physician self- (2) direct or restrict referrals to a be protected by this safe harbor referral law’s regulatory exception for particular provider, practitioner, or outweigh any risk of misuse of the safe value-based arrangements with supplier if: harbor to protect fraudulent or abusive meaningful downside financial risk at (A) A patient expresses a preference arrangements. section 411.357(aa)(2). for a different practitioner, provider, or Lastly, we are considering for the final Under (i), the proposed percentage of supplier; rule, and seek comment regarding, the VBE’s substantial downside (B) the patient’s payor determines the whether we should include advanced financial risk in which the VBE provider, practitioner, or supplier; or APMs and other payor advanced APMs, participant must share is based on the (C) such direction or restriction is as both terms are defined at 42 CFR 8-percent nominal risk standard under contrary to applicable law or regulations 414.1305, in the definition of the CMS regulation governing advanced under titles XVIII and XIX of the Act; ‘‘substantial downside financial risk.’’ APM and other payor advanced APM (iv) the value-based arrangement does Specifically, we seek comment on the criteria at 42 CFR 414.1415 and not include marketing to patients of following: (i) If advanced APM 414.1420, respectively. We solicit items or services or engaging in patient participants would likely rely on this comments on additional or alternative, recruitment activities; and safe harbor versus the CMS-sponsored specific thresholds we could include in (v) the VBE or its VBE participants model arrangements safe harbor; and if the final rule to help ensure that the maintain documentation sufficient to so, what barriers, if any, our proposed VBE participant is meaningfully demonstrate compliance with the safe definition of ‘‘substantial financial risk’’ engaged with the VBE in delivering harbor’s conditions and make such and ‘‘meaningfully share’’ (as outlined value through its ordering and referring records available to the Secretary upon in further detail below) may pose; and decisions, as well as data to support request. (ii) whether our current definition of suggestions. Note that we are considering, and ‘‘substantial financial risk’’ is too To protect against risks of stinting on seek comment regarding whether we narrow, such that we have excluded care, we further propose that the should include in the final rule, a advanced APMs or other payor remuneration must not induce condition regarding the maintenance of advanced APMs that encourage limitations on, or reductions of, materials and records sufficient to participants to meaningfully assume medically necessary items or services establish compliance with the downside financial risk. furnished to any patient. We are conditions of this safe harbor for a set This safe harbor proposes to protect considering for the final rule additional period of time (e.g., at least 6 years or remuneration from a VBE to a VBE conditions to safeguard against risks of 10 years). participant pursuant to a value-based cherry picking or lemon dropping of In addition to the foregoing standard, arrangement. As a condition of this safe patients, which could affect the quality under this proposed safe harbor, the harbor, the terms of the value-based of care patients receive. In addition, we remuneration must be used primarily to arrangement require the VBE participant are considering and solicit comments on engage in value-based activities that are to meaningfully share in the VBE’s whether to include a length-of-time directly connected to the items and substantial downside financial risk for requirement (e.g., 1 year) for the VBE to services for which the VBE is at providing or arranging for items and be at substantial downside financial risk substantial downside financial risk. For services for the target patient to avoid gaming (as highlighted in our example, a VBE is at substantial population. This condition is intended subsequent discussion of this issue in downside financial risk through an to ensure that VBE participants ordering the full financial risk safe harbor). agreement with a payor to assume a or arranging for items and services for We are proposing to include the percentage of shared losses for items patients (in other words, those making following conditions similar to certain and services provided in connection care decisions) closely share the VBE’s conditions we are proposing for the care with hip replacements to the target goals and share in accountability if coordination arrangements safe harbor patient population. Remuneration those goals are not achieved. and would interpret these conditions, provided by the VBE to a VBE For purposes of this condition, we where applicable, as described participant would be protected under propose that a VBE participant previously in the discussion of the care this proposed safe harbor only if the ‘‘meaningfully shares’’ in the VBE’s coordination arrangements safe harbor: VBE participant primarily uses the substantial downside financial risk if (i) The value-based arrangement must remuneration to engage in value-based the value-based arrangement contains be set forth in a writing that contains, activities that have a direct connection one of the following: (i) A risk-sharing among other information, a description to the items and services provided to payment pursuant to which the VBE of the nature and extent of the VBE’s patients in the target patient population participant is at risk for 8 percent of the substantial downside financial risk for undergoing hip replacement surgery amount for which the VBE is at risk the target patient population and a (i.e., the items and services for which under its agreement with the applicable description of the manner in which the the VBE is at substantial downside payor (e.g., an 8-percent withhold, recipient meaningfully shares in the financial risk). Thus, while the VBE recoupment payment, or shared losses VBE’s substantial downside financial could give the VBE participant money payment); (ii) a partial or full capitated risk; that it uses to hire a staff member who payment or similar payment (ii) the VBE or VBE participant primarily coordinates patients’ methodology (excluding the prospective offering the remuneration does not take transitions between care settings after payment systems for acute inpatient into account the volume or value of, or undergoing hip replacement surgery, the hospitals, home health agencies, condition the remuneration on, referrals VBE could not give the VBE participant hospice, outpatient hospitals, inpatient of patients outside of the target patient money that it uses to hire a staff member psychiatric facilities, inpatient population or business not covered who coordinates transitions between rehabilitation facilities, long-term care under the value-based arrangement; care settings for patient undergoing an hospitals, and SNFs or other like (iii) the value-based arrangement does array of surgical procedures. In payment methodologies); or (iii) in the not: (1) Place any limitation on VBE addition, we propose that the case of a VBE participant that is a participants’ ability to make decisions remuneration exchanged must be physician, a payment that meets the in the best interest of their patients, or directly connected to one or more of the

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VBE’s value-based purposes, at least one shifting costs to a Federal health care a separate legal entity. We are of which must be the coordination and program, other payors, or individuals. considering for the final rule whether management of care for the target Through the substantial downside we should protect ownership or patient population. financial risk safe harbor, we seek to investment interests with respect to We believe these safeguards are provide more flexibility for entities that VBEs that must contract with a payor on necessary to ensure transparency and assume a substantial amount of behalf of VBE participants for purposes accountability, as well as to reduce the financial risk such that the risk of value-based arrangements with full potential for protected arrangements to incentivizes a shift from volume-based financial risk. be used to pay for referrals unrelated to decision making to value-based decision We also propose, for the same reasons coordinating care and improving health making. By allowing parties this discussed previously with respect to the outcomes and value for programs and enhanced flexibility in exchange for care coordination arrangements safe patients. For example, as with other safe assuming risk with respect to only a harbor, that this safe harbor would not harbors proposed in this rulemaking, we subset of items and services furnished to protect any remuneration funded by, or do not intend to protect arrangements a target patient population, we are otherwise resulting from contributions nominally characterized as a care mindful of the potential for parties to by, an individual or entity outside of the coordination or value-based assume financial risk for such a narrow applicable VBE. arrangement but that in reality are subset of items and services that the We propose that a VBE would be at schemes intended merely to buy or sell offeror’s risk does not equate to ‘‘full financial risk’’ for the cost of care referrals. To further protect against such substantial downside financial risk. We of a target patient population if the VBE arrangements, we are considering solicit comments on safeguards against is financially responsible for the cost of including in the final rule a commercial this risk and the overall approach we all items and services covered by the applicable payor for each patient in the reasonableness requirement and a have taken with respect to the target patient population and is monitoring standard, each of which substantial downside financial risk safe prospectively paid by the applicable would be similar to those included in harbor. payor. By ‘‘prospective,’’ we mean the our proposed care coordination E. Value-Based Arrangements With Full anticipated cost of all items and services arrangements safe harbor at Financial Risk (1001.952(gg)) covered by the applicable payor for the 1001.952(ee). In addition, to heighten We propose to protect certain target patient population, has been transparency of any value-based arrangements (including in-kind and determined and paid in advance (as arrangements and to ensure that the monetary remuneration) involving VBEs opposed to billing under the otherwise value-based arrangement is known by that have assumed ‘‘full financial risk,’’ applicable payment systems and and closely related to the VBE itself, we as that term is defined in the proposed undergoing a retrospective are considering for the final rule regulation, for a target patient reconciliation after items and services whether to require that, in advance of, population. Because we recognize that have been furnished). or contemporaneous with, the VBEs that have assumed full financial By way of example, a VBE would be commencement of the applicable value- risk present fewer traditional FFS fraud at ‘‘full financial risk’’ if it received a based arrangement, the VBE’s and abuse risks, this proposed safe prospective, capitated payment for all accountable body or responsible person harbor would include more flexible items and services covered by Medicare make a bona fide determination that the conditions than the proposed care Parts A and B for a target patient value-based arrangement is directly coordination arrangements and population. Similarly, we would connected to a value-based purpose, at substantial downside financial risk safe consider a VBE that contracts with a least one of which must be the harbors, which we believe would reduce Medicaid managed care organization coordination and management of care burden for the VBE and its VBE and receives a fixed per-patient per- for the target patient population. participants. We intend for the safe month amount to be at full financial risk As discussed previously, we remain harbor to offer this category of VBEs the if the fixed amount covered the cost of aware that the arrangements protected greatest ability to innovate with respect all Medicaid-covered items and services by the proposed substantial downside to coordinated care arrangements in furnished to the target patient financial risk safe harbor would not be light of their assumption of the highest population. subject to programmatic requirements, level of risk contemplated in this In contrast, our proposal would not oversight, or monitoring comparable to proposed rulemaking. We propose to protect an entity that receives a partial CMS-sponsored models. Accordingly, incorporate the definitions of capitated payment, be it either: (i) A we are considering for the final rule ‘‘coordination and management of capitated payment that covers a limited including a requirement to submit care,’’ ‘‘target patient population,’’ set of items or services or (ii) a payment information to the Department about the ‘‘value-based activity,’’ ‘‘value-based arrangement where an entity receives a VBE, VBE participants, and the value- arrangement,’’ ‘‘value-based enterprise,’’ combination of reduced FFS and based arrangement similar to the ‘‘value-based purpose,’’ and ‘‘VBE capitation payments for a defined set of requirement we are considering for the participant’’ found in proposed items or services. For example, a care coordination safe harbor at paragraph 1001.952(ee). For the same hospital that participates in a bundled 1001.952(ee). As discussed in the care reasons discussed previously with payment program for patients who coordination arrangements safe harbor respect to the care coordination receive knee replacements, and that section, we also are considering for the arrangements safe harbor, we propose receives an episodic payment to cover final rule a condition prohibiting VBEs that this safe harbor would not protect all costs associated with the knee or VBE participants from billing Federal an ownership or investment interest in replacement surgeries and follow-up health care programs, other payors, or the VBE or any distributions related to care for 90 days, would not be eligible individuals for remuneration exchanged an ownership or investment interest. We for protection under this safe harbor. pursuant to the safe harbor; claiming the solicit comments on this approach and, The hospital is at full financial risk for value of the remuneration as a bad debt in particular, whether this proposal the knee surgeries and related services for payment purposes under a Federal presents any operational challenges but not for the patients’ total cost of health care program; or otherwise with respect to the creation of a VBE as care. We note that other proposals in

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this rulemaking may be available for for arrangements involving parties that ‘items or services’ for purposes of this such arrangements. have not yet assumed the risk that section.’’ We note that our proposed definition operates as a prerequisite and key If the VBE participant is permitted to of ‘‘full financial risk’’ would not safeguard for this safe harbor. To seek additional payment for items or prohibit a VBE from entering into balance the need to protect start-up services furnished to the target patient arrangements—like global risk arrangements with our program integrity population from a payor, the safe harbor adjustments, risk corridors, reinsurance, concerns, the safe harbor would protect would not protect the value-based or stop loss agreements—to protect arrangements between the VBE and the arrangement. For example, protection against catastrophic losses. We VBE participant only during the 6 under the safe harbor would not extend emphasize that it is our intent for such months prior to the date by which the to payment made by a VBE to a VBE arrangements to be limited to VBE must assume full financial risk. We participant for telehealth services catastrophic losses; a VBE may not use solicit comments on whether 6 months furnished to the target patient risk corridors or other like arrangements is a sufficient timeframe, and if not, population if the VBE participant could as a mechanism to shift an amount of what an appropriate timeframe might also claim separate payment for such financial risk that does not meet the be. We could include a longer or shorter services from a payor. Value-based spirit of this safe harbor. Similarly, we timeframe in the final rule. arrangements that permit VBE note that our proposed definition of We propose writing requirements in participants to claim separate payment ‘‘full financial risk’’ would not prohibit this safe harbor that are designed to from a payor are not ‘‘full risk.’’ Such a VBE from conducting a ‘‘back-end’’ promote transparency and arrangements potentially involve mixed reconciliation, with resulting payment accountability. First, we propose that financial incentives for providers, and adjustments due to quality or financial the VBE have a signed writing with a parties would need to seek protection performance metrics, provided again, payor that specifies the target patient for such arrangements under one of the that the reconciliation is not used as a population and contains terms sufficient other proposed safe harbors. This mechanism to shift material financial to demonstrate that the VBE is at full requirement would permit VBE risk back to the contracting payor. financial risk for the target patient participants to bill a payor but not claim We also are considering other ways to population for at least 1 year. Our intent payment (e.g., through a ‘‘no-pay define ‘‘full financial risk’’ in the final in proposing a length-of-time claim’’) if required by a payor, including rule. For example, we are considering requirement is to minimize gaming Medicare. for purposes of the final rule including opportunities that could arise if the VBE We also propose requirements related an actuarial equivalence standard assumes full financial risk for a short to the remuneration. First, we propose similar to that used in the Medicare Part time period in order to take advantage that remuneration exchanged must: (i) D context, and we request comments on of the proposed safe harbor’s flexibility Be used primarily to engage in the the use of this potential standard. In but without meaningfully committing to value-based activities set forth in the addition, we seek comments about other the transition to full financial risk. parties’ signed writing; (ii) is directly situations that stakeholders believe Second, we propose that the parties set connected to one or more of the VBE’s should qualify as a VBE assuming ‘‘full forth the material terms of the value- value-based purpose(s), at least one of financial risk.’’ We request that based arrangement in a signed writing, which must be the coordination and commenters provide specific examples including the value-based activities to management of care for the target of arrangements that they believe be undertaken by the parties, and that patient population; and (iii) not induce constitute ‘‘full financial risk’’ but that the arrangement must be for a period of the VBE or VBE participants to reduce would not be covered by the definition at least 1 year. or limit medically necessary items or proposed above. We propose that the term of the value- services furnished to any patient. We We propose to require that the VBE based arrangement must be for a period propose to interpret these conditions assume full financial risk either directly, of at least 1 year to ensure that the VBE consistent with the similar conditions in or through a VBE participant with the participant is committed to coordinating the proposed care coordination legal authority to obligate the VBE. We care for the target patient population of arrangements safe harbor at note, to the extent a VBE participant the VBE that has taken on full financial 1001.952(ee). wholly assumes risk on behalf of the risk. Second, we propose to require that VBE, it may act in both its capacity as We propose that the VBE participant the VBE and VBE participant must not a VBE participant and an agent of the cannot claim additional or separate take into account the volume or value VBE. payment in any form directly or of, or condition the remuneration In addition, we propose that this safe indirectly from a payor for items or exchanged on: (i) Referrals of patients harbor would cover both value-based services covered under the value-based who are not part of the target patient arrangements between a VBE and a VBE arrangement. For purposes of this safe population or (ii) business not covered participant where the VBE has assumed harbor, we propose that the phrase under the value-based arrangement. full financial risk as of the date the VBE ‘‘items or services’’ would have the This requirement would preclude and VBE participant enter into the meaning set forth in paragraph protection under the safe harbor for value-based arrangement, as well as 1001.952(t)(2)(iv), which defines ‘‘items remuneration that is part of a broader value-based arrangements between a and services’’ as: ‘‘Health care items, ‘‘swapping’’ arrangement to steer VBE and a VBE participant where the devices, supplies or services or those patients outside of the target patient VBE is contractually obligated to services reasonably related to the population to the party offering the assume such risk but has not yet done provision of health care items, devices, remuneration. We solicit comments on so. We are mindful that a VBE that is supplies or services including, but not this condition and any additional contractually obligated to take on full limited to, non-emergency safeguards that we should include in financial risk may need lead time to transportation, patient education, this safe harbor to mitigate the risk of develop and implement arrangements in attendant services, social services (e.g., problematic swapping arrangements in anticipation of taking on full financial case management), utilization review order to prevent the safe harbor from risk. However, we also are concerned and quality assurance. Marketing and being used to protect payments for about providing safe harbor protection other pre-enrollment activities are not referrals that are not part of the value-

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based arrangement. We would have 10 years). We would interpret these should limit protection to arrangements significant concerns with a VBE requirements as described with respect between VBE participants that are part participant entering into a purported to the care coordination arrangements of the same VBE, or we should extend value-based arrangement in which it safe harbor and would include them in protection to arrangements between: (i) offers the VBE a reduced rate for this safe harbor for the reasons A VBE participant and a downstream patients in the target patient population articulated there. contractor, (ii) arrangements between in exchange for gaining access to that In addition, we note that, as proposed, two downstream contractors, or (iii) VBE’s other patients. this safe harbor would apply only to both. We request that any comments We propose to require that the VBE remuneration exchanged between a VBE include specific examples of provide or arrange for: (i) An and a VBE participant pursuant to a downstream arrangements that may not operational utilization review program value-based arrangement. The proposed be protected under existing safe harbors and (ii) a quality assurance program that full financial risk safe harbor would not or any of the safe harbors proposed protect against underutilization and protect remuneration exchanged under this rulemaking but warrant specify patient goals, including between or among VBE participants that protection under this proposed safe measurable outcomes, where are part of the same VBE, remuneration harbor because of the level of risk appropriate. These conditions mirror exchanged between a VBE participant assumed by the VBE. those found in the existing safe harbor and a downstream contractor, or at paragraph 1001.952(u), which were remuneration between two downstream F. Arrangements for Patient Engagement derived from the then-current regulatory contractors. However, nothing prevents and Support To Improve Quality, requirements for plans operating under these parties from turning to other Health Outcomes, and Efficiency section 1876 of the Act. We are available safe harbors for protection. (1001.952(hh)) considering for the final rule whether We are considering for the final rule We propose to establish a new safe there may be other ways to frame this and solicit comments on whether to harbor at proposed paragraph requirement that meet the spirit of the extend this safe harbor to remuneration 1001.952(hh) to protect certain conditions in paragraph 1001.952(u) but that passes from a VBE participant to a arrangements for patient engagement are updated to reflect the utilization downstream contractor (which also tools and supports to improve quality, review and quality assurance could be, but may not be required to be, health outcomes, and efficiency mechanisms in place today. a VBE participant). While we recognize furnished by VBE participants, as Like the proposed care coordination that increased flexibility at the VBE defined in proposed paragraph arrangements and substantial downside participant level may foster innovation, 1001.952(ee), to specified patients. This financial risk safe harbors and for the we are concerned that these safe harbor, hereinafter the ‘‘patient reasons explained in connection with downstream arrangements present engagement and support safe harbor,’’ is those proposals, we are considering for higher risks of fraud and abuse because intended to remove barriers presented the final rule requiring the submission the VBE participants and downstream by the anti-kickback statute and the to the Department of information about contractors exchanging the beneficiary inducements CMP 26 to VBEs, VBE participants, and value- remuneration may have assumed little providers offering patients beneficial based arrangements for safe harbor or no financial risk. As such, they may tools and supports to improve quality, protection. We welcome comments on continue to be subject to the potential health outcomes, and efficiency, by this. As discussed in the care risks inherent in any FFS financial promoting patient engagement with coordination arrangements safe harbor arrangements, namely, incentives to their care and adherence to care section, we also are considering for the order medically unnecessary or overly protocols. Commenters to the OIG RFI final rule a condition prohibiting VBEs costly items and services. For these overwhelmingly supported such a safe or VBE participants from billing Federal reasons, we are considering for the final harbor, with appropriate safeguards. health care programs, other payors, or rule, and solicit comments on, the Achieving well-coordinated care and individuals for remuneration exchanged following: improving value require patients to pursuant to the safe harbor; claiming the • In addition to the safeguards actively participate and engage in their value of the remuneration as a bad debt proposed in paragraph 1001.952(gg), preventive care, treatment, and general for payment purposes under a Federal whether additional safeguards could be health. To prevent illness or disease or health care program; or otherwise implemented under the full financial to manage a disease or condition shifting costs to a Federal health care risk safe harbor (or a different proposed effectively, patients must be involved in program, other payors, or individuals. safe harbor) to ensure that legitimate their healthcare and be empowered to We also propose requirements that (i) arrangements between VBE participants make informed healthcare-related the value-based arrangement does not and downstream contractors that decisions. Appropriate patient include marketing to patients of items or advance the value-based purpose(s) of engagement tools and supports can services or engaging in patient the VBE are protected. foster successful behavior modifications recruitment activities; and (ii) the VBE • For purposes of protecting that improve health, ensure that patients or its VBE participants maintain downstream arrangements, whether we receive the medically necessary care documentation sufficient to demonstrate should incorporate some of the and other nonclinical, but health- compliance with the safe harbor’s safeguards proposed in the safe harbor related, items and services they need, conditions and make such records for care coordination arrangements or and improve adherence to an available to the Secretary upon request. the safe harbor for parties at substantial appropriate treatment regimen. We are considering for the final rule and downside financial risk. If so, whether In some cases, improved care seek comment regarding whether we certain safeguards would best capture coordination may be facilitated through should include, in the final rule, a our need to protect against fraud and various supports, including, for condition regarding the maintenance of abuse risks with the recognition that we materials and records sufficient to do not want to impose undue burden on 26 A practice permissible under the anti-kickback establish compliance with the parties to these arrangements. statute, whether through statutory exception or • regulations issued by the Secretary, is also excepted conditions of this safe harbor for a set If we were to protect certain from the beneficiary inducements CMP. Section period of time (e.g., at least 6 years or downstream arrangements, whether we 1128A(i)(6)(B) of the Act.

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example, providing supports that aim to supports (as specified in proposed prescribe one drug over another. Such improve patients’ safety at home or paragraph 1001.952(hh)) furnished remuneration could influence a patient during care transitions (including directly by a VBE participant (as defined to request a particular drug that is more discharge from facility care to the in proposed paragraph 1001.952(ee)) to expensive or less clinically efficacious community) or that allow providers to a patient in a target patient population than other clinically equivalent drugs. communicate more efficiently and (as defined in proposed paragraph This could both improperly influence effectively with patients and their 1001.952(ee)), that are directly patient choice and increase costs to families and to monitor their patients’ connected to the coordination and Federal health care programs—two care. However, we also are cognizant of management of care (as defined in factors cited by Congress to consider the potential for improper patient proposed paragraph 1001.952(ee)), when developing safe harbors—without engagement tools and supports to result provided that all of the conditions of necessarily increasing quality. in inappropriate utilization, the steering proposed paragraph 1001.952(hh) are As noted above, we also are excluding of patients to particular providers, satisfied. manufacturers, distributors, and suppliers of DMEPOS and laboratories suppliers, or products that might not be 1. Limitations on Offerors in their best interests, increased costs to from the definition of a VBE participant. payors and patients, and anti- Under this proposal, only patient Based on long-standing enforcement competitive effects. engagement tools and supports and oversight experience, we are Depending on the facts and furnished by a VBE participant, as concerned that manufacturers, circumstances, providing patient defined in proposed paragraph distributors, and suppliers of DMEPOS engagement tools and supports may 1001.952(ee), would receive protection. and laboratories may inappropriately implicate the Federal anti-kickback Our intent in proposing to limit safe use patient engagement tools and statute and the beneficiary inducements harbor protection to VBE participants is supports to market their products or CMP. Some tools and supports may be to align the safe harbor with the value- divert patients from a more clinically protected under existing safe harbors or based framework set forth in this appropriate item or service, provider, or exceptions to the definition of proposed rulemaking. We are mindful supplier without regard to the best ‘‘remuneration’’ under the beneficiary that this approach would require the interests of the patient or to induce inducements CMP (e.g., the local offeror of the remuneration to be part of medically unnecessary demand for transportation safe harbor, 42 CFR a VBE (of any size) as defined at items and services. 1001.952(bb); the exception for proposed paragraph 1001.952(ee). We We are interested in comments on the remuneration that promotes access to are soliciting comments, including impact of any such exclusions, if care and poses a low risk of harm to illustrative fact patterns, about potential included in the final rule, for the patient patients and Federal health care patient engagement tools and supports engagement and support safe harbor in programs, 42 CFR 1003.110; and the that would improve care coordination particular and any negative impact on exception for incentives given to and health outcomes where the offeror the provision of potentially beneficial individuals to promote the delivery of does not meet the proposed definition of tools and supports. We seek comments preventive care, 42 CFR 1003.110). In a VBE participant because the offeror is regarding whether the proposed addition, for CMS-sponsored models, not part of a VBE. exclusion of these entities from the some patient engagement tools and For example, we are considering for definition of ‘‘VBE participant,’’ and the supports may qualify for protection the final rule safe harbor protection for, proposed condition at (hh)(2), limiting and seek comments regarding, a under the Medicare Shared Savings funding by and other contributions from hospital’s or physician group practice’s Program’s waiver for patient non-VBE participants, might negatively provision of patient engagement tools incentives 27 or a waiver available for impact patients’ ability to receive and supports that would advance beneficiary incentives offered under an beneficial items and services, including coordination and management of care applicable Innovation Center model.28 new technologies that may foster better for a patient and otherwise satisfy However, under certain facts and access to care and improve health conditions similar to those set forth in circumstances, no safe harbor, outcomes. the proposed safe harbor, but where As noted above, we also are exception, or waiver may be available to such hospital or physician group considering whether to exclude other protect beneficial patient engagement practice is not part of a VBE. We seek categories of suppliers and other tools and supports that implicate the comments on the fraud and abuse risks entities, including pharmacies, PBMs, anti-kickback statute, beneficiary associated with removing the wholesalers, and distributors from the inducements CMP, or both. These requirement that the offeror is a VBE definition of ‘‘VBE participant.’’ 29 We arrangements must be evaluated on a participant and what additional solicit comments on the potential case-by-case basis for compliance with safeguards would be appropriate to impact of our considered exclusion of the statutes. offset those risks. pharmacies, PBMs, wholesalers, and Under the proposed patient Pharmaceutical manufacturers, engagement and support safe harbor at distributors, if included in the final rule, distributors, and suppliers of DMEPOS, for the patient engagement and support paragraph 1001.952(hh), and laboratories are not included in the ‘‘remuneration’’ under the Federal anti- safe harbor in particular. proposed definition of ‘‘VBE We also are considering, and seek kickback statute would not include in- participant’’ in paragraph 1001.952(ee) comment on, whether this proposed safe kind patient engagement tools or for the reasons described earlier in this harbor should protect only in-kind tools preamble. In addition to the reasons for and supports furnished by VBE 27 Medicare Program; Final Waivers in Connection With the Shared Savings Program, 80 exclusion of pharmaceutical participants that assume at least some FR 66726, 66743 (Oct. 29, 2015). manufacturers in the definition of ‘‘VBE 28 See, e.g., Notice of Waivers of Certain Fraud participant’’ previously articulated, we 29 Note that, should we adopt the definition of and Abuse Laws in Connection with the Bundled believe that offers of remuneration by ‘‘applicable manufacturer’’ as set forth in in 42 CFR Payments for Care Improvement Advanced Model 403.902, such definition would include distributors (May 25, 2018), available at https://www.cms.gov/ such manufacturers to patients could and wholesalers (which include re-packagers, re- Medicare/Fraud-and-Abuse/PhysicianSelfReferral/ improperly influence the patient, as labelers, and kit assemblers) that hold title to a Downloads/BPCI-Advanced-Model-Waivers.pdf. well the patient’s clinician’s decision to covered drug, device, biological or medical supply.

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financial risk, so as to better align retrospectively or on a preliminary technology’’ and ‘‘patient health-related protected remuneration with value- prospective basis. monitoring tools and services’’ might include wearable monitoring devices, based purposes. In particular, if we were 3. Limitations on Type of Remuneration to limit safe harbor protection to only such as a smart watch or tracker VBE participants that assume financial The proposed safe harbor would designed to collect information and risk, we are considering, and seek protect only tools or supports, as transmit data to a patient’s physician for comments regarding, the appropriate specified in proposed 1001.952(hh), treatment or disease monitoring. We are level of financial risk to require of such furnished by a VBE participant to a considering for purposes of the final VBE participants (e.g., VBE participants patient in the target patient population. rule requiring that the VBE participant that assume at least some downside As proposed in 1001.952(hh)(3)(i), (ii) confirm that the tools and services financial risk or VBE participants that and (iii), we would limit a patient provided to a patient are not duplicative assume substantial downside financial engagement ‘‘tool or support’’ to in- of, or substantially the same as, tools risk). kind, preventive items, goods, or and services the patient already has. For services, or items, goods, or services example, we are considering whether 2. Limitations on Recipients such as health-related technology, the safe harbor should protect the patient health-related monitoring tools provision of a new cell phone or This proposed safe harbor would and services, or supports and services wireless service to a patient who needs protect patient engagement tools and designed to identify and address a an application for remote patient supports furnished to patients in a target patient’s social determinants of health, monitoring if the patient already has patient population (as defined in that have a direct connection to the these products and only needs the proposed paragraph 1001.952(ee)). We coordination and management of care of application. note that the scope of this proposed safe the target patient population. This With respect to the provision of harbor would not be limited to Federal limitation on tools or supports would supports and services designed to health care program beneficiaries in exclude gift cards, cash, and any cash identify and address social determinants recognition that the VBE or VBE equivalent (e.g., a check or pre-paid of health, many commenters to the OIG participants may define the target debit card). RFI urged us to consider ‘‘social patient population without regard to We do not propose a specific determinants of health,’’ also described payor type. We solicit comments on definition of ‘‘preventive care item or as ‘‘health-related nonmedical’’ items, whether we should instead provide safe service’’ to provide flexibility for VBE goods, and services, that address basic harbor protection for tools and supports participants that seek to furnish needs essential to patients’ health, such VBE participants furnish to a broader preventive care items and services as a as food, shelter, safety, clothing, universe of patients by, for example, means to improve patient outcomes and income, and transportation, in designing protecting patient engagement tools and better overall patient health.31 OIG is any proposed safe harbors. There is supports furnished by VBE participants mindful of the evolving nature of substantial evidence that unmet social to any patient, so long as the tools and clinical practice guidelines and needs related to these determinants of supports predominantly address needs recommendations for practices that are health, such as transportation, nutrition, of the target patient population and the categorized as ‘‘preventive care,’’ and and safe housing, play a critical role in tools and supports have a direct we intend to allow this proposed safe health outcomes and expenditures.32 connection to the coordination and harbor to protect the provision of tools These needs must be considered when management of care for the patient. and supports that a VBE participant thinking about maximizing health We recognize that some VBEs may not reasonably determines, within the outcomes and lowering healthcare costs. be able to prospectively identify the medical judgment of the applicable Evidence indicates that efforts that practitioner treating the patient, to be individual patients in the target patient target home and neighborhood-level preventive care. VBE participants would population. For example, in some factors, such as healthcare accessibility need to exercise caution in ensuring that accountable care organization (ACO) for low-income individuals, physical tools and supports for which they desire arrangements under CMS-sponsored and environmental obstructions to safe harbor protection are reasonably models, beneficiaries are assigned to the healthy living, and housing and case considered preventive care. ACO, which could be a VBE, management, can lead to improved We solicit comments on whether the 33 retrospectively or on a preliminary health outcomes for people of all ages. categories of patient engagement tools These improved health outcomes prospective basis (e.g., for agreement and supports listed above that would periods beginning on July 1, 2019, ACOs include decreased mortality, delay or receive protection (i.e., health-related prevention of preventable and chronic participating in the Medicare Shared technology, patient health-related Savings Program may select preliminary monitoring tools and services, or 32 prospective assignment with See, e.g., Michael Marmot et al., on behalf of supports and services designed to the World Health Organization and Commission on 30 retrospective reconciliation). We are identify and address a patient’s social Social Determinants of Health, Closing the gap in interested in stakeholder comments on determinants of health) are sufficiently a generation: Health equity through action on the the challenges, if any, presented by the social determinants of health, 372 Lancet 9650 flexible but also sufficiently targeted to (2008), available at https:/www.thelancet.com/ safe harbor’s protection of only patient protect against the risks of fraud and journals/lancet/issue/vol372no9650/PIIS0140- engagement tools and supports abuse associated with providing 6736(08)X6047-7; Gayle Shier et al., Strong Social furnished to patients in the target inappropriate remuneration to patients. Support Services, Such As Transportation And patient population when the VBE’s Help For Caregivers, Can Lead To Lower Health For instance, we believe ‘‘health-related Care Use And Costs, 32 Health Affairs 3 (2013), assigned beneficiaries are identified available at https://www.healthaffairs.org/doi/pdf/ 31 We do not intend to incorporate the definition 10.1377/hlthaff.2012.0170. 30 42 CFR 425.400(a)(4)(ii). We offer this as an of ‘‘preventive care’’ found in the regulations 33 See, e.g., J. Michael McGinnis, Pamela illustrative example. Participants in the Medicare interpreting the beneficiary inducements CMP, 42 Williams-Russo, and James R. Knickman, The Case Shared Savings Program and Innovation Center CFR 1003.110. Note that the definitions found at 42 For More Active Policy Attention To Health ACO models have existing fraud and abuse law CFR 1003.110 apply to part 1003, not part 1001, Promotion, 21 HEALTH AFFAIRS 2 (Mar. 2002), waivers and may not need new safe harbor where the proposed 42 CFR 1001.952(hh) would be available at https://www.healthaffairs.org/doi/ protection. located. 10.1377/hlthaff.21.2.78.

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diseases, and lowered healthcare social determinants of health. example, a physician could be utilization, indicating a higher quality of Regardless, whether a particular tool or influenced to prescribe an item or life.34 support would, in fact, be protected service, which may be free at some By addressing health disparities that under the safe harbor when offered by point, but would be covered by a third- emerge from the social determinants of a VBE participant to a patient in a target party payor (including Federal health health, some research suggests that the patient population would depend on the care programs) in the future.38 Because United States could save over $230 facts and circumstances and whether all of the risks presented by allowing safe billion in medical care costs.35 safe harbor conditions were satisfied. harbor protection for the provision of Moreover, there is research suggesting We solicit comments on whether, potentially reimbursable items and that policy interventions that focus on instead of using the proposed categories, services, including inappropriate the social determinants of health can the final rule should list specific tools seeding arrangements or the provision produce an estimated economic return and supports that could be protected of medically unnecessary or harmful of $1.02 trillion.36 under the safe harbor. We are interested items or services, we are considering, Based on the connection of social in feedback on which tools and supports and seek comment on, excluding in the determinants to healthcare outcomes should be listed and how the rule could final rule federally reimbursable items and costs, we are considering for account for emerging tools and supports and services as a protected tool or purposes of the final rule whether that improve patient engagement, care support. As discussed further below, the explicitly to include protection for tools coordination, and health outcomes. proposed patient engagement and and supports that address some social We do not intend for tools and support safe harbor would not protect determinants of health that meet all supports protected by this proposed safe cost-sharing waivers, and thus would other safe harbor conditions. While all harbor, which includes only in-kind not protect billing a Federal program social determinants have the potential items, goods, and services, to be limited while waiving the beneficiary’s share of to improve health outcomes, some to items or services covered by a Federal payment. social determinants may be more health care program (as the term of art, The in-kind requirement means that specifically aligned with preventive care ‘‘items or services,’’ when used in the the patient must receive the actual tool and the coordination and management context of the Medicare program, could or support and not funds to purchase of care for patients (e.g., transportation suggest).37 In general, the provision of to medical appointments, nutrition to covered items and services to patients the tool or support. For example, address clinical conditions, safe housing does not require safe harbor protection patients may not be given cash for patients discharged to their homes) provided that all normal billing rules reimbursements for items or goods they than others (e.g., a more general need for are followed. That said, the proposed purchase directly. While cash income through employment). We seek description of a permissible tool or reimbursements for tools and supports public input on which social support would include federally would not satisfy the in-kind determinants are most crucial to reimbursable items and services, and requirement, we would consider a improving care coordination and provided that the other requirements of voucher for a particular tool or support transitioning to value-based care and the safe harbor are satisfied, the (e.g., a meal voucher or a voucher for a payment, with respect both to needed provision of federally reimbursable taxi) to satisfy the in-kind requirement. arrangements between providers or items and services could receive safe a. Cash and Cash Equivalent Incentives others in a position to generate Federal harbor protection. health care program referrals between We seek comment on potential fraud A number of commenters responding them, and needed arrangements and abuse risks presented by including to the OIG RFI urged OIG to protect the between beneficiaries and providers or items and services that could be distribution of cash incentives to others in a position to influence the reimbursable by a Federal health care patients as a reward for engaging in selection of providers, practitioners, and program as permitted tools or supports. certain healthcare-related activities. For suppliers. We are aware of, and deeply concerned example, providers responding to the We are considering, and solicit about, fraud schemes that involve the OIG RFI stated that they would like comments on, how the final safe harbor provision of items and services, protection to provide cash rewards to should make distinctions among the including prescription opioids or other patients both for attending categories of social determinants, such drugs, that are not needed by patients or appointments (e.g., $10 for patients who as protecting some types of tools and that are harmful to them. We do not attend an initial primary care visit) and supports but not others. We are propose to protect such arrangements in for engaging in activities designed to considering for the final rule whether this rulemaking, and such arrangements promote the adoption and maintenance we should specify specific tools and would not be protected in any final rule. of healthy behaviors (e.g., a $25 check supports that would be permissible, Further, as OIG has previously stated, offered to patients who complete including whether to base such a list on we are concerned that the provision of milestones in a behavioral modification the types of tools and supports potentially reimbursable items and program related to substance use described in CMS guidance for the services, for free, could result in steering disorders). Commenters cited a number Medicare and Medicaid programs. We or unfair competition or could create a of studies in support of this are interested in illustrative examples seeding arrangement, where, for recommendation.39 and data supporting commenters’ views on this topic, including data supporting 37 While OIG’s regulations found at 42 CFR 38 Adv. Op. No. 18–14, available at https:// 1003.110 define ‘‘items and services or items or oig.hhs.gov/fraud/docs/advisoryopinions/2018/ (or not supporting) the efficacy from a services,’’ we do not cross-reference such definition AdvOpn18-14.pdf. quality, effectiveness, and cost in this proposed safe harbor, nor do we propose to 39 See, e.g., Cathy J. Bradley & David Neumark, perspective of particular types of tools limit the items, goods, and services potentially Small Cash Incentives Can Encourage Primary Care and supports related to addressing protected by this proposed safe harbor to the items Visits by Low-Income People with New Health Care and services that would satisfy the definition found Coverage, 36 Health Affairs 8 (2017), https:// at 42 CFR 1003.110. Note also that the definitions www.healthaffairs.org/doi/10.1377/ 34 Marmot, supra. found at 42 CFR 1003.110 apply to part 1003, not hlthaff.2016.1455; Scott D. Halpern, MD, Ph.D. et 35 McGinnis, supra. part 1001, where the proposed 42 CFR 1001.952(hh) al., Randomized Trial of Four Financial-Incentive 36 McGinnis, supra. would be located. Programs for Smoking Cessation, 372 New Eng. J.

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Commenters to the OIG RFI noted that of cash remuneration to reward patients incentives of cost-sharing or might incentives and supports in the form of for attending medically necessary allow for abusive ‘‘insurance-only cash could help improve patients’ primary care or other clinically billing’’ marketing schemes targeting adherence to treatment plans, encourage prescribed treatment visits, or for patients for unnecessary or poor-quality participation in medically necessary successful participation in a clinically items or services. care, and motivate patients to lead appropriate behavioral modification or Long-standing OIG guidance allows healthier lifestyles. In addition, substance use disorder treatment for non-routine, good-faith financial commenters to the OIG RFI posited, and program. If we were to adopt this need cost-sharing waivers,43 and several some research suggests, that patients approach, we would consider requiring safe harbors and beneficiary prefer cash to in-kind items, goods, or offerors to have an evidence-based inducements CMP exceptions already services and that cash may be more reason for using cash to influence offer protection for certain reductions, effective at maintaining patient patients’ adherence to a treatment waivers, and differentials in cost- engagement and encouraging and regimen or clinical program. (This might sharing, such as the exception for the reinforcing positive behavioral change. be the case, depending on the evidence, waiver of cost-sharing amounts found at We also have observed congressional with respect to a substance use disorder section 1128A(i)(6)(A) of the Act and 42 interest in allowing providers to offer treatment or smoking cessation CFR 1003.110. Those safe harbors and beneficiaries cash through, by way of program.) We solicit comment on exceptions remain available and example, the recent enactment of the potential criteria a party may apply to unchanged by this proposal. We also are ACO Beneficiary Incentive Program, ensure that the arrangement is evidence- proposing protection for certain cost- section 1899(m) of the Act. However, based, such as ensuring the arrangement sharing waivers or reductions under the OIG historically has had significant is supported by the Joint Commission, CMS-sponsored model patient concerns with allowing providers to the Agency for Healthcare Research and incentives safe harbor, proposed at offer cash or cash equivalents to Quality, or other independent 1001.952(ii). As noted above, many VBE patients, and our oversight and organization that develops national participants that would avail themselves enforcement experience suggests that quality standards or quality measures. of the patient engagement and support cash incentives can: (i) Result in safe harbor would not be subject to medical identity theft and misuse of b. Waiver or Reduction of Cost-Sharing programmatic requirements, oversight, patients’ Medicare numbers, (ii) lead to Obligations or monitoring comparable to CMS- inappropriate utilization (in the form of A number of the comments we sponsored models. Therefore, cost- medically unnecessary items and received in response to the OIG RFI sharing waivers or reductions offered services), and (iii) cause improper advocated broad protection from and provided under the CMS-sponsored steering (including patients selecting a potential anti-kickback statute and models may present fewer risks. provider because the provider offers the beneficiary inducements CMP liability We are aware of concerns expressed most valuable incentives and not for routinely waived or reduced cost- by some stakeholders about the because of the quality of care the sharing obligations. As an initial matter, collection of small beneficiary cost- provider furnishes). we note that the requirement for cost- sharing amounts associated with certain Notwithstanding, we are considering sharing in Medicare and Medicaid is a care coordination services, such as care for the final rule, and seek comment on, programmatic matter; cost-sharing is management and remote monitoring, whether to protect patient incentives required pursuant to statute and where the costs of collection exceed the and supports in the form of cash and regulations set forth by CMS and State amount to be collected. Stakeholders cash equivalents in certain Medicaid programs. We do not believe would like safe harbor protection for circumstances.40 If we do so, we might safe harbors to the anti-kickback statute waivers of such cost-sharing amounts. set a monetary limit on the aggregate are the right tool to obviate these We are considering for the final rule amount of remuneration provided programmatic requirements. Our whether limited safe harbor protection annually (such as up to $75 per year, or concerns regarding routine waivers of for such waivers might be appropriate, higher or lower amounts) 41 or include cost-sharing amounts are including whether such safe harbor other safeguards to prevent the misuse longstanding; 42 such routine waivers protection would be consistent with the of cash incentives to steer patients to may constitute prohibited remuneration program rules establishing such items or services to influence them to to induce referrals. Therefore, as beneficiary cost-sharing amounts. We allow others to use their personal proposed, the patient engagement and are considering for the final rule, and information to order unnecessary or support safe harbor would not protect seek comment regarding, what inappropriate items and services. the routine waiver or reduction of cost- conditions we should include in any Further, we likely would limit the use sharing obligations (including coupons safe harbor for limited cost-sharing leading to such waivers or reductions). waivers that would protect only cost- Med. 2108 (2015), https://www.nejm.org/doi/full/ We are interested in comments that sharing waivers associated with certain 10.1056/NEJMoa1414293. identify potential benefits of permitting specified services, such as care 40 OIG continues to consider items convertible to cash (such as a check) or that can be used like cash in the final rule the waiver or offset of management and remote monitoring. If (such as a general purpose debit card) to be cash cost-sharing obligations where the cost- we were to finalize such a safe harbor, equivalents. sharing waiver or offset of obligations is we likely would include conditions 41 The $75 amount parallels OIG’s 2016 ‘‘Office of part of a value-based arrangement under similar to those set forth in proposed Inspector General Policy Statement Regarding Gifts 1001.952(hh). of Nominal Value to Medicare and Medicaid our value-based framework. In addition, Beneficiaries Policy Statement,’’ which currently we solicit comments on any safeguards Finally, we are aware of interest sets the retail value of permissible ‘‘inexpensive’’ or that would mitigate concerns that among some stakeholders in offering ‘‘nominal value’’ gifts at $15 per item and $75 in routine waivers of cost-sharing amounts patients a share of savings the patients the aggregate per patient on an annual basis. See help generate for a payor. For example, OIG, Office of Inspector General Policy Statement might undermine prudent consumer Regarding Gifts of Nominal Value to Medicare and a patient who selects a clinically Medicaid Beneficiaries (Dec. 7, 2016), available at 42 See, e.g., Special Fraud Alert: Routine Waiver https://oig.hhs.gov/fraud/docs/alertsandbulletins/ of Copayments or Deductibles Under Medicare Part 43 See, e.g., OIG, Special Fraud Alert, 59 FR OIG-Policy-Statement-Gifts-of-Nominal-Value.pdf. B, 59 FR 65372, 65374 (Dec. 19, 1994). 65372, 65374 (Dec. 19, 1994).

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appropriate but less costly setting to that are not pre-paid debit cards,44 we or otherwise contribute to patient obtain services (e.g., home-based should include to the extent the safe engagement tools and supports services instead of a treatment in a harbor protects the provision of gift furnished by a VBE participant. We facility) might share in the savings cards. propose to interpret the requirement at 1001.952(hh)(2) to prohibit the VBE realized from the lower cost care setting. 4. Additional Proposed Conditions We believe that in many cases, this type participant from accepting or using of program would be part of a plan’s The patient engagement and support funds or free in-kind items or services benefit design. The need for new safe safe harbor would impose a number of furnished by any individual or entity conditions on the provision of protected harbor protection for this type of outside of the VBE to finance or patient engagement tools and supports. arrangement is unclear, and we solicit otherwise facilitate its patient The intent of these safeguards is to comments on this issue. engagement tools, supports, or both, balance the potential benefits of tools including both the cost of the tool or c. Gift Cards and supports with safeguards that support and any associated operating minimize the risk of harm to patients, costs incurred through the provision of OIG has never considered gift cards to payors, or both. such tool or support (e.g., staff time be in-kind items, goods, or services. The a. Furnished Directly to the Patient dedicated to ordering or distributing limitation of ‘‘tool or support’’ proposed blood pressure cuffs or technology in paragraph 1001.952(hh) would be Under the proposed condition at expenses or help desk services consistent with OIG’s position that gift 1001.952(hh)(1), the tool or support associated with a patient support). We cards are not in-kind items, goods, and must be furnished directly to the patient believe this requirement is necessary to services. OIG recognizes certain risks by a VBE participant. The reasons for reduce the likelihood of undue attendant to providing gift cards as this proposed condition are two-fold. influence that could result in patient engagement tools and supports, First, the condition would prevent inappropriate patient steering to specific some of which may make gift cards entities that are excluded from products, providers, or suppliers. indistinguishable from cash (e.g., we participating in a VBE from directly or In addition, this proposed condition recognize that consumers can sell or indirectly furnishing tools and supports would ensure that the entities we trade gift cards through gift card to patients. Second, we believe that this propose to exclude as VBE participants condition would help patients redemption sites, which could result in would not indirectly furnish patient understand which entity or individual a gift card morphing into cash). Similar engagement tools and supports under is furnishing the tool or support, which to cash and cash equivalents, OIG is the safe harbor. For example, a could aid patients in deciding whether concerned that tools and supports in the pharmaceutical manufacturer, to participate in the program or form of gift cards could induce patients manufacturer, distributor, or supplier of treatment regimen offered. We are DMEPOS, or laboratory could not to seek medically unnecessary items considering for the final rule and seek and services—leading to inappropriate circumvent the proposed exclusion from comment on whether we should include the definition of ‘‘VBE participant’’ by utilization—and could result in a condition in the final safe harbor that providing funds to a third-party entity providers improperly steering patients would require the VBE participant to and then directing or otherwise through offering valuable incentives in provide any patient receiving a patient controlling any aspect of the third-party the form of gift cards. engagement tool or support a written entity’s provision of patient engagement Nevertheless, because gift cards may notice describing: (i) The VBE tools and supports as a VBE participant. be effective at promoting behavioral participant that is giving the patient the Further, this proposed condition would change, OIG is considering whether to tool or support; (ii) what the prohibit a non-VBE participant’s include protection for gift cards in remuneration is; and (iii) the purpose of, contribution of in-kind items and limited circumstances, for example, or reason for, the remuneration. We services for a VBE participant to provide where they are provided to patients solicit comments on whether we should to patients as tools or supports. By way with certain conditions, such as expressly permit the VBE participant to of example, a pharmaceutical substance use disorders and behavioral furnish the tool or support through manufacturer’s provision of free product health conditions, as part of an someone acting on the VBE participant’s to a VBE participant (e.g., a physician) evidence-based treatment program, for behalf and under the VBE participant’s for the VBE participant’s distribution to the purpose of effecting behavioral direction (e.g., a physician practice that patients as free product samples would change. OIG seeks comments on the provides the tool or support through an not be protected by this proposed safe potential inclusion of gift cards in individual member of the practice or harbor.45 We solicit comments on this limited circumstances such as these and nurse employed by the practice). We approach and whether there may be requests citations to any recent studies also seek comments on the applicability defined, limited circumstances in which assessing the positive or negative effects of the proposed safe harbor to potential non-VBE participants should be able to of gift card incentives on promoting arrangements by which a VBE contribute or otherwise participate in behavioral change. OIG also solicits participant orders or arranges for the the provision of tools and supports comments on whether and how delivery of a tool or support from an eligible for safe harbor protection. We note that this proposed safe including gift cards as allowable ‘‘tools independent third party. harbor does not address, or otherwise or supports’’ in the circumstances b. Funding Limitations described above would raise the risk of Under the proposed condition at 45 For further information regarding the Federal fraud and abuse and specifically 1001.952(hh)(2), we limit who can fund anti-kickback statute and beneficiary inducements whether it would present any anti- CMP implications of free product samples, see e.g., OIG, Compliance Program Guidance for competitive effects, particularly for 44 OIG recognizes that gift cards can take a Pharmaceutical Manufacturers, 68 FR 23731, 23739 smaller providers and suppliers. OIG number of forms, including tangible gift cards, (May 5, 2003); Adv. Op. No. 08–04, available at also is considering and seeks comment electronic gift cards, and the replenishment of https://oig.hhs.gov/fraud/docs/advisoryopinions/ on what additional safeguards, such as funds available, through a smartphone application, 2008/AdvOpn08-04.pdf; Adv. Op. No. 15–11, to purchase items, goods, or services at a particular available at https://oig.hhs.gov/fraud/docs/ limiting protection for gift cards to those entity. advisoryopinions/2015/AdvOpn15-11.pdf.

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prohibit, arrangements between VBE We believe that this requirement or her chosen healthcare providers in participants and others (including effectively balances the goals of patient developing plans for treatment and care. vendors and manufacturers) for the engagement tools and supports, such as We are considering and solicit purchase and sale of tools and supports patient compliance with a plan of care comment on, whether we should that the VBE participant would furnish and adherence to behavior include as a safeguard a requirement under the safe harbor. Such modifications to improve overall health, that the patient’s licensed healthcare arrangements must be assessed on a with the risk that VBE participants provider certify in writing, under 18 case-by-case basis for compliance with could use extravagant tools or supports U.S.C. 1001 and 1519, that the the Federal anti-kickback statute and to steer beneficiaries or incentivize particular item or service is any other applicable law. unnecessary or inappropriate care. recommended solely to treat a Consistent with our goals of fostering documented chronic condition of a c. Prohibition on Marketing and Patient flexibility, adaptability, and innovation, patient in a target patient population. Recruitment we are not further describing specific We solicit comments on how providers Under the proposed condition at patient engagement tools and supports would most efficiently meet such a 1001.952(hh)(3)(iii), the remuneration that would be considered to have a requirement and whether and how must not include any in-kind item, direct connection to the coordination providers should be required to make good, or service used for patient and management of care for the patient. the certification available. recruitment or marketing of items or We are considering for the final rule and For all types of remuneration services to patients. We do not intend to solicit comments on whether we should contemplated under this proposed safe protect tools or supports that serve require a ‘‘reasonable connection’’ harbor, we are considering for the final solely as patient recruitment incentives. rather than a ‘‘direct connection.’’ rule and seek comment on whether we Similarly, we do not intend to protect As an alternative or in addition to this should impose further limitations on the tools or supports offered to patients approach, we are considering whether, nature of remuneration furnished or where the party knows or should know to heighten transparency of patient other conditions to safeguard against the that the patient would not use the item engagement tools and supports and to risks associated with fraud and abuse. as intended under the arrangement and ensure that qualifying patient For example, we are considering for the would instead resell the item. engagement tools and supports are final rule and seek comment on some or We seek comments on this proposed known by and closely related to the VBE all of the following additional condition, and in particular, any itself, we should require the VBE to safeguards: benefits of permitting in the final rule make a bona fide determination that the • A requirement that VBE some targeted marketing or similar VBE participant’s arrangement to participants furnishing patient outreach to the target patient population provide tools and supports to patients is engagement tools and supports for the purposes of engaging them in directly connected to the coordination demonstrate and document the desired evidence-based prevention or wellness and management of care for the patient, adherence to a treatment regimen, activities, or in improving population as that term is used in the proposed adherence to a drug regimen, adherence health outcomes, particularly for VBEs 1001.952(ee). We solicit comments on to a follow-up care plan, management of or VBE participants at financial risk for this approach. a disease or condition, improvement in the health outcomes of the target patient Lastly, we are considering for the final measurable health outcomes, or patient population. As with our proposal at rule, and solicit comment on, whether safety; and paragraph 1001.952(ee), we also are we should require that patient • a monitoring requirement to ensure interested in comments on how best to engagement tools and supports be that the patient engagement tools and preclude marketing of reimbursable directly connected to any of the four supports do not result in diminished items and services and patient value-based purposes, as opposed to quality of care or patient harm. recruitment while still permitting requiring a direct connection In addition, we seek specific beneficial educational efforts and specifically to the coordination and examples of any other types of activities that promote patient management of the patient’s care. remuneration that stakeholders believe awareness of care coordination activities should be covered (or should not be and available tools and supports. e. Medical Necessity covered) by this proposed safe harbor Under the proposed condition at and why, as well as input on whether d. Direct Connection 1001.052(hh)(3)(iv), the tool or support we can better define categories of Under the proposed condition at furnished to the patient must not result remuneration, and any limitations or 1001.952(hh)(3)(i), the tool or support in medically unnecessary or safeguards necessary to protect against furnished to the patient must have a inappropriate items or services fraud and abuse risks specific to such ‘‘direct connection’’ to the coordination reimbursed in whole or in party by a examples or categories. and management of care for the patient. Federal health care program. We believe g. Advancement of Specified Goals We interpret ‘‘direct connection’’ to that this is an important protection for mean that the VBE has a good faith patient safety and quality of care. Under the proposed condition at expectation that the tool or support will 1001.952(hh)(3)(vii), the incentives and further the VBE’s coordination and f. Nature of the Remuneration supports must advance specifically management of care for the patient, as Under the proposed conditions at enumerated goals, namely: Adherence that concept is described in the 1001.952(hh)(3)(vi), the tool or support to a treatment regimen as determined by proposed conditions at 1001.952(ee). must be recommended by the patient’s the patient’s licensed healthcare Where a direct connection exists, it licensed healthcare provider. This provider; adherence to a drug regimen should not be difficult for the VBE and condition seeks not only to ensure that as determined by the patient’s licensed the VBE participant providing the the remuneration is focused specifically healthcare provider; adherence to a patient engagement tool or support to on patient care, but also underscore the follow-up care plan established by the clearly articulate the nexus between the importance of quality of care, the patient’s licensed healthcare provider; tool or support and a care coordination healthcare provider’s medical judgment, management of a disease or condition as and management purpose of the VBE. and the patient’s relationship with his directed by the patient’s licensed

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healthcare provider; improvement in indirectly through their caregivers or $100, $200, $1,000, $1,500, or another evidence-based measurable health family members or others acting on amount that would be of sufficient outcomes for a patient or the target patients’ behalf if the remuneration magnitude to protect the most beneficial patient population; ensuring patient otherwise satisfies the conditions of the arrangements while also preventing the safety; or some combination of the safe harbor. Specifically, if a patient is most abusive ones). For purposes of above.46 We are not proposing to specify unable to care for herself or himself and measuring retail value, we propose that which tools and supports would another person (e.g., a family member or such value be measured at the time the advance the named goals to provide other caregiver) has legal authority or patient engagement tool or support is flexibility for VBE participants and the patient’s consent to act on the provided, and we are considering for the promote innovation. We intend for this patient’s behalf, then remuneration final rule whether to interpret ‘‘retail proposed condition to protect a range of furnished to that person, on the value’’ to mean the fair market value to tools and supports. For example, an patient’s behalf and for the patient’s the recipient or commercial value to the item, such as a smart pill bottle, that benefit, would be protected if all recipient. We also solicit comments on dispenses medications at preset times conditions of the safe harbor are met. the proposed requirement applying the for a patient could meet this condition For example, if the patient is a child cap to individual VBE participants and because it is a tool that enables the suffering from asthma, the child’s parent whether the requirement should instead patient to access the right medication at or guardian may accept in-kind apply the annual cap to the VBE as a the appropriate dosage and time. remuneration, such as a new air purifier whole. Under this alternative, we are Offering a parking voucher or providing for the child’s bedroom, on the child’s considering whether only one VBE free childcare during medical behalf without violating this participant within a VBE could offer appointments also could satisfy this requirement. remuneration to a patient during the condition because these supports would i. Monetary Cap year. If we limited the cap to the VBE allow a patient to comply with his or instead of a VBE participant, we are her treatment regimen. Conversely, Under the proposed condition at interested in comments regarding how offering a patient movie tickets to 1001.952(hh)(5), the aggregate retail this might negatively impact reward compliance with a treatment value of patient engagement tools and opportunities for patients and providers regimen would not satisfy this supports furnished by a VBE participant or create burdensome tracking and condition. to a patient could not exceed $500 on recordkeeping obligations for a VBE or While we are concerned about the an annual basis, with certain limited VBE participants. We also solicit exceptions. With this condition, we potential for abuse when patients are comments on whether we should apply have attempted to strike the right offered rewards to induce them to the annual cap on a value-based balance between flexibility for receive items or services, we also are arrangement basis; in other words, beneficial patient tools and supports aware that, in some circumstances, under each value-based arrangement, a and a bright-line limit on the amount of patients, or persons at risk of becoming patient could receive aggregate protected remuneration to protect patients with more serious conditions, remuneration up to the cap (whether patients from being improperly might be offered tools or supports that from one or more VBE participants in influenced by valuable gifts; to protect result in lower healthcare costs (without the arrangement). We are interested in the Federal health care programs from compromising quality) or that promote comments about any negative impacts patient wellness and healthcare. potential abuse through overutilization and inappropriate utilization due to or burdens from this approach. h. No Diversion or Resell such gifts; and to allow for innovation We propose that the cap could be Under the proposed condition at and beneficial arrangements that benefit exceeded for certain patients who lack 1001.952(hh)(4), this safe harbor would patients and payors. As noted elsewhere financial resources. Specifically, the not protect the provision of a tool or in this preamble, our enforcement proposed condition at 1001.952(hh)(5) support if the offeror of the experience shows that incentives provides that the aggregate retail value remuneration knows or should know offered to beneficiaries can be used to of patient engagement tools or supports that the tool or support is likely to be coerce them into obtaining unnecessary furnished to a patient by a VBE diverted, sold, or utilized by the patient services or harmful care, and this risk participant may exceed $500 per year if other than for the express purpose for may be heightened when the value of the patient engagement tools and which the patient engagement tool or remuneration is high or unlimited. supports are furnished to a patient support is provided. This proposed However, we are unsure whether a based on a good faith, individualized condition is designed to prevent VBE monetary cap would present a barrier to determination of the patient’s financial participants from providing tools and achieving the intended benefits for need. OIG has existing guidance related supports to patients if they likely would patients envisioned by this proposed to individualized, good faith divert or sell or otherwise use for safe harbor. In lieu of a monetary cap, determinations of financial need in the purposes other than the coordination we are considering for the final rule, context of cost-sharing waivers, and and management of care and the goals and seek comments on, whether other accounting for financial need generally outlined in (hh)(3)(vi). We seek combinations of safeguards proposed in aligns with an existing exception under comments on this approach. this rule would offer meaningful the CMP. We are not specifying any Notwithstanding the foregoing, for the protection against fraud and abuse particular method of determining purposes of this safe harbor, we would involving patients and programs, while financial need because we believe what not consider a tool or support to be still achieving the policy goal of constitutes ‘‘financial need’’ varies diverted if it is furnished to patients promoting value-based care. depending on the circumstances. We solicit comments on whether this However, it would be important for VBE 46 We note here that the word ‘‘drug’’ is proposed monetary limit of $500 is participants to make determinations of synonymous with and inclusive of ‘‘medication,’’ appropriate, whether $500 per year is financial need on a good faith, neither of which terms we are defining for purposes individualized, case-by-case basis in of this proposed safe harbor. Similarly, ‘‘followup too low or too high, and if so, what care plan’’ would include so-called ‘‘discharge other figures are more appropriate and accordance with a reasonable set of plans.’’ the reasons for such other figures (e.g., income and resource guidelines

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uniformly applied in all cases. The purposes of the proposed patient limit certain VBE participants’ ability to guidelines would need to be based on engagement and support safe harbor, we offer tools and supports due to the objective criteria and appropriate for the are considering and seek comment on potential cost of furnishing the tool or applicable locality. A patient’s medical additional potential safeguards for the support to an entire target patient costs and liabilities could be taken into final rule. We are considering and seek population rather than a smaller subset account, among other factors, as part of comment on the possible safeguards of the target patient population. the determination. We seek comments outlined below for this proposed safe Similarly, we are interested in on this approach as applied to the harbor because many VBE participants comments explaining why offering proposed safe harbor as well as whether that would avail themselves of the remuneration to a smaller subset of a we should include a cap but not allow proposed patient engagement and target patient population instead of to for the cap to be exceeded. support safe harbor would not be the entire target population would be We seek comments regarding whether subject to governmental programmatic appropriate and not increase the risk of the monetary limit imposed at requirements, oversight, or monitoring fraud and abuse, such as the targeting of 1001.952(hh)(5) is necessary and comparable to CMS-sponsored models particularly lucrative patients to receive appropriate, or if alternatives that better (addressed in the proposed safe harbor tools and supports (cherry picking) or protect patients and payors exist, such at 1001.952(ii)). failure to provide tools and supports to as a limitation on the frequency of such high-cost patients (lemon dropping). remuneration (e.g., a one-time provision a. Prohibition on Cost-Shifting of remuneration, once per year, or once We are considering for the final rule, c. Monitoring Effectiveness per month), or a per-occurrence and seek comment on, a condition We are considering adding a limitation, in place of, or in addition to, prohibiting VBE participants from condition to the final rule that would an aggregate limit. If a per occurrence billing Federal health care programs, require VBE participants to use limitation is desirable, we seek feedback other payors, or individuals for the tool ‘‘reasonable efforts’’ to monitor the on its amount standing alone and in or support; claiming the value of the effectiveness of the tool or support in relation to an aggregate cap (e.g., if the tool or support as a bad debt for achieving the intended coordination aggregate cap were to be $500 per year, payment purposes under a Federal and management of care for the patient should the per occurrence cap be $100, health care program; or otherwise and would require the VBE or the VBE $200, or some higher or lower figure). shifting the burden of the value of the participant to have policies and We seek comments about, and tool or support onto a Federal health procedures in place to address any supporting data for selecting, cap care program, other payors, or identified material deficiencies. We amounts. Finally, we seek comments individuals. This requirement, if believe that including such a condition regarding how we should treat ongoing included in any final rule, would be in the safe harbor would help ensure costs associated with tools and supports designed to protect against tools and that the tools and supports VBE (such as batteries, maintenance costs, or supports resulting in inappropriately participants furnish to patients achieve upgrades). increased costs to Federal health care the stated purpose(s), and in turn, could programs, other payors, and patients. help prevent VBE participants from j. Materials and Records We are considering, and seek comments offering patients engagement tools and Under the proposed condition at on, prohibiting both: (1) Directly billing supports that induce them to seek more, 1001.952(hh)(6), the VBE or a VBE any third party, including patients, for potentially unnecessary, care. We solicit participant would be required to make the patient engagement tool or support comments on whether we should available to the Secretary, upon request, or any operational costs attendant to the include such a monitoring provision all materials and records sufficient to provision of the patient engagement and, if so, any anticipated burdens and establish compliance with the tools and supports; and (2) claiming the ways OIG could minimize any burden. conditions of this safe harbor. We are cost of the patient engagement tool or We would apply a facts and not proposing particular parameters support and any operational costs circumstances analysis to the regarding the creation or maintenance of attendant to the provision of patient ‘‘reasonable efforts’’ employed by documentation to allow individuals and engagement tools and supports as bad parties under this condition, using an entities the flexibility to determine what debt for payment purposes under objective standard of reasonableness. constitutes best documentation Medicare or a State healthcare program. We solicit comments on this approach. practices but welcome comments on b. Consistent Provision of Patient d. Retrieval of Items and Goods whether particular parameters are Incentives needed. In particular, we are We are considering for the final rule considering for the final rule and seek We are considering for the final rule, and seek comment on a condition that comment regarding whether we should and seek comment on, whether to would require offerors to engage in include, in the final rule, a requirement require VBE participants to provide the reasonable efforts to retrieve an item or that VBE participants retain materials same patient engagement tools or good furnished as a tool or support in and records sufficient to establish supports to an entire target patient certain circumstances. For example, we compliance with the conditions of this population or otherwise consistently are considering requiring that the offeror safe harbor for a set period of time (e.g., offer tools and supports to all patients make reasonable efforts to retrieve the at least 6 years or 10 years). Were an satisfying specified, uniform criteria. patient engagement tool or support (if it entity to be under investigation and We believe that including such a is an item or good) when the patient is assert this safe harbor as a defense, it condition in the safe harbor would no longer in the target patient would need to be able to demonstrate protect against a VBE participant population, the VBE no longer exists, or compliance with each condition of the targeting certain patients to receive tools the offeror is no longer a VBE safe harbor. and supports based on, for example, the participant. This would prevent the safe patient’s insurance status. We solicit harbor from being misused to protect 5. Potential Safeguards comments on this issue. In particular, inducements to beneficiaries that do not In addition to the proposed we are interested in understanding promote value. If we were to include conditions set forth above, for the whether this proposed safeguard would such a requirement, we are considering

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setting a minimum value for the item or apply only to: (i) Arrangements under other sections of the Act with good above which offerors would be described by the models and (ii) model statutory authority to waive the fraud required to make reasonable retrieval participants and other specified and abuse laws. efforts (e.g., $100, $200, $500 or a higher individuals and entities. Further, any By proposing this safe harbor, we aim or lower amount). We believe such a protection furnished by the waivers is to simplify application of the anti- provision would reduce the burden limited in duration. kickback statute and CMP authorities for associated with retrieval efforts. We also Commenters to the OIG RFI generally individuals and entities that participate are interested in comments regarding asked us to simplify and standardize our in CMS-sponsored models in a manner whether any retrieval requirement approach to protecting CMS-sponsored that is consistent with CMS’s authorities should be limited to tools and supports model arrangements under the anti- to operate and test new models and to that are practicable to recover, such as kickback statute and beneficiary reduce the need to issue model-by- those which are not fixtures or were for inducements CMP. Waivers issued to model waivers of fraud and abuse laws. short-term use or an otherwise date are tailored to the particular CMS As with fraud and abuse waivers, our temporary benefit, and where harm to model and CMS’s design for the model, goal is to accommodate CMS’s testing the patient or disproportionate expense pursuant to the waiver authorities. and operation of innovative, value- to the VBE participant would not result. Commenters requested that OIG based care delivery and payment promulgate regulatory protections that models that CMS has determined could e. Advertising would provide uniformity and improve quality of care, reduce growth We are considering for the final rule predictability for parties participating in in costs, or both, while also including and seek comment on a condition that CMS models. program integrity protections against would require that the VBE participant We propose to create a new anti- fraud and abuse. To the extent that an does not publicly advertise the patient kickback statute safe harbor at 42 CFR arrangement under a CMS-sponsored engagement tool or support (to patients 1001.952(ii) to: (i) Permit remuneration model implicates the anti-kickback or others who are potential referral between and among parties to statute or beneficiary inducements CMP, sources). This would prohibit arrangements (e.g., distribution of parties within CMS-sponsored models advertising in the media or posting capitated payments, shared savings or for which we have issued fraud and information for public display or on losses distributions) under a model or abuse waivers may continue to use websites about the availability of free other initiative being tested or expanded applicable CMS-sponsored model items or services, similar to the local by the Innovation Center under section waivers to protect their arrangements or transportation safe harbor, 42 CFR 1115A of the Act and the Medicare may choose to structure arrangements to 1001.952(bb). Such prohibition on Shared Savings Program under section comply with this new safe harbor or any public advertising would inhibit the use 1899 of the Act (collectively, ‘‘CMS- other applicable anti-kickback statute of patient engagement tools and sponsored models’’) and (ii) permit safe harbor or CMP exception. supports as a marketing tool, thus remuneration in the form of incentives The degree of flexibility offered by keeping the focus of the safe harbor on and supports provided by CMS model this proposed safe harbor recognizes improving care coordination and participants and their agents under a CMS’s ability to oversee and monitor management of patients’ care. We solicit CMS-sponsored model to patients CMS-sponsored models and initiatives comments on this potential safeguard. covered by the CMS-sponsored model. and to embed program integrity In particular, we are interested in The objective of the proposed safe protections in such models and comments on whether this condition harbor is to standardize and simplify initiatives in ways that do not would impose a barrier to the success of anti-kickback statute compliance for necessarily apply to arrangements care coordination and value-based CMS-sponsored model participants in outside the models. For this reason, this arrangements by restricting information models for which CMS has determined proposal does not extend to commercial available to patients about options for participants should have the protection and private insurance arrangements that receiving better coordinated care. that would be afforded by this safe may operate alongside, but outside, a harbor 49 (rather than requiring CMS-sponsored model. However, G. CMS-Sponsored Model Arrangements participants to comply with the law as nothing in this proposed safe harbor and CMS-Sponsored Model Patient it would exist without this safe harbor) would prevent commercial and private Incentives (1001.952(ii)) by applying uniform conditions across insurers from implementing OIG and CMS have jointly issued all models or initiatives sponsored by arrangements that cover both public and fraud and abuse waivers of certain CMS. private patients; such arrangements provisions of the Federal anti-kickback This proposal focuses on models could be structured to satisfy other statute, the physician self-referral law under sections 1115A and 1899 of the proposed safe harbor protections that do and, for OIG only, certain CMP law Act; we are considering for the final not distinguish between public and authorities for numerous payment rule, and solicit comments on, private patient populations. models established and tested by CMS broadening the scope of this safe harbor We are proposing a number of under section 1115A(d)(1) of the Act to protect remuneration between and definitions for purposes of this safe (pertaining to models tested by the among parties to arrangements under harbor. We propose to define a ‘‘CMS- Innovation Center) 47 and section 1899 CMS initiatives that are authorized sponsored model party’’ as a CMS- of the Act (pertaining to the Medicare sponsored model participant or another Shared Savings Program).48 Waivers formation of accountable care organizations that are individual or entity that the CMS- accountable for a Medicare patient population, sponsored model’s participation coordinate items and services under Parts A and B, 47 See, e.g., CMS, Fraud and Abuse Waivers for and encourage investment in infrastructure and documentation specifies may enter into Select CMS Models and Programs, available at redesigned care processes for high-quality and a CMS-sponsored model arrangement. https://www.cms.gov/Medicare/Fraud-and-Abuse/ efficient service delivery). We propose to define ‘‘participation PhysicianSelfReferral/Fraud-and-Abuse- 49 For example, CMS might specify in a documentation’’ for purposes of this Waivers.html. participation agreement whether or not this safe 48 See, e.g., 76 FR 67992 at 67992 (Nov. 2, 2011); harbor would apply to any arrangement under the safe harbor as the participation 80 FR 66726 at 66726 (Oct. 29, 2015) (Medicare CMS-sponsored model or to particular types of agreement, cooperative agreement, Shared Savings Program is designed to promote the arrangements under the CMS-sponsored model. regulations, or model-specific

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addendum to an existing contract with patient is in a CMS-sponsored model at a CMS-sponsored model to certain CMS that: (i) Is currently in effect, and any given point in time. We are providers or entities (e.g., certain CMS- (ii) specifies the terms of a CMS- considering for the final rule and solicit sponsored models may exclude sponsored model. comments on extending the definition pharmaceutical manufacturers from We propose to define a ‘‘CMS- of ‘‘CMS-sponsored model incentive’’ to participating in a CMS-sponsored model sponsored model participant’’ as an include patients beyond those under a or participating in arrangements under individual or entity that is subject to, CMS-sponsored model or, in the the CMS-sponsored model). CMS has and is operating under, participation alternative, defining ‘‘CMS-sponsored discretion to determine the scope of documentation with CMS to participate model patient’’ such that a CMS- entities, arrangements, or incentives that in a CMS-sponsored model. We propose sponsored model participant could may be protected under this safe harbor to define a ‘‘CMS-sponsored model provide incentives to any patient (or any on a model-by-model basis. Unlike the arrangement’’ as a financial arrangement beneficiary) that meets the other proposed safe harbors at 42 CFR between or among CMS-sponsored conditions of the safe harbor. 1001.952(ee), (ff), (gg) and (hh), which model parties to engage in activities As proposed, this safe harbor would propose to exclude pharmaceutical under the CMS-sponsored model and provide CMS-sponsored model parties manufacturers; manufacturers, that is consistent with, and is not a type an additional pathway to protection distributors, and suppliers of DMEPOS; of arrangement prohibited by, the from sanctions under the anti-kickback and laboratories from arrangements and participation documentation. Finally, statute and the beneficiary inducements tools and supports that would receive we propose to define a ‘‘CMS-sponsored CMP. An arrangement needs to meet the protection under the safe harbors, this model patient incentive’’ as requirements of only one safe harbor to proposed safe harbor would not exclude remuneration that is not of a type ensure immunity from criminal and any entities from potential protection prohibited by the participation civil prosecution under the statute. For under the safe harbor. We do not documentation and is furnished example, CMS-sponsored model parties propose any such exclusions to allow: consistent with the CMS-sponsored would be able to choose to structure an (i) The Innovation Center the discretion model by a CMS-sponsored model arrangement to comply with the to determine the scope of the models it participant (or by an agent of the CMS- conditions of this proposed safe harbor, wishes to test and expand and (ii) CMS sponsored model participant under the the proposed value-based arrangements the discretion to determine how to CMS-sponsored model participant’s safe harbors (paragraphs (ee), (ff), and implement the Medicare Shared Savings direction and control) directly to a (gg)), the patient engagement and Program. In addition, OIG notes that patient under the CMS-sponsored support safe harbor (paragraph (hh)), CMS-sponsored models include model. any other applicable existing safe programmatic rules, monitoring, and We would expect CMS to notify CMS- harbors or exceptions, or fraud and oversight not present in value-based sponsored model participants, through abuse waivers issued for the CMS- arrangements and the provision of participation documentation, or other sponsored model. However, to ensure patient tools and supports outside of public means as determined by CMS, protection, an arrangement must meet such models, which may mitigate some when CMS-sponsored model all conditions of a particular safe harbor of the fraud and abuse risks presented participants may use this safe harbor or waiver. We note that depending on by the inclusion of pharmaceutical under a CMS-sponsored model. For the facts and circumstances, an manufacturers; manufacturers, example, CMS may specify the types of arrangement may comply with fraud distributors, and suppliers of DMEPOS; CMS-sponsored model patient and abuse laws absent specific safe and laboratories in such models. incentives that a CMS-sponsored model harbor or waiver protection. participant may provide under the CMS- a. Conditions for CMS-Sponsored Model sponsored model within a CMS- 1. Proposed Conditions for CMS- Arrangements sponsored model participation Sponsored Model Arrangements and Proposed paragraph (ii)(1) sets forth agreement. The CMS-sponsored model CMS-Sponsored Model Patient the terms for protection of certain participant also must satisfy certain Incentives remuneration between or among CMS- programmatic requirements imposed by We are proposing below important sponsored model parties under a CMS- CMS in connection with the use of this safeguards to ensure that arrangements sponsored model arrangement in a safe harbor. CMS also may require CMS- protected by this proposed safe harbor model for which CMS has determined sponsored model participants to operate as intended by the CMS- that the safe harbor is available. disclose to CMS when they use this safe sponsored models, and the CMS- We propose six conditions parties harbor under a CMS-sponsored model sponsored models are not undermined would need to meet to receive safe as a condition of participation in the by arrangements that might lead to harbor protection. The first condition CMS-sponsored model. If this safe stinting on medically necessary care or would require that CMS-sponsored harbor is finalized and CMS determines induce inappropriate utilization. These model participants reasonably that it be made available for a CMS- safeguards are necessary to ensure that determine that the CMS-sponsored sponsored model, the safe harbor would a CMS-sponsored model party’s model arrangement will advance one or not be available to protect any financial arrangements and patient more goals of the CMS-sponsored remuneration that does not satisfy incentives are consistent with the model. We intend to interpret program requirements as may be quality, care coordination, and cost- ‘‘reasonably determine’’ to mean that imposed by CMS on CMS-sponsored reduction goals of a CMS-sponsored the activities set forth in the written model participants. model and can be readily overseen by agreement are fairly and verifiably We solicit comments on these CMS and OIG. anticipated to achieve at least one or definitions. In particular, we solicit As a threshold matter, CMS would more goals of the CMS-sponsored comments regarding the scope of the determine whether the safe harbor model. For example, CMS-sponsored definition of ‘‘CMS-sponsored model protection would be available for model parties may wish to create an patient incentive,’’ recognizing that a arrangements or patient incentives implementation protocol explaining the CMS-sponsored model participant may under the particular CMS-sponsored activities and evidence-based processes not always know whether a particular model. CMS may limit participation in or guidance relied upon to develop and

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implement an arrangement that would CMS-sponsored model would have safe harbor.50 Similarly, some CMS- advance a goal of a CMS-sponsored flexibility to determine what type of sponsored models might have their own model through the CMS-sponsored documentation would best memorialize requirements for giving patient model arrangement. the arrangement such that they could incentives, and this proposed safe The safe harbor would be flexible to demonstrate safe harbor compliance to harbor would not obviate those permit parties to pursue a wide array of the Secretary or OIG upon request. programmatic requirements. For activities under the CMS-sponsored Nothing in this proposed condition example, in making incentive payments model; however, the arrangement must would change or alter any requirements to an assigned Medicare beneficiary be consistent with the purposes of the related to documentation (or any other under the ACO Beneficiary Incentive CMS-sponsored model. As stated above, model feature) imposed by CMS as part Program, ACOs are expected to satisfy CMS determines the scope of its models of its model. the programmatic requirements and what is being tested. As we propose Finally, we propose to include a governing such incentive payments at to reflect in the definition of ‘‘CMS- condition requiring CMS-sponsored section 1899(m) of the Act and 42 CFR sponsored model arrangement,’’ if an model participants to satisfy such other 425.304(c); if this safe harbor is arrangement is a type of arrangement programmatic requirements as may be finalized and CMS determines that it be prohibited by the participation imposed by CMS in connection with the made available for the ACO Beneficiary documentation, then it does not qualify use of this safe harbor. Because CMS has Incentive Program, the safe harbor as a CMS-sponsored model authority to test and design models, it would not be available for any incentive arrangement. If an arrangement does not payment that does not satisfy such can also create programmatic qualify as a CMS-sponsored model programmatic requirements. requirements integral to testing and arrangement, then it would not be Depending on the goals set forth by protected by this safe harbor even if the monitoring its model design for CMS- CMS for the CMS-sponsored model, we CMS-sponsored model parties sponsored model participants. We are would expect a CMS-sponsored model determined that it would advance a proposing this condition to ensure that participant would use this safe harbor to purpose of the CMS-sponsored model. parties comply with any additional provide its patients with free or below- In the second proposed condition, we programmatic requirements as may be fair-market-value incentives that specify that the exchange of value must imposed by CMS related to the advance the goals of the CMS-sponsored not induce CMS-sponsored model arrangements for which they might seek model, such as preventive care, parties or other providers or suppliers to safe harbor protection. We would expect adherence to a treatment regimen, or furnish medically unnecessary items or CMS to set forth these requirements management of a disease or condition. reduce or limit medically necessary within the CMS-sponsored model’s The proposed protection would cover a items or services furnished to CMS- participation documentation or broad range of incentives, such as, sponsored model patients. We believe otherwise make such requirements transportation, nutrition support, home that this is an important protection for publicly available. monitoring technology, and gift cards, patient safety and quality of care, and it b. Conditions for CMS-Sponsored Model as determined by CMS through the would be consistent with every CMS- Patient Incentives CMS-sponsored model’s design. Certain sponsored model. CMS-sponsored models or future In the third proposed condition, we With respect to patient incentives, the models might permit waivers of cost- are incorporating a key safeguard that proposed safe harbor would apply to sharing amounts (for example, we have consistently utilized in our certain incentives offered by a CMS- copayments and deductibles) or cash fraud and abuse waivers to prohibit sponsored model participant or by an incentives to certain patients to promote remuneration that is explicitly or agent of the CMS-sponsored model certain clinical goals of a CMS- implicitly offered, paid, solicited, or participant under the CMS-sponsored sponsored model. All of these patient received in return for, or to induce or model participant’s direction and incentives, when determined by CMS to reward, any referrals or other business control directly to a patient receiving be appropriate for the CMS-sponsored generated outside of the CMS-sponsored healthcare items and services under the model design and not prohibited by the model. CMS-sponsored model that will advance participation documentation, could fit The fourth condition would require one or more goals of the CMS-sponsored within the proposed safe harbor, CMS-sponsored model parties, in model. provided that the arrangement advance of, or contemporaneously with CMS would determine whether the otherwise complies with all safe harbor the commencement of, the CMS- safe harbor protection would be conditions. We are proposing safeguards sponsored model arrangement, to set available for the particular CMS- specific to the protected patient forth the terms of the CMS-sponsored sponsored model. As stated above, CMS incentives. model arrangement in a signed writing. has discretion to determine which Under the proposed condition at The fifth condition would require entities may avail themselves of this paragraph (ii)(2)(i), the CMS-sponsored parties to the CMS-sponsored model safe harbor or to determine the types of model participant must reasonably arrangement to make available to the patient incentives CMS-sponsored determine that the patient incentive the Secretary materials and records model parties may provide on a model- CMS-sponsored model participant sufficient to establish whether the by-model basis. We would expect CMS furnishes to its patients under the CMS- remuneration was exchanged between sponsored model will advance one or to notify CMS-sponsored model the parties in a manner that meets the more goals of the CMS-sponsored participants of the scope of permissible conditions of this safe harbor. We are model. As stated above, we would patient incentives within its not proposing particular parameters expect CMS to notify CMS-sponsored participation documentation or to make regarding documentation, but rather such determination publicly available. specifying only that the writing must 50 Unlike the patient engagement and support safe describe the activities to be undertaken If CMS determines a type of incentive harbor proposed at 1001.952(hh), under the CMS- is prohibited, then it would not qualify sponsored model patient incentives safe harbor, by the CMS-sponsored model parties CMS would determine the types of patient and the nature of the remuneration to be as a CMS-sponsored model patient incentives CMS-sponsored model parties may exchanged. Therefore, parties under a incentive for purposes of this proposed provide on a model-by-model basis.

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model participants, through sponsored model in connection with the until the last payment or exchange of participation documentation, or other use of this safe harbor. anything of value made by a CMS- means as determined by CMS, when sponsored model party under a CMS- c. Duration of Protection CMS-sponsored model participants may sponsored model occurs, even if the use this safe harbor under a CMS- Under our proposal, as reflected in model has otherwise terminated. We sponsored model and the types of the defined terms, the duration of safe solicit comments on whether the final patient incentives they may offer. CMS- harbor protection aligns with the rule should allow safe harbor protection sponsored model participants may look duration of the participation for one or a combination of the above to their participation documentation for documentation under a CMS-sponsored options. potential descriptions or guidance on model. For example, the proposed Similarly, we solicit comments on patient incentives that would be definition of ‘‘CMS-sponsored model whether under the final rule a CMS- consistent with the goals of the CMS- arrangement’’ specifies that the sponsored model participant should be sponsored model. For example, the protected arrangement is to ‘‘engage in able to continue to provide the participation documentation might activities under the CMS-sponsored outstanding portion of any service to a specify that any incentives furnished model.’’ Similarly, the proposed patient if the service was initiated must be preventive care items or definition of ‘‘participation before its participation documentation services or must advance one or more documentation’’ specifies that it is terminated or expired. If we provide clinical goals for patients under the ‘‘currently in effect.’’ The CMS- additional time under the final rule, we CMS-sponsored model by engaging him sponsored models, and arrangements are interested in including conditions to or her in better managing his or her own between parties operating under CMS- prevent gaming of the length of time health. sponsored models, have various terms, remuneration is provided after a CMS- some of which are described in a CMS- Under the second proposed condition, sponsored model participant has been sponsored model’s participation we propose to require that the patient terminated from a model (or the model documentation. In order to meet the incentive have a direct connection to has terminated) to protect beneficiaries conditions set forth in the proposed safe the patient’s healthcare. We believe this from improper inducements unrelated harbor, the CMS-sponsored model condition to be consistent with the to a CMS-sponsored model. We note arrangement or a CMS-sponsored model design of all CMS models and initiatives that, under our proposal, patients would patient incentive must begin and end contemplated as part of this safe harbor. be able to retain any incentives received while the parties are operating under an This condition is consistent with prior to the termination or expiration of existing CMS-sponsored model. the participation documentation. requirements we have imposed The safe harbor would protect previously within our fraud and abuse arrangements during the period under H. Cybersecurity Technology and waivers for a number of CMS-sponsored which a CMS-sponsored model Related Services (1001.952(jj)) models. For the same reasons described participant participates in the CMS- We propose a safe harbor to protect further in our discussion of the sponsored model but would not extend donations of certain cybersecurity proposed patient engagement and to protect remuneration exchanged after technology and related services with support safe harbor at proposed participation in the CMS-sponsored appropriate safeguards. We believe this paragraph 1001.952(hh), we propose model ends. In some cases, certain proposed safe harbor could help that this requirement would warrant a activities associated with a CMS- improve the cybersecurity posture of the dual consideration: Whether a direct sponsored model may extend beyond healthcare industry by removing a real connection exists from a healthcare the last performance period during or perceived barrier that would allow perspective and whether a direct which a CMS-sponsored model parties to address the growing threat of connection exists from a financial participant provides services under the cyberattacks that infiltrate data systems perspective. CMS-sponsored model. For example, and corrupt or prevent access to health We are not proposing specific the participation documentation might records and other information essential documentation under the third provide for a certain period of time after to the delivery of healthcare. condition for patient incentives offered a termination date or after the end of the In recent years we have received by CMS-sponsored model participants; performance period to conduct numerous comments and suggestions however, CMS-sponsored model reconciliation or make final payment to urging the creation of a safe harbor to participants must maintain providers (e.g., a shared savings protect donations of cybersecurity documentation sufficient to establish distribution). This safe harbor would technology and services.51 The whether the patient incentive was protect the last payment or exchange of digitization of the healthcare delivery distributed in a manner that meets the value made by or received by a CMS- system and related rules designed to conditions of the safe harbor. Under this sponsored model party following the increase interoperability and data proposed condition, CMS-sponsored final performance period that the CMS- sharing in the delivery of healthcare model participants would have sponsored model participant that is a create numerous targets for cyberattacks. flexibility to determine what type of party to the arrangement participates in The healthcare industry and the documentation would best establish the CMS-sponsored model. We are technology used to deliver healthcare whether the CMS-sponsored model considering each of the following have been described as an patient incentive was distributed options for 1001.952(ii) and may interconnected ‘‘ecosystem’’ where the appropriately. finalize one or a combination of these ‘‘weakest link’’ in the system can Finally, as described above, if this options: (i) Terminating protection after compromise the entire system.52 Given safe harbor is finalized and CMS the end of the performance period or determines that it would be available for within a certain time period after the 51 See, e.g., OIG, Semiannual Report to Congress, a particular CMS-sponsored model, the end of a performance period; (ii) Apr. 1, 2018–Sept. 30, 2018, at 84. safe harbor would not protect terminating protection upon termination 52 See, e.g., Health Care Industry Cybersecurity Task Force, Report on Improving Cybersecurity in remuneration that does not satisfy such of the CMS-sponsored model the Health Care Industry, June 2017 (HCIC Task programmatic requirements as may be participation documentation or within a Force Report), available at https://www.phe.gov/ imposed by CMS under the CMS- certain period of time after that; and (iii) Continued

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the prevalence of protected electronic a template for a new statutory as much consistency as possible health information and other personally exception.56 between our proposed safe harbor and identifiable information stored within However, in general, any donation of CMS’s proposed exception, despite the these systems, as well as the processing valuable technology or services to differences in the respective underlying and transmission of this information physicians or other sources of Federal statutes. Because of the close nexus and other critical information within a health care program referrals can pose between this proposed rule and CMS’s given provider’s systems as well as risks of fraud or abuse that may increase proposed rule, we may consider and across the healthcare industry, the risks as the value of the donated technology take additional actions based on associated with cyberattacks may be or services increases. In some respects, comments submitted in response to most immediate for the ‘‘weak links’’ the fraud and abuse risks posed by the CMS’s proposed rule in addition to but have implications for the entire donation of cybersecurity technology or those submitted in response to this healthcare system. services to physicians or other rulemaking, if warranted. healthcare providers or suppliers are In response to the OIG RFI, we similar to the risks associated with the We propose to protect nonmonetary received overwhelming support for a provision of electronic health records remuneration in the form of certain cybersecurity technology donation safe technology because, like electronic types of cybersecurity technology and harbor. Many commenters highlighted health records technology, cybersecurity services. Specifically, as explained the increasing prevalence of technology is inherently valuable to below, we propose to define cyberattacks and other threats. recipients in terms of actual cost, ‘‘cybersecurity’’ to mean ‘‘the process of Commenters noted that cyberattacks avoided overhead, and administrative protecting information by preventing, pose a fundamental risk to the expenses. Additionally, the types of detecting, and responding to healthcare ecosystem and that data cybersecurity technology and services cyberattacks.’’ We propose to include breaches can result in patient harm as are highly variable; their costs and value within the scope of covered technology, well as high costs to the healthcare also vary greatly. For example, ‘‘any software or other types of industry. Moreover, disclosures of PHI cybersecurity technology or services information technology, other than through a data breach can result in may consist only of anti-virus software hardware.’’ In an effort to foster identity fraud. for a single workstation in a physician’s beneficial cybersecurity donation Relatedly, protecting Department office or it may include incident arrangements without permitting data, systems, and beneficiaries from response services for several primary arrangements that negatively impact cybersecurity threats, and otherwise and specialty group practices. Further, beneficiaries of Federal health care securing the exchange and use of health adding robust cybersecurity technology programs, this safe harbor would information technology and data, are and services may provide recipients a impose a number of conditions on challenges that OIG has identified in the valuable shield from liability for fines, cybersecurity donations, as set forth Department’s annual Top Management ransom, and litigation risk given the below. Most notably, the first proposed prevalence of cybersecurity threats to and Performance Challenges for the last condition of the safe harbor requires the healthcare providers and breaches donation to be necessary and used decade.53 involving protected health information predominantly to implement and The Health Care Industry and electronic health records. Finally, maintain effective cybersecurity. Cybersecurity (HCIC) Task Force, responses to the OIG RFI indicate that We also have included an alternative created by the Cybersecurity the cost, or value, of cybersecurity proposal for an additional, optional Information Sharing Act of 2015 technology and services has increased condition to this proposed safe harbor. (CISA),54 was established in March 2016 dramatically, to the point where some The optional condition imposes an and is comprised of government and providers and suppliers are unable to additional safeguard that parties can private sector experts. The HCIC Task adequately invest in cybersecurity satisfy in exchange for protecting certain Force produced its HCIC Task Force measures. cybersecurity hardware. Report in June 2017.55 The HCIC Task We believe that this proposed safe Force recommended, among other harbor would (i) minimize the risks 1. Definitions things, that Congress ‘‘evaluate an inherent in any type of valuable amendment to [the physician self- remuneration between referral sources We propose two definitions at referral law and the anti-kickback and (ii) remove an actual or perceived 1001.952(jj)(6): ‘‘cybersecurity’’ and statute] specifically for cybersecurity barrier that will allow the healthcare ‘‘technology.’’ These definitions are software that would allow healthcare industry to take additional action to integral to understanding the conditions organizations the ability to assist mitigate the risks posed by of the safe harbor, so we first elaborate physicians in the acquisition of this cybersecurity threats. Specifically, we on the definitions. For purposes of this technology, through either donation or believe this proposed safe harbor would safe harbor, we propose to define the subsidy’’ and noted that the regulatory promote increased security for terms ‘‘cybersecurity’’ and ‘‘technology’’ exception to the physician self-referral interconnected and interoperable as follows: law and the safe harbor for electronic healthcare information technology • ‘‘Cybersecurity’’ means the process health records technology could serve as systems without protecting of protecting information by preventing, arrangements that either serve as detecting, and responding to preparedness/planning/cybertf/documents/ marketing platforms or inappropriately cyberattacks. influence clinical decision-making. report2017.pdf. • ‘‘Technology’’ means any software 53 See, e.g., OIG, 2018 Top Management & This proposed safe harbor would Performance Challenges Facing HHS, available at protect certain cybersecurity donations. or other types of information https://oig.hhs.gov/reports-and-publications/top- CMS is proposing a similar exception to technology, other than hardware. challenges/2018/. the physician self-referral law. We This proposed definition of 54 Public Law 114–113, 129 Stat. 2242. 55 HCIC Task Force Report, available at https:// coordinated closely with CMS to ensure ‘‘cybersecurity’’ is derived from the www.phe.gov/preparedness/planning/cybertf/ National Institute for Standards and documents/report2017.pdf. 56 Id. at 27. Technology (NIST) ‘‘Framework for

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Improving Critical Infrastructure.’’ 57 We As we describe below, however, we into account the volume or value of intend for the definition to be broad and are not proposing a requirement for referrals or other business generated. propose to rely on a definition in a NIST recipients to contribute a portion of the First, at 1001.952(jj)(1), we propose to framework that does not apply directly donor’s costs. Consistent with the HCIC limit safe harbor protection to donated to the healthcare industry but applies Task Force Report, we recognize that technology and services that are generally to any United States critical many providers do not have adequate necessary and used predominantly to infrastructure. Our goal is to broadly resources to significantly invest in the implement and maintain effective define cybersecurity and avoid cybersecurity items and services cybersecurity. The goal of this condition unintentionally limiting donations by protected by this proposed safe harbor. is to ensure that donations are being relying on a narrow definition or a Consequently, we believe that omitting made for the purposes of addressing definition that might become obsolete a contribution requirement may allow legitimate cybersecurity needs of donors over time. We solicit comment on this providers with limited resources to and recipients. Explained differently, approach and whether a definition receive protected cybersecurity the core function of the donated tailored to the healthcare industry donations while also using their own technology or service must be to protect would be more appropriate. resources to invest in other technology information by preventing, detecting, Similarly, the proposed definition of not protected by the safe harbor, such as and responding to cyberattacks. Our ‘‘technology’’ is broad, but for the updating legacy hardware that may pose intent is to protect a wide range of exclusion of hardware. The intent of the a cybersecurity risk, or simply investing technology and services that are safe harbor is to be agnostic to specific in their own computers, phones, and specifically donated for the purpose of, types of non-hardware cybersecurity other hardware that are core to their and are necessary for, ensuring that technology. We intend for this safe businesses, notwithstanding their donors and recipients have effective harbor to be broad enough to include relationship with a donor who cybersecurity. cybersecurity software and other contributes cybersecurity technology. As stated previously, our intent is to information technology (e.g., an We solicit comments on excluding be technology agnostic, including as to Application Programming Interface donations of hardware from this safe the types and versions of software that (API), which is neither software nor a harbor and the omission of a can receive protection. By way of service as those terms are generally contribution requirement, and in example, the types of technology used) that is available now and particular, any specific cybersecurity protected by this safe harbor may technology that may become available risks or limitations that would result include, but are not limited to, software as the industry continues to develop. from such exclusion and omission. that provides malware prevention, The proposed definition of We are considering for the final rule software security measures to protect ‘‘technology’’ excludes hardware under adding limited protection for specific endpoints that allow for network access this new safe harbor. While we hardware that is necessary for control, business continuity software recognize that effective cybersecurity cybersecurity, is stand-alone (i.e., is not that mitigates the effect of cyberattacks, may require hardware that meets certain integrated within multifunctional data protection and encryption, and standards (e.g., encrypted endpoints, equipment), and serves only email traffic filtering. We believe these updated servers), we remain concerned cybersecurity purposes (e.g., a two- examples are indicative of the types of that donations of valuable, factor authentication dongle), and solicit technology that are necessary and used multifunctional hardware pose a higher comments on what types of hardware predominantly for effective risk of constituting a disguised payment might qualify and whether we should cybersecurity. We also do not for referrals. Consistent with the protect them under this safe harbor. distinguish between cloud-based proposed condition at 1001.952(jj)(1), Finally, we note that this proposed software or software that must be we believe that donations with multiple safe harbor only protects cybersecurity installed locally. We solicit comments uses outside of cybersecurity present a technology and services as defined. It on the proposed breadth of protected greater risk that the donation is being does not extend to other types of technology as well as whether we made to influence referrals. Hardware is cybersecurity measures outside of should expressly include other most likely to be multifunctional and, as technology or services. For example, technology or categories of technology a result, would not be necessary and this safe harbor would not protect in this safe harbor. used predominantly to implement and donations of installation, improvement, Similarly, we propose to protect a maintain effective cybersecurity. For or repair of infrastructure related to broad range of services. Such services example, the safe harbor would not physical safeguards, even if they could could include, for example: • protect a laptop computer or tablet used improve cybersecurity (e.g., upgraded Any services associated with in the general course by a physician to wiring or installing high security doors). developing, installing, and updating Donations of infrastructure upgrades are cybersecurity software; enter patient visit information into an • electronic health record and respond to extremely valuable and have multiple any kind of cybersecurity training emails. However, it would protect benefits in addition to cybersecurity, services, such as training recipients on encryption software for a laptop. This together which pose an increased risk how to use the cybersecurity also is consistent with a similar that one purpose of the donation is to technology, how to prevent, detect, and exclusion of hardware in the electronic pay for or influence referrals. respond to cyber threats, and how to troubleshoot problems with the health record donation safe harbor at 2. Conditions on Donation and cybersecurity technology (e.g., ‘‘help 1001.952(y), which identifies a similar Protected Donors rationale for excluding hardware from desk’’ services specific to cybersecurity); To be protected non-monetary • any kind of cybersecurity services protection.58 We solicit comments on remuneration, donations of for business continuity and data this approach. cybersecurity technology and services recovery services to ensure the must meet five conditions in recipient’s operations can continue 57 Appendix B, Version 1.1 (Apr. 16, 2018) available at https://nvlpubs.nist.gov/nistpubs/ 1001.952(jj)(1)–(5). The first two during and after a cyberattack; CSWP/NIST.CSWP.04162018.pdf. conditions relate to the purpose of the • any kind of ‘‘cybersecurity as a 58 71 FR 45110, 45120 (Aug. 8, 2006). donation and prohibit donors taking service’’ model that relies on a third-

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party service provider to manage, one developed or endorsed by NIST, technology or services, or the amount or monitor, or operate cybersecurity of a another American National Standards nature of the technology or services to recipient; Institute-accredited standards body, or be donated. In addition, we propose that • any services associated with an international voluntary standards donors do not condition the donation of performing a cybersecurity risk body such as the International technology or services, or the amount or assessment or analysis, vulnerability Organization for Standardization. Any nature of the technology or services to analysis, or penetration test; or such provision would not require be donated, on future referrals. In other • any services associated with sharing compliance with a particular framework words, we propose that a donor cannot information about known cyber threats, or set of standards, but rather would require, explicitly or implicitly, that a and assisting recipients responding to provide an option for donors to recipient either refer to the donor or threats or attacks on their systems. demonstrate that the donation is recommend the donor’s business as a We believe these types of services are necessary and predominantly used to condition of receiving a cybersecurity indicative of the types of services that implement and maintain effective donation. We understand that the are necessary and used predominantly cybersecurity. We believe such a purpose of donating cybersecurity for effective cybersecurity. We solicit provision may provide some assurance technology and services is to guard comments on the proposed breadth of to donors and recipients about how to against threats that come from protected services as well as whether we demonstrate that donations are interconnected systems, and we should expressly include other services necessary and predominantly used to understand and expect that a donor or categories of services in this safe implement and maintain effective would provide the cybersecurity harbor. We note, in addition, that the cybersecurity. If we were to finalize this technology and services only to donation of services must be non- deeming provision, we would add a individuals and entities that connect to monetary. For example, donating the sentence to 1001.952(jj)(1) that would its systems, which includes those that time of a consultant to implement a deem a donation to meet this condition refer to it (or that receive referrals from cybersecurity program could be if the parties demonstrate that the it). However, this condition would protected, but if an entity were to donation furthers a recipient’s ability to restrict a donor from conditioning the experience a cyberattack that involved comply with a written cybersecurity donation on referrals or other business ransomware, payment of the ransom program that reasonably conforms to a generated.59 amount on behalf of a recipient or widely recognized cybersecurity This proposed condition would not paying the recipient the ransom amount framework or set of standards. We require a donor to donate cybersecurity would not be protected. solicit comments on incorporating this technology and services to every We do not intend to protect donations proposed deeming provision in individual or entity that connects to its of technology or services that have 1001.952(jj)(1). system. Donors would be able to use multiple, general uses outside of Regarding this proposed deeming selective criteria for choosing recipients, cybersecurity. As explained in our provision, we also solicit comments on provided that neither a recipient’s discussion of the definition of how donors and recipients could eligibility, nor the amount or nature of ‘‘hardware’’ above, we remain practically demonstrate that a donation the cybersecurity technology or services concerned that donations of valuable furthers a recipient’s ability to comply donated, is determined in a manner that multi-use technology or services pose a with a written cybersecurity program directly takes into account the volume higher risk of constituting a disguised that reasonably conforms to a widely or value of referrals or other business payment for, or otherwise influencing, recognized cybersecurity framework or generated between the parties. For referrals. Similarly, we do not intend to set of standards. We are not proposing example, a donor could perform a risk protect donations of technology or to condition protection on assessment of a potential recipient (or services that are otherwise used in the demonstrating compliance with a require a potential recipient to provide normal course of the recipient’s specific framework or set of standards, the donor with a risk assessment) before business (e.g., general help desk services but we seek to provide a practical determining whether to make a related to use of a practice’s information method that allows parties to donation, or the scope of a donation. technology). We solicit comment on this demonstrate that a donation meets the Similarly, for example, if a donor is a approach and whether this proposed potential deeming provision we are hospital, the hospital might choose to condition unintentionally limits the considering for 1001.952(jj)(1). limit donations to physicians who are donation of cybersecurity technology Understanding that our intent is not on the hospital’s medical staff. and services that are vital to improving to incorporate a specific framework or Additionally, selective criteria might be the cybersecurity posture of the set of standards, we seek comments on based on the type of connection healthcare industry. whether there are other ways that between a donor and recipient, such as For the purposes of meeting the parties could reliably demonstrate that a a simple read-only connection to a proposed condition at 1001.952(jj)(1), donation meets the potential properly implemented, standards-based we are considering for the final rule, cybersecurity deeming provision in API that enables only the secure and seek comment on, whether to add 1001.952(jj)(1). For instance, we are transmission of a copy of the patient’s a deeming provision that would allow interested in comments regarding record at the patient’s request to the donors or recipients to demonstrate that whether parties could demonstrate that recipient. That type of connection poses donations are necessary and a donation meets the cybersecurity less risk to a donor’s systems than a predominantly used to implement and deeming provision through connection that allows for information maintain effective cybersecurity. This documentation, certifications, or other to be written directly into the donor’s deeming provision would allow donors methods not prescribed by regulation. systems. Thus, a donor contemplating Second, at 1001.952(jj)(2), we propose and recipients to demonstrate that the allowing a higher-risk connection (such to require that donors do not directly donation furthers a recipient’s ability to as a bi-directional read-write comply with a written cybersecurity take into account the volume or value of program that reasonably conforms to a referrals or other business between the 59 We note that, if a system is only as strong as widely recognized cybersecurity parties when determining the eligibility its weakest link, then even a very low-referring framework or set of standards, such as of a potential recipient for the entity poses a cybersecurity risk.

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connection) to a potential recipient’s to secure additional referrals from the protection that we believe are critical to systems could develop selective criteria recipient or otherwise influence guarding against fraud and abuse. In the based on that difference in risk of the referrals or other business generated. case of cybersecurity, we do not believe connection. We solicit comments on We are concerned that technology a specified recipient contribution to the this condition. donations risk referral sources becoming cost is necessary or practical. We We have declined to propose a list of beholden to the donors, and therefore recognize that the level of services for selection criteria which, if met, would we are considering narrowing the scope each recipient might vary, and might be be deemed not to directly take into of protected donors as we have done in higher or lower each year, each month, account the volume or value of referrals other safe harbors. We solicit comments or even each week. Similarly, donors or other business generated between the on whether particular types of may aggregate the cost of certain parties, as we did in the electronic individuals and entities should be services across all recipients, such as health records safe harbor at excluded from donating cybersecurity cybersecurity patches and updates, on a 1001.952(y)(5). We do not believe technology and services, and if so, why. regular basis, which may result in a donations of cybersecurity technology Specifically, in past rulemakings we contribution requirement becoming a and services present the same types of have distinguished between individuals barrier to widespread, low-cost risks as donations of electronic health and entities with direct and primary improvements in cybersecurity because records software and information patient care relationships that have a of the practical challenges in collecting technology. Primarily, cybersecurity central role in the healthcare delivery a contribution from recipients. For donations are further removed from the infrastructure such as hospitals and instance, attempting to quantify the volume and value of referrals than physician practices, and providers and value of a frequent cybersecurity scans electronic health record donations. suppliers of ancillary services such as included in a vendor’s suite of services Cybersecurity donations, if legitimate, pharmaceutical, device, and DMEPOS as part of a cybersecurity donation, are more likely to be based on manufacturers, and other manufacturers across dozens of recipient practices, and considerations such as security risks or vendors that indirectly furnish items determining the pro rata share each and are less likely to be based on and services used in the care of practice must contribute based on the considerations that are closely related to patients.60 We seek comments as to size of the practice as well as the the volume and value of referrals or whether our historical enforcement relative size of the donation made to other business generated (e.g., the total concerns and other considerations each practice, might become number of prescriptions written by the regarding direct and indirect patient unworkable for many donors. recipient). Therefore, we do not believe care are present for purposes of Importantly, we note that our that cybersecurity donations need a cybersecurity donations. proposal to omit a contribution similar list of selection criteria to ensure requirement as a condition of the safe 3. Conditions for Recipients that parties can meet the volume or harbor does not prohibit donors from value condition at 1001.952(jj)(2). In proposed 1001.952(jj)(3), similar to requiring a contribution. Donors are free Nonetheless, we are considering the condition at (jj)(2) on donors to require recipients to contribute to the whether to add such a list in the final discussed previously, this proposed cost, so long as the determination of a rule and whether the list should be condition would require that neither a contribution requirement does not take based on the permitted conduct at potential recipient, nor a potential into account the volume or value of 1001.952(y)(5)(i)–(vii). We solicit recipient’s practice (or any affiliated referrals between the parties. For comments on this approach and any individual or entity), can demand, example, if a donor gave a full suite of other conditions or permitted conduct explicitly or implicitly, a donation of cybersecurity technology and services we should enumerate in this safe cybersecurity technology and services as for free to a high-referring practice but harbor, with respect to determinations a condition of doing business or required a low-referring practice to related to cybersecurity donations. continuing to do business with the contribute 20 percent of the cost, then Related to these two conditions, we donor. the donor could violate the conditions do not propose to restrict the types of We do not propose a recipient at proposed paragraphs (jj)(2)(i) and (ii). individuals and entities that may donate contribution requirement as part of this In addition, we do not intend for this cybersecurity donations under this safe safe harbor. As we explain above, with safe harbor to require that donations be harbor. Although donating cybersecurity this proposed safe harbor we seek to solely between two parties. For technology and services would relieve a remove a barrier to donations that example, two hospitals and a large recipient of a cost that it otherwise improve cybersecurity throughout the multi-specialty physician practice might would incur, the fraud and abuse risks healthcare industry in response to the agree to jointly subsidize cybersecurity associated with cybersecurity are critical cybersecurity issues identified technology and services for smaller different than donations of other in the HCIC Task Force Report and physician practices in their area. valuable technology, such as electronic elsewhere. We propose to include only We do not propose to impose health records items and services. We those conditions for safe harbor restrictions on the type of individual or generally view donating cybersecurity entity that can receive donations of technology and services to be a self- 60 See OIG, Final Rule: Safe Harbors for Certain cybersecurity technology or related protective measure because a Electronic Prescribing and Electronic Health Records Arrangements Under the Anti-Kickback services. We note that, because we do cybersecurity breach in the donor’s Statute, 71 FR 45110, 45128 (Aug. 8, 2006) not propose to restrict the scope of system can have a devastating impact on (excluding pharmaceutical, device, DMEPOS protected recipients under this safe the donor and anyone who maintains a manufacturers, or other entities that indirectly harbor, we believe patients would be connection to the donor’s systems. furnish items and services used in the care of patients both because ‘‘[our] enforcement included as protected recipients. Meanwhile, electronic health record experience demonstrates that unscrupulous Donations to patients, just like other donations facilitate the exchange of manufacturers have offered remuneration in the recipients, would only be protected if clinical information between the form of free goods and services to induce referrals they precisely met all conditions of the of their products’’ and because they lack ‘‘a direct recipient referral source and the donor and central patient care role that justifies safe safe harbor. As discussed previously, and, thus, present a greater risk that one harbor protection for the provision of electronic donations of multifunctional technology purpose of the donation is for the donor health records technology’’). or services would not be protected

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because all cybersecurity donations report, donations of cybersecurity degree of harm and likelihood of harm must be necessary and used technology or services to other occurring.62 predominately to implement and individuals or entities could not be Risk assessments are a key component maintain effective cybersecurity. included as an administrative expense to developing effective organization- We anticipate that donations to on the hospital’s cost report. wide risk management for information patients would be more limited than security. We believe that risk donations to healthcare providers and 6. Alternative Proposed Condition for assessments conducted consistent with suppliers (e.g., anti-malware tools). Protection of Cybersecurity Hardware industry standards would provide a However, we solicit comments on what We also propose and solicit comments reasonable basis for donors to identify types of cybersecurity technology or on an alternative approach that would risks and threats to their organizational services a donor might anticipate giving add an additional, optional safeguard to information security that need to be to a patient, whether we would need the proposed cybersecurity safe harbor. mitigated by donating cybersecurity additional or different safeguards when This alternative approach would protect hardware to other entities. Additionally, a patient is the recipient, and whether cybersecurity hardware donations if the donations that are made in response to patients should be protected recipients parties choose to meet an additional risk assessments are likely to meet the at all under the safe harbor. More condition, along with the other five purpose of this safe harbor that specifically, we solicit comments on conditions proposed at 1001.952(jj)(1)– donations are necessary and used whether we should include additional (5). Under this alternative proposal, a predominantly to implement and conditions for donations of protected donation could also include maintain effective cybersecurity. Under cybersecurity technology services to cybersecurity hardware that a donor has this proposal, a donor would perform or patient recipients that are similar to the determined is reasonably necessary have an existing risk assessment for its beneficiary inducements CMP’s based on a risk assessment of its own own organization, and would require a exceptions under 42 CFR 1003.110. For organization and that of the potential potential recipient to have, perform, or example, we are considering whether recipient. obtain a risk assessment, that would cybersecurity technology or service The goal of this alternate proposal is provide a reasonable basis to determine donations to patients should not be to provide donors and recipients more that the donated cybersecurity hardware offered as part of any advertisement or flexibility regarding the types of is needed to address a risk or threat solicitation or not be tied to the cybersecurity donations that are identified by a risk assessment. provision of other items or services protected, while also adding an Consistent with the HCIC Task Force reimbursed in whole or in part by the additional safeguard to further ensure Report and comments we received in Medicare program under Title VIII or a that the donation is necessary and used response to the OIG RFI, we recognize State health care program (as defined in predominantly to implement and that ‘‘[m]any organizations cannot afford section 1128(h) of the Act). maintain effective cybersecurity. to retain in-house information security personnel, or designate an information 4. Written Agreement We believe this alternative proposal builds on existing legal requirements technology (IT) staff member with At 1001.952(jj)(4), we propose to and best practices related to information cybersecurity as a collateral duty.’’ require that the donor and recipient security generally and the healthcare Understanding that resource constraint, enter into a signed, written agreement. industry more specifically. For example, one goal of this safe harbor is to increase While we do not interpret this condition the HHS Office for Civil Rights the avenues available for all healthcare to require every item of cybersecurity explained that conducting a risk organizations to improve their technology and every potential service analysis is the first step in identifying cybersecurity practices. We believe to be specified in the agreement, we and implementing safeguards that protecting a cybersecurity hardware propose that the written agreement must donation based on the risk assessment comply with and carry out the standards include a general description of the of a recipient would further the goal of and implementation specifications in cybersecurity technology and services to increasing the avenues available to the HIPAA Security Rule.61 More be provided over the term of the improve cybersecurity for all healthcare generally, NIST Special Publication agreement and a reasonable estimate of entities, regardless of their available 800–30, which does not directly apply the value of the donation. In addition, resources. to the healthcare industry, but to the extent the parties share any We recognize that a potential represents industry standards for financial responsibility for the cost of recipient with limited resources and information security practices, explains the cybersecurity technology and cybersecurity experience may not be that the purpose of a risk assessment is services, those financial terms, able to conduct or pay for its own risk to inform decision makers and support including the amount of the assessment. As noted above, one risk responses by identifying: (i) contribution, must be memorialized in cybersecurity service that would be a Relevant threats to organizations or the written agreement. We solicit protected donation under the proposed threats directed through organizations comments on the conditions proposed safe harbor is a risk assessment. Under against other organizations; (ii) here, as well as whether additional or the alternative proposal, donors could vulnerabilities both internal and different terms should be required in a then make additional cybersecurity external to organizations; (iii) impact written agreement. hardware donations that are reasonably (i.e., harm) to organizations that may based on the risk assessments of the 5. Prohibition on Cost Shifting occur given the potential for threats donor and recipients. At 1001.952(jj)(5), we propose to exploiting vulnerabilities; and (iv) We recognize that risk assessment prohibit donors from shifting the costs likelihood that harm will occur. The practices vary across the healthcare of any cybersecurity donations to end result is a determination of risk, industry and may be depend on the size Federal health care programs. For which is typically a function of the example, under this proposed 62 NIST Special Publication 800–30 Revision 1, 61 condition, while a hospital’s own HIPAA for Professionals, Guidance on Risk Guide for Conducting Risk Assessments (Sept. Analysis (Mar. 2017), available at https:// 2012), available at https://nvlpubs.nist.gov/ cybersecurity costs could be an www.hhs.gov/hipaa/for-professionals/security/ nistpubs/legacy/sp/nistspecialpublication800- administrative expense on its cost guidance/guidance-risk-analysis/index.html. 30r1.pdf.

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and sophistication of any provider or ‘‘small provider of services or small is a difficult task. We solicit comment entity. We solicit comments on this supplier’’ as set forth in the on whether the proposed safe harbor alternative proposal to understand requirements related to the electronic establishes the right balance and if not, whether entities that are potential submission of Medicare claims at 42 request comments that recommend donors or recipients already conduct CFR 424.32. We also are considering for specific changes to do so. Commenters risk assessments that would provide a the final rule and solicit comments on should consider the safe harbor in its reasonable basis to determine that a whether other subsets of potential entirety, including the proposed cybersecurity hardware donation is recipients, for example critical access conditions, optional deeming provision, reasonable and necessary. We would hospitals, should be exempted from the alternate condition, and definitions propose to define ‘‘risk assessment’’ 15-percent contribution requirement when commenting on this issue. We are based on NIST Special Publication 800– because it would impose a significant especially interested in comments from 30 and solicit comment on whether that financial burden on the recipient. healthcare providers because they both definition is sufficient for this Additionally, if a contribution bear the cybersecurity risks and likely cybersecurity donation safe harbor. requirement is included in the final have relevant compliance experience Additionally, we solicit comments on rule, we are considering exempting with other safe harbors. whether this proposal should contributions for the upgrades, updates, To facilitate specific comments on incorporate specific standards or or patches of remuneration that was this issue, we ask the following requirements, such as NIST Special previously donated. Based on our questions: Does the proposed condition Publication 800–30. experience with the electronic health at 1001.952(jj)(1) permit the donation of We are considering for the final rule, records arrangements safe harbor, we the right types of cybersecurity and seek comment on, adding recognize the practical challenges in technology and services that could safeguards to this alternate proposal. For collecting contributions from recipients meaningfully improve the cybersecurity instance, we are considering limiting for minor upgrades, updates, and posture of the healthcare industry while the additional cybersecurity hardware patches that are necessary to keep the also ensuring that the donated permitted under the alternative proposal donated technology compliant with new technology and services do not pose to certain kinds of hardware. We are security policies. undue risk of improperly influencing interested in comments, particularly If we were to finalize this alternate referrals? If not, what other standard or from providers, that explain what types proposal, we would modify the limitation would be appropriate to of hardware would be necessary for proposed safe harbor by adding new strike the right balance between effective cybersecurity under this conditions and a definition in the safe cybersecurity risks and program alternate proposal. We note that because harbor. Primarily, we would add a new integrity risks? Does excluding this alternate proposal builds upon the condition that would require a donor to hardware from the definition of proposed conditions at proposed perform or have an existing risk ‘‘technology’’ further our aim of 1001.952(jj)(1)–(5), multifunctional assessment for its own organization, and balancing cybersecurity risks with the hardware still would be prohibited require a potential recipient to have, program integrity risks? If not, what because it would not be necessary and perform, or obtain a risk assessment, other conditions should we impose to predominantly used to implement and that provides a reasonable basis to limit the value of remuneration maintain effective cybersecurity, as determine that the donated protected by the proposed safe harbor, required under proposed 1001.952(jj)(1). cybersecurity hardware is needed to so it does not improperly influence If the donation includes hardware, we address a risk or threat identified by the referrals? For example, should the safe are also considering requiring a donor’s and recipient’s risk assessments. harbor impose a monetary value limit contribution from the recipient, similar We also would add definitions of on the total amount of donations that a to the electronic health records safe hardware and risk assessment in donor can make to a recipient or should harbor at 1001.952(y)(11), and we are proposed 1001.952(jj)(6). the safe harbor require the recipient to considering requiring the contribution contribute to the costs of a donation 7. Solicitation of Comments amount to be 15 percent. We are once the value has exceeded certain interested in comments on this The goal of the proposed safe harbor monetary thresholds? approach, and whether we should is to help improve the cybersecurity I. Electronic Health Records consider other contribution amounts posture of the healthcare industry by (1001.952(y)) instead, such as 5 percent, or 20 or 30 removing a real or perceived barrier. To percent. achieve this goal, we must appropriately On August 8, 2006, we published a If we add this contribution balance the risk of cybersecurity threats final rule (the 2006 Final EHR Safe requirement, we are considering against risks associated with permitting Harbor Rule) that, among other things, excepting small and rural practices, and parties to donate valuable technology finalized a safe harbor (the EHR safe we are interested in comments on this and services. In doing so, we recognize harbor) at 42 CFR 1001.952(y) protecting approach. Relatedly, we solicit that cyberattacks are ubiquitous, certain arrangements involving the comments on how ‘‘small or rural dynamic, potentially funded by nation- donation of interoperable electronic practices’’ should be defined. For states or well-funded criminal health records software or information example, we solicit comments on enterprises, and can have consequences technology and training services. The whether ‘‘rural practices’’ should be to beneficiary health, safety, and privacy EHR safe harbor was initially scheduled defined as those located in rural areas, that are difficult to mitigate. To help to sunset on December 31, 2013. as defined in the safe harbor for local improve the cybersecurity hygiene of On December 27, 2013, we published transportation at 42 CFR 1001.952(bb). the healthcare industry without a final rule (the 2013 Final EHR Safe We also solicit comments on whether comprising program integrity, it is Harbor Rule) modifying the EHR safe ‘‘small practices’’ should be defined as important that we strike the right harbor by, among other things, those in medically underserved areas, as balance. extending the expiration date of the safe designated by the Secretary under We drafted the proposed safe harbor harbor to December 31, 2021; excluding section 330(b)(3) of the Public Health with this aim in mind, but we recognize laboratory companies from the types of Service Act, or defined similarly to a that appropriately balancing these risks entities that may donate electronic

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health records items and services under interoperable condition in with protections for privacy).65 Since the safe harbor; and updating the 1001.952(y)(2) by deeming software to that time, significant legislative, provision under which electronic health be interoperable if it is certified under regulatory, policy, and other Federal records software is deemed the certification program. In the 2013 Government action defined this problem interoperable. Final EHR Safe Harbor Rule we further (now commonly referred to as The present proposed rule sets forth modified the deeming provision to ‘‘information blocking’’) and established certain proposed changes to the EHR reflect developments in the certification penalties for certain types of individuals safe harbor. CMS is proposing almost program and track ONC’s anticipated and entities that engage in information identical changes to the physician self- regulatory cycle. By relying on the blocking. Most notably, the 21st Century referral law electronic health records certification program and related Cures Act added section 3022 of the exception elsewhere in this issue of the updates of criteria and standards, we PHSA, known as ‘‘the information Federal Register. We attempted to stated that the deeming provision would blocking provision,’’ which defines ensure as much consistency as possible meet ‘‘our objective of ensuring that conduct by healthcare providers, health between our proposed safe harbor software is certified to the current IT developers of certified health IT, changes and CMS’s proposed exception required standard of interoperability exchanges, and networks that changes, despite the differences in the when it is donated.’’ 64 We propose to constitutes information blocking. respective underlying statutes. Because retain this general construct for the Section 3022(a)(1) of the PHSA defines of the close nexus between this updated safe harbor. However, we ‘‘information blocking’’ in broad terms, proposed rule and CMS’s proposed rule, propose two textual clarifications to this while section 3022(a)(3) authorizes and we may consider comments submitted provision. Current language specifies charges the Secretary to identify in response to CMS’s proposed rule and that the software is ‘‘deemed to be reasonable and necessary activities that take additional actions when crafting interoperable if, on the date it is do not constitute information blocking. our final rule. provided to the recipient, it has been The ONC NPRM would implement the 1. Interoperability certified by a certifying body . . . .’’ We statutory definition of ‘‘information propose to modify this language to blocking,’’ define certain terms related The conditions at 1001.952(y)(2) and clarify that, on the date the software is to the statutory definition of (y)(3) require donated items and provided, it ‘‘is’’ certified. In other ‘‘information blocking,’’ and proposes services to be interoperable and prohibit words, the certification must be current seven exceptions to the information the donor (or someone acting on the 66 as of the date of the donation, as blocking definition. donor’s behalf) from taking action to opposed to the software having been We propose modifications to limit the interoperability of the donated certified at some point in the past but 1001.952(y)(3) to recognize these item or service. We are proposing no longer maintaining certification on significant updates since the 2013 Final changes that impact 42 CFR the date of the donation. We also EHR Safe Harbor Rule. Specifically, we 1001.952(y)(2) and (3) based on the 21st propose to remove reference to propose aligning the condition at Century Cures Act (Cures Act) and the ‘‘editions’’ of certification criteria to 1001.952(y)(3) with the proposed Office of the National Coordinator for align with proposed changes to the information blocking definition and Health Information Technology (ONC), certification program. We solicit related exceptions in 45 CFR part 171. HHS Notice of Proposed Rulemaking comments on these clarifications. We note that the EHR safe harbor ‘‘21st Century Cures Act: conditions, while not using the term Interoperability, Information Blocking, As we describe in more detail below, ‘‘information blocking,’’ already include and the ONC Health IT Certification however, we are updating the definition concepts similar to those found in the Program’’ (ONC NPRM) that proposes to of ‘‘interoperable.’’ Although this 21st Century Cures Act’s prohibition on implement key provisions in Title IV of revised definition would not require a information blocking. For example, we the Cures Act.63 Among other things, textual change to this paragraph (y)(2), were concerned about donors (or those the ONC NPRM proposes conditions the revision would impact the deeming on the donor’s behalf) taking steps to and maintenance of certification provision, and we solicit comments limit the interoperability of donated requirements for health information regarding this update. software to lock in or steer referrals, technology (health IT) developers under 3. Information Blocking which is prohibited by the anti-kickback the ONC Health IT Certification Program statute.67 These proposed modifications (certification program) and reasonable The current condition at are not intended to change the purpose and necessary activities that do not 1001.952(y)(3) prohibits the donor (or of this condition, but instead further our constitute information blocking for any person on the donor’s behalf) from longstanding goal of preventing abusive purposes of section 3022(a)(1) of the taking any action to limit or restrict the arrangements that lead to information Public Health Service Act (PHSA). use, compatibility, or interoperability of blocking and referral lock-in through These proposed changes, if finalized, the items or services with other updated understandings of those affect the EHR safe harbor conditions at electronic prescribing or electronic concepts established in the 21st Century 1001.952(y)(2), which is known as the health records systems (including, but Cures Act.68 ‘‘deeming provision,’’ and not limited to, health information 1001.952(y)(3) related to interoperability technology applications, products, or 65 78 FR 79213 (Dec. 27, 2013). and ‘‘data lock-in.’’ services). As explained in the 2006 66 84 FR at 7602–05. Final EHR Safe Harbor Rule and 67 See Implementation of the 21st Century Cures 2. Deeming reaffirmed in the 2013 Final EHR Safe Act: Achieving the Promise of Health Information Technology Before the S. Comm. On Health, The deeming provision provides Harbor Rule, 1001.952(y)(3) has been Education, Labor, & Pensions, 115th Cong. 1 (2017) certainty to parties seeking protection of designed to: (i) Prevent the misuse of (statement of James Cannatti, Senior Counselor for the EHR safe harbor by providing an the safe harbor that results in data and Health Information Technology HHS OIG). optional method of ensuring that referral lock-in and (ii) encourage the 68 We recognize that the ONC NPRM is not a final free exchange of data (in accordance rule and is subject to change. However, we base our donated items or services meet the proposal on both the statutory language and the language in ONC’s proposed rule for purposes of 63 84 FR 7424 (Mar. 4, 2019). 64 78 FR 79201, 79204 (Dec. 27, 2013). soliciting public input on our proposals.

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We note that health plans, which are software and services have always been alone cybersecurity safe harbor, we protected donors under the EHR safe protected under this safe harbor,71 and solicit comments on whether it harbor, may not be subject to the to more broadly protect the donation of necessary to modify the EHR safe harbor information blocking provisions of the software and services related to to expressly include cybersecurity. 21st Century Cures Act or the ONC cybersecurity. Currently, the safe harbor 5. The Sunset Provision NPRM. Nevertheless, health plans that protects electronic health records seek the protection of this safe harbor do software or information technology and The EHR safe harbor originally was so voluntarily. We note that the training services necessary and used scheduled to sunset on December 31, definition of ‘‘information blocking’’ at predominantly to create, maintain, 2013. In adopting this condition of the PHSA section 3022(a)(1) applies a transmit, or receive electronic health EHR safe harbor, we acknowledged in different knowledge standard to health records. We propose to modify this the 2006 Final EHR Safe Harbor Rule IT developers of certified health IT, language to include certain ‘‘that the need for a safe harbor for health information networks, and health cybersecurity software and services that donations of electronic health records information exchanges than it does to ‘‘protect’’ electronic health records. technology should diminish healthcare providers. A healthcare In the 2006 Final EHR Safe Harbor substantially over time as the use of provider engages in a practice of Rule, we emphasized the requirement such technology becomes a standard information blocking if such a provider that software, information technology, and expected part of medical practice.’’ ‘‘knows that such practice is and training services donated must be In the 2013 notice of proposed unreasonable and is likely to interfere ‘‘closely related to electronic health rulemaking for an amendment to the with, prevent, or materially discourage records’’ and that the ‘‘electronic health EHR safe harbor (2013 Proposed Rule), access, exchange, or use of electronic records functions must be we acknowledged that while electronic health information.’’ 69 The EHR safe predominant.’’ We stated that ‘‘[t]he health record technology adoption had harbor primarily applies to healthcare core functionality of the technology risen dramatically, use of such providers due to the limitations on the must be the creation, maintenance, technology had not yet been universally types of donors permitted under transmission, or receipt of individual adopted nation-wide. Because 1001.952(y)(1). Therefore, most donors patients’ electronic health records,’’ but, continued electronic health record under the EHR safe harbor would be recognizing that the electronic health technology adoption remained an subject to the information blocking records software is commonly integrated important Departmental goal, we knowledge standard at section with other features, we also stated that solicited comments regarding an 3022(a)(1)(B)(ii) of the PHSA. Rather arrangements in which the software extension of the safe harbor. In response than have different conditions for package included other functionality to those comments, in the 2013 Final healthcare providers and health plans, related to the care and treatment of EHR Safe Harbor Rule we extended the we believe it is reasonable to have one individual patients would be protected. sunset date of the safe harbor to condition that applies the same Under our proposal, the same criteria December 31, 2021, a date that information blocking knowledge would apply to cybersecurity software corresponds to the end of the electronic standard to all parties who voluntarily and services: The predominant purpose health record Medicaid incentives. We use the safe harbor to protect donations of the software or service must be stated our continued belief that as of EHR items and services. For purposes cybersecurity associated with the progress on this goal is achieved, the of donations under this safe harbor, we electronic health records. need for a safe harbor for donations propose to apply the knowledge We note that we also are proposing a should continue to diminish over time. standard articulated in the PHSA at new safe harbor specifically to protect Since publication of the 2013 Final EHR section 3022(a)(1)(B)(ii) as applicable to donations of cybersecurity technology Safe Harbor Rule, however, numerous both providers and health plans, and we and related services. As proposed, the commenters have urged us to extend or seek comments on this approach. cybersecurity safe harbor is broader and make permanent the safe harbor at 42 Additionally, the current condition at includes fewer conditions than the EHR CFR 1001.952(y). Specifically, 1001.952(y)(3), as adopted in the 2006 safe harbor. However, we are proposing commenters have suggested this Final EHR Safe Harbor Rule 70 was to expand the EHR safe harbor to modification in response to OIG’s intended to prevent donors, including expressly include cybersecurity annual Solicitation of New Safe Harbors health plans, from donating EHR software and services so that it is clear and Special Fraud Alerts, and also in software and then engaging in practices that an entity donating electronic health response to the OIG RFI and the CMS of information blocking that would limit records software and providing training RFI. the interoperability of the donated and other related services may also While we acknowledge that items, notwithstanding that we did not donate related cybersecurity software widespread adoption of electronic use that exact terminology. As a result, and services to protect the electronic health record technology, though not we do not believe this proposed health records. For clarity, we also universal, largely has been achieved, we modification places any additional propose to incorporate a definition of no longer believe that once this goal is burden on health plans that voluntarily ‘‘cybersecurity’’ in this safe harbor that achieved the need for a safe harbor for seek to protect donations. We solicit mirrors the definition we propose in the donations of such technology will comments on aligning the condition at stand-alone cybersecurity safe harbor. A diminish over time or completely 1001.952(y)(3) with the proposed party seeking safe harbor protection disappear. New entrants into medical information blocking definition in 45 needs to comply with the requirements practice, coupled with aging EHR CFR part 171. of only one safe harbor. We solicit technology at existing practices and the comments on this approach. In emergence of new and better 4. Cybersecurity particular, with the addition of a stand- technology, necessitate the availability We propose to amend the safe harbor of this safe harbor to achieve the to clarify that certain cybersecurity 71 For instance, a secure log-in or encrypted Department’s policy objectives. Our access mechanism included with an EHR system or experience indicates that the continued EHR software suite would be cybersecurity features 69 PHSA § 3022(a)(1)(B)(ii). of the EHR that are protected under the existing availability of the safe harbor plays a 70 71 FR 45136. EHR safe harbor. part in achieving the Department’s goal

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of promoting electronic health records throughout the Cures Act and that is safe harbor and the final information technology adoption by providing central to the definition of blocking regulations. certainty with respect to the cost of ‘‘interoperability’’ at PHSA § 3000(9) We believe the statutory definition of electronic health records items and and the information blocking provision ‘‘interoperability’’ includes similar services for recipients, and by at PHSA § 3022. Additionally, the ONC concepts to the existing definition of encouraging adoption by physicians NPRM proposes a definition of ‘‘interoperable’’ in the note to paragraph who are new entrants into medical ‘‘electronic health information.’’ 72 We (y) (e.g., the ability to securely exchange practice or have postponed adoption have based the proposed modifications, data across different systems or based on financial concerns regarding in part, on ONC’s proposed definition of technology). Two new concepts in the the ongoing costs of maintaining and ‘‘electronic health information’’ to statutory definition are included in the supporting an electronic health records reflect more modern terminology used proposed modification: (i) Interoperable system. Ongoing protection of electronic to describe the type of information that means the ability to exchange electronic health record items and services is part of an electronic health record. health information ‘‘without special donations would further new We solicit comments on this updated effort on the part of the user’’ and (ii) Department priorities and policies by definition. interoperable expressly does not mean allowing donors and recipients to In the note to paragraph (y) under information blocking.74 As a practical ensure new technology is adopted that, 1001.952, the existing definition of matter, we believe these two concepts for example, may improve the ‘‘interoperable’’ means ‘‘able to are not substantively different from the interoperability of electronic health communicate and exchange data existing definition and only reflect an information. accurately, effectively, securely, and updated understanding of We are proposing to eliminate the consistently with different information interoperability and related sunset provision at 42 CFR technology systems, software terminology. We solicit comments on 1001.952(y)(13). As an alternative to this applications, and networks, in various the proposed definition that would align proposed elimination of the sunset settings, and exchange data such that the definition of ‘‘interoperable’’ with provision, we are considering an the clinical or operational purpose and the statutory definition of extension of the sunset date for the final meaning of the data are preserved and ‘‘interoperability.’’ rule. We seek comment on whether we unaltered.’’ As explained in the 2006 We also are considering linking the should select a later sunset date instead Final EHR Safe Harbor Rule, this definition of ‘‘interoperable’’ with the of making the safe harbor permanent, definition was based on 44 U.S.C. proposed definition of and if so, what that date should be. 3601(6) (pertaining to the management ‘‘interoperability’’ at 45 CFR 170.102 in and promotion of electronic the ONC NPRM 75 if that proposed 6. Definitions Government services) and several definition is finalized. We note that We are proposing to modify the comments we received in response to ONC’s proposed regulatory definition of definitions of ‘‘interoperable’’ and the proposed rule that referenced ‘‘interoperability’’ matches the statutory ‘‘electronic health record.’’ In the 2006 emerging industry definitions and definition. However, linking the ONC Final EHR Safe Harbor Rule, we standards related to interoperability.73 regulatory definition of finalized these definitions based on We propose to update the definition ‘‘interoperability’’ may allow for then-current terminology, the emerging of the term ‘‘interoperable’’ to align with additional, future updates to be adopted standards for electronic health records, the statutory definition of by reference in the EHR safe harbor. We and other resources cited by ‘‘interoperability’’ added by the Cures solicit comments on this proposal. commenters. The following proposed Act to Section 3000(9) of the PHSA and In the alternative, we are considering modifications to these definitions are as proposed in the ONC NPRM. We revising our regulations to eliminate the largely based on terms and provisions in propose modifications to match the term ‘‘interoperable’’ and instead the Cures Act that update or supersede statutory definition and the ONC NPRM incorporate the term ‘‘interoperability’’ terminology we used in the 2006 Final definition of ‘‘interoperability.’’ and define this term by reference to EHR Safe Harbor Rule. Consistent with PHSA § 3000(9), we section 3000(9) of the PHSA and In the current note to paragraph (y) propose to define ‘‘interoperable’’ to proposed in 45 CFR part 170. Under this under 1001.952, ‘‘electronic health mean able to: ‘‘(i) securely exchange alternative proposal, we would revise record’’ is defined as ‘‘a repository of data with, and use data from other § 1001.952(y)(2) to require donations of consumer health status information in health information technology without software to meet interoperability computer processable form used for special effort on the part of the user; (ii) standards established under Title XXX clinical diagnosis and treatment for a allow for complete access, exchange, of the PHSA and its implementing broad array of clinical conditions.’’ We and use of all electronically accessible regulations. Software would be deemed propose to modify the definition of health information for authorized use to meet interoperability standards if, on ‘‘electronic health record’’ to mean: ‘‘a under applicable State or Federal law; the date it is provided to the recipient, repository of electronic health and (iii) does not constitute information it is certified by a certifying body information that: (A) is transmitted by blocking as defined in 45 CFR part 171.’’ authorized by ONC to health or maintained in electronic media; and The only difference between the information technology certification (B) relates to the past, present, or future statutory definition of ‘‘interoperability’’ criteria identified in 45 CFR part 170. health or condition of an individual or and the definition in the ONC NPRM is We seek comment regarding whether the provision of healthcare to an the reference to the regulatory definition using terminology identical to the PHSA individual.’’ of ‘‘information blocking’’ in 45 CFR and proposed ONC regulations would The proposed revision to the part 171, which we propose to adopt. facilitate compliance with the definition of ‘‘electronic health record’’ We will work closely with ONC as they requirements of the EHR safe harbor and is not intended to substantively change finalize the information blocking rule to reduce any regulatory burden resulting the scope of protection. We are ensure definitions align across the EHR from the differences in the agencies’ proposing these modifications to this definition to reflect the term ‘‘electronic 72 84 FR 7424, 7513 (Mar. 4, 2019). 74 PHSA § 3000(9); 42 U.S.C. 300jj(9). health information’’ that is used 73 71 FR 45110, 45126 (August 8, 2006). 75 84 FR 7424, 7589 (Mar. 4, 2019).

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different terminology related to the should eliminate or reduce the 15- b. Replacement Technology singular concept of interoperability. percent contribution requirement as In the 2013 Final EHR Safe Harbor Finally, for ease of reference, we applied to a specific subset of recipients Rule, we highlighted one commenter’s propose to amend the safe harbor by such as small or rural practices. In assertion that ‘‘the prohibition on moving the undesignated definitions set particular, we solicit comments on how donating equivalent technology forth in the note to paragraph (y) to a ‘‘small or rural practices’’ should be currently included in the safe harbor new paragraph (y)(14). defined. For example, we solicit locks physician practices into a vendor, 7. Additional Proposals and comments on whether ‘‘rural practices’’ even if they are dissatisfied with the Considerations should be defined as those located in technology, because the recipient must rural areas, as defined in the safe harbor choose between paying the full amount a. 15-Percent Recipient Contribution for local transportation at 42 CFR for a new system and continuing to pay In the 2006 Final EHR Safe Harbor 1001.952(bb). We also solicit comments 15 percent of the cost of the substandard Rule, we agreed with a number of on whether ‘‘small practices’’ should be system.’’ The same commenter asserted commenters who suggested that cost defined as those in medically that ‘‘the cost difference between these sharing is an appropriate method to underserved areas, as designated by the two options is too high and effectively address some of the fraud and abuse Secretary under section 330(b)(3) of the locks physician practices into electronic risks inherent in unlimited donations of Public Health Service Act, or defined health record technology vendors.’’ In technology. Accordingly, we similarly to a ‘‘small provider of the 2013 Final EHR Safe Harbor Rule, incorporated a requirement into 42 CFR services or small supplier’’ as set forth we responded that ‘‘we continue to 1001.952(y) that the recipient pays 15 in the requirements related to the believe that items and services are not percent of the donor’s cost of the electronic submission of Medicare ‘‘necessary’’ if the recipient already technology. We noted in the 2006 Final claims at 42 CFR 424.32. We also are possesses the equivalent items or EHR Safe Harbor Rule that ‘‘the 15 considering for the final rule and solicit services. We noted that providing percent cost sharing requirement is high comments on whether other subsets of equivalent items and services confers enough to encourage prudent and robust potential recipients, for example critical independent value on the recipient and electronic health records arrangements, access hospitals, should be exempted noted our expectation that ‘‘physicians without imposing a prohibitive financial from the 15-percent contribution would not select or continue to use a burden on recipients.’’ Moreover, we substandard system if it posed a threat because it would impose a significant stated, ‘‘this approach requires to patient safety.’’ financial burden on the recipient. recipients to contribute toward the We appreciate that advancements in benefits they may experience from the Second, and in the alternative, we are electronic health records technology are adoption of interoperable electronic considering reducing or eliminating the continuous, rapid, and sometimes health records (for example, a decrease 15-percent contribution requirement in prohibitively expensive for the in practice expenses or access to this safe harbor for all recipients. We purchaser of such technology, and that incentive payments related to the solicit comments regarding the impact in some situations, replacement adoption of health information this might have on the use and adoption technology is appropriate. We are technology).’’ of electronic health records technology, proposing to delete the condition that We are aware that the 15-percent and any attendant risks of fraud and prohibits the donation of equivalent contribution requirement has proven abuse. We are interested in specific items or services at current burdensome to some recipients and may examples of the prohibitive costs 1001.952(y)(7) to allow donations of act as a barrier to adoption of electronic associated with the 15-percent replacement electronic health records health records technology. We contribution requirement, both for the technology. We specifically seek understand that this burden may be initial donation of electronic health comment as to whether deleting this particularly acute for small and rural records technology, and subsequent condition is necessary, and in what practices that cannot afford the upgrades and updates to the technology. situations replacement technology contribution. We also recognize that would be appropriate. We further solicit Finally, if we retain a 15-percent applying the 15-percent contribution comment as to how we might safeguard contribution requirement or reduce that requirement to upgrades and updates to against situations where donors contribution requirement for some or all electronic health record technology is inappropriately offer, or recipients recipients, we are considering restrictive and cumbersome and inappropriately solicit, unnecessary modifying or eliminating the similarly may act as a barrier. technology instead of upgrading their We are not proposing specific contribution requirement for updates to existing technology for appropriate amendments to the 15-percent previously donated EHR software or reasons. contribution requirement at this time, technology. We solicit comments on this and we are considering retaining this approach as well as what such a c. Protected Donors requirement without change in the final modification should entail. For We are considering expanding the rule. However, we also are considering example, we are considering requiring a group of entities that may be protected and solicit comments on the three contribution for the initial investment donors under the EHR safe harbor, for alternatives to the existing requirement only, as well as any ‘‘new’’ modules, but purposes of the final rule. As as outlined below. We solicit comment not requiring a contribution for any background, in the preamble to the 2006 on each of the alternatives as separate update of the software already Final EHR Safe Harbor Rule for the EHR proposed modifications to the purchased. We solicit comments on safe harbor, we were mindful that broad contribution requirement. these alternatives, or another similar safe harbor protection would First, for purposes of the final rule, we alternative that would still involve some significantly further the important are considering eliminating or reducing contribution but could reduce the public policy goal of promoting the percentage contribution required for uncertainty and administrative burden electronic health records, and thus small or rural practices. We specifically associated with assessing a contribution concluded that the safe harbor should seek comment on whether and how we for each update. protect any donor that is an individual

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or entity that provides patients with would avail themselves of a broadening opportunity to provide financial healthcare items or services covered by of the protected donors. In addition, we incentives in exchange for referrals. a Federal health care program and specifically solicit comments regarding To provide the healthcare industry submits claims or requests for payment the removal of this restriction and enhanced flexibility to undertake for those items or services (directly or whether and how removal would innovative arrangements, we are pursuant to reassignment) to Medicare, impact the widespread adoption of proposing to revise the safe harbor to Medicaid, or other Federal health care electronic health records technology as remove the requirement at 42 CFR programs (and otherwise meets the safe well as comments regarding any 1001.952(d)(5) that the ‘‘aggregate’’ harbor conditions).76 Notwithstanding attendant risks of fraud and abuse. amount of compensation paid over the this conclusion, we indicated that ‘‘[w]e term of the agreement must be set forth remain concerned about the potential J. Personal Services and Management in advance. To mitigate the risk of for abuse by laboratories, durable Contracts and Outcomes-Based parties to the agreement periodically medical equipment suppliers, and Payment Arrangements (1001.952(d)) adjusting the compensation to reward others’’ and noted that ‘‘[w]e intend to referrals or unnecessary utilization, the We propose to modify the existing monitor the situation. If abuses occur, proposed modification to the safe harbor we may revisit our determination.’’ 77 safe harbor for personal services and would require the parties to an In the 2013 Final EHR Safe Harbor management contracts at 42 CFR arrangement to determine the Rule, we finalized a proposal to remove 1001.952(d) to: (i) Substitute, for the arrangement’s compensation laboratory companies from the scope of requirement that aggregate methodology in advance of the initial protected donors under the safe harbor compensation under these agreements payment under the arrangement. In to address, among other things, be set in advance, a requirement that the addition, under (d)(1) of our proposal, potential abuse identified by some of methodology for determining the safe harbor would continue to the commenters involving potential compensation be set in advance; (ii) require that the compensation reflect recipients conditioning referrals for eliminate the requirement that, if an fair market value, be commercially laboratory services on the receipt of, or agreement provides for the services of reasonable, and not take into account redirecting referrals for laboratory an agent on a periodic, sporadic or part- the volume or value of referrals or services following, donations from time basis, the contract must specify the business otherwise generated between laboratory companies, and general schedule, length, and the exact charge the parties. misuse of donations by donors to secure for such intervals; (iii) create a new We anticipate this proposal would referrals. paragraph (d)(2) to protect certain more closely align this safe harbor with We remain concerned about the outcomes-based payments, as defined the personal service arrangements potential for fraud and abuse by certain below; and (iv) to make certain exception to the physician self-referral donors that we articulated in the 2006 technical changes. These proposals seek law, 42 CFR 411.357(d). Final EHR Safe Harbor Rule and the to modernize the safe harbor and 2. Elimination of Requirement To 2013 Final EHR Safe Harbor Rule. respond to comments in response to the Specify Schedule of Part-Time However, in light of the Department’s RFI that existing safe harbor Arrangements continued objective to advance the requirements present barriers to certain adoption of electronic health records care coordination and value-based We propose to eliminate the technology, particularly as related to the arrangements. requirements set forth at 42 CFR Regulatory Sprint, and in response to 1001.952(d)(3) relating to agreements for certain comments received to the OIG 1. Elimination of Requirement To Set services provided on a periodic, RFI, we are considering expanding the Aggregate Compensation in Advance sporadic, or part-time basis. This scope of protected donors by paragraph of the safe harbor requires The existing safe harbor for personal eliminating or revising the requirement contracts that provide for services on services and management contracts in 42 CFR 1001.952(y)(1)(i) that such a basis to specify ‘‘exactly the protected donors be limited to those requires that such agreements be for a schedule of such intervals, their precise who ‘‘submit[ ] claims or requests for term of at least 1 year, and that the length, and the exact charge for such payment, either directly or through aggregate compensation be set in intervals.’’ Removing this requirement reassignment, to the Federal health care advance. In addition, the compensation would afford parties additional program.’’ If we were to revise rather must be consistent with fair market flexibility in designing bona fide than eliminate the restriction, we are value in arm’s-length transactions. business arrangements, including care considering broadening it in the final Consistent with our existing safe harbor, coordination and quality-based rule to entities with indirect compensation under personal services arrangements, where parties provide responsibility for patient care. This and management contracts may not be legitimate services as needed. expansion would protect as donors, for determined in a manner that takes into The existing safe harbor requires part- example, entities like health systems or account the volume or value of any time contractual arrangements between accountable care organizations that referrals or business otherwise healthcare providers to specify their neither are health plans nor submit generated between the parties for which timing or duration because of our claims for payment. Certain commenters payment may be made in whole or in concern that such arrangements are to the OIG RFI also recommended part under Medicare, Medicaid or other especially vulnerable to abuse. permitting any risk-bearing entity that Federal health care programs. Also, the Specifically, part-time arrangements participates in an Advanced APM entity aggregate services performed under the could be readily modified based on under the Medicare Quality Payment agreement must not exceed those which changing referral patterns between the Program (QPP) to be a donor. We are are reasonably necessary to accomplish parties. However, we believe that interested in understanding other types the commercially reasonable business existing safeguards under (d)(1) of our of entities and potential donors who purpose of the services.78 The purpose proposal would provide sufficient of these requirements is to limit the safeguards against the manipulation of 76 71 FR 45127. these arrangements to reward referrals, 77 Id. at 45128. 78 42 CFR 1001.952(d)(4), (5) and (7). namely: The term of the arrangement

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must be not less than 1 year; the payments, gainsharing payments, pay- • ‘‘Pay-for-performance arrangement’’ compensation terms must reflect fair for-performance payments, or episodic could be defined to mean a payment market value, be commercially or bundled payments. We are from a principal to an agent (or a payor reasonable, and not take into account considering and solicit comments on to a principal) for the achievement of a the volume or value of any referrals or whether, if we take this approach, we legitimate cost, quality, or operational business otherwise generated between should further define specific types of performance metric (e.g., bonus the parties; and the methodology for payment arrangements that would payment) on behalf of the principal for determining compensation must be set qualify for this safe harbor in the final a specified patient population. in advance. rule. To the extent we further define We anticipate such outcomes-based As with our first proposal, we such arrangements, we are considering payment arrangements would largely anticipate this proposal would more basing potential definitions on mirror, in concept, similar arrangements closely align this safe harbor with the arrangements defined in various used in various Innovation Center personal service arrangements exception Innovation Center models and the models and the Medicare Shared to the physician self-referral law, 42 Medicare Shared Savings Program. Such Savings Program and would, more CFR 411.357(d). terms might include: specifically, encompass examples like • the following: (i) An ACO makes a 3. Proposal To Protect Outcomes-Based ‘‘Shared savings payment’’ could be ‘‘shared savings’’ payment to its member Payments defined to mean a payment from a payor to a principal or the downstream physicians, with such payments We propose to protect outcomes- payment by the principal to the agent of representing a percentage of payor based payment arrangements in certain a share of payor savings realized from savings generated by the ACO as a result circumstances under proposed new the agent’s activities for a specified of its members’ efforts to reduce total paragraph (d)(2) and (d)(3). Our patient population. Shared savings patient care costs and improve quality; proposal is in response to the evolution payments encourage the use of the (ii) where an ACO incurs financial loss of new payment models, such as shared lowest cost service for the patient and is obligated to pay money to its savings, shared losses, episodic population to achieve certain desired payor, a hospital makes ‘‘shared losses’’ payments, gainsharing, and pay-for- health outcomes. payments to the ACO, representing an performance, and recognizes that such • ‘‘Shared losses payment’’ could be agreed upon percentage of the ACO’s arrangements may facilitate care defined to mean a payment from a loss; and (iii) a hospital and group of coordination, encourage provider physicians and post-acute care principal to a payor or from a engagement across care settings, and providers agree collectively to be paid downstream agent to a principal to promote the shift to value. by a payor for an episode of care (e.g., repay the payor for a portion of the inpatient stay and 90 days post- a. Outcomes-Based Payments payor’s losses incurred with respect to discharge) and share among themselves a specific patient population under a We propose to define ‘‘outcomes- the savings or losses generated against a shared savings arrangement when a based payment’’ as payments from a benchmark. In some cases involving principal’s expenditures for the patient principal to an agent that: (i) Reward the reconciliation, the hospital might be population for the applicable agent for improving (or maintaining responsible for sharing any savings performance period exceed specific improvement in) patient or population among its partners; in others, the health by achieving one or more performance benchmarks. • hospital might be responsible for paying outcome measures that effectively and ‘‘Gainsharing payment’’ could be its partners for the services they furnish efficiently coordinate care across care defined to mean a payment from a the patients under the episode. settings; or (ii) achieve one or more principal to an agent to incentivize the As noted previously, our proposed outcome measures that appropriately agent to appropriately reduce healthcare definition of ‘‘outcomes-based reduce payor costs while improving, or costs (other than solely the principal’s payment’’ excludes arrangements that maintaining the improved, quality of internal costs) for a specified patient relate solely to achievement of internal care for patients. population while achieving certain cost savings for the principal. For We further propose that such outcome measures in accordance with a example, outcomes-based payment payments would exclude any payments principal’s arrangement with a payor. arrangements would not include made, directly or indirectly, by a • ‘‘Episodic or bundled payment’’ arrangements that involve sharing in pharmaceutical manufacturer; a could be defined to mean a payment financial risk or gain only as it relates manufacturer, distributor, or supplier of from a payor to a principal or from a to the prospective payment systems for DMEPOS; or a laboratory. Such principal to a downstream agent for an acute inpatient hospitals, home health payments would also exclude any episode of care across care settings for agencies, hospice, outpatient hospitals, payment that relates solely to the a specified patient population. This inpatient psychiatric facilities, inpatient achievement of internal cost savings for could include a retrospective bundled rehabilitation facilities, long-term care the principal. We solicit comments on payment arrangement where actual hospitals, or SNFs. Although potential alternative definitions of the healthcare expenditures of the payor arrangements reimbursed by Federal term ‘‘outcomes-based payment’’ that and principal for the patient population health care programs under the would be consistent with the goals are reconciled against a target price for prospective payment systems may described in the preceding paragraphs an episode of care and a portion of such create internal cost savings for a of this preamble section. For example, payment to the principal may be made provider, the savings under the we are considering for the final rule to the agent or a prospectively arrangement would not accrue to the defining the term by reference to determined bundled payment from the payor. specific types of payments, such as payor to the principal or a portion of Thus, and for example, this safe those described as examples of such payment to the principal made to harbor would not protect an outcomes- outcomes-based payments below. the agent that encompasses all based payment arrangement between a Examples of outcomes-based payment healthcare services furnished by the hospital and physician group, where the arrangements could include shared principal and agent for the patient parties share financial risk or gain only savings payments, shared losses population during the episode of care. with respect to items or services

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reimbursed to the hospital under the arrangements, there may not be a direct This proposed safe harbor requires Medicare prospective payment system correlation between the level or value of satisfaction of an outcome measure to for acute inpatient hospitals. However, services provided by a particular receive an outcomes-based payment, an outcomes-based payment recipient of payments and that party’s whereas the care coordination arrangement that involves a hospital share of savings or outcomes-based arrangements safe harbor requires and physician group sharing financial payments (e.g., shared savings payments monitoring and assessment related to risk or gain realized across care settings may be distributed on a basis unrelated such outcome measures; and the would be protected (e.g., for a patient’s to actual services provided). While the achievement of outcomes measures is inpatient stay and the 60-day post- two requirements described do not not a prerequisite to the provision or use discharge period), provided all safe expressly require that the outcomes- of in-kind remuneration under the harbor requirements were met. based payment arrangement include the proposed safe harbor at paragraph (ee). provision of services (merely that the Such differences are deliberate and due b. Entities Not Included parties collaborate, and to the extent the to the variations in type and scope of Based on our enforcement and parties’ arrangement includes services, potential remuneration that could be oversight experience and as explained that they be documented), we anticipate exchanged under the respective safe with respect to a similar exclusion in that many arrangements would include harbors. the definition of VBE participant in this a service component. For the proposed outcomes-based proposed rule, we are proposing to payment arrangements amendments to exclude pharmaceutical manufacturers; d. Safe Harbor Conditions the safe harbor, outcome measures must manufacturers, distributors, and Our proposal for outcomes-based relate to improving quality of patient suppliers of DMEPOS; and laboratories payment arrangements includes safe care; appropriately and materially from the proposed safe harbor for harbor conditions, some of which mirror reducing costs to, or growth in outcomes-based payments. As stated program integrity safeguards set forth in expenditures of, payors while previously, we are concerned that these the existing personal services and improving, or maintaining the improved types of entities, which are heavily management contracts safe harbor and quality of care for patients; or both. As dependent upon practitioner some of which are new safeguards an additional safeguard, parties must prescriptions and referrals, might use specific to outcomes-based payment select outcome measures based upon outcomes-based payments primarily to arrangements. As detailed below, our clinical evidence or credible medical market their products to providers and proposed safe harbor conditions are support. patients. based on our experience with these Any outcome measures established As with the proposed definition of a types of arrangements through the pursuant to the parties’ arrangement VBE participant, we are also considering advisory opinion process and the must be measurable and valid, and such for the final safe harbor at development of waivers for CMS measures must promote improved 1001.952(d)(2) excluding pharmacies models. quality or efficiencies in the delivery of (including compounding pharmacies), care, or appropriate cost reduction. PBMs, wholesalers, and distributors. We e. Goal of the Outcomes-Based Payment Measures that simply seek to reward the solicit comments about these proposed Arrangement status quo would not meet this exclusions, as well as illustrative As stated above, all outcomes-based requirement. In some circumstances, we examples of beneficial or problematic payments must be made between or acknowledge that payment for the outcomes-based payment arrangements among parties that are collaborating to maintenance of high quality may be low that might be excluded or included if measurably improve quality of patient risk (e.g., where an established ACO that we finalize some or all of these care (or maintain improvement); has made demonstrable quality exclusions. appropriately and materially reduce improvements over the course of several We also are considering whether to costs to, or growth in expenditures of, years seeks to reward its members to more specifically target the final safe payors while improving or maintaining maintain such improvements). We harbor on outcomes-based payment the improved quality of care; or both. solicit comments on whether, and if so arrangements that further value-based We propose to limit safe harbor how, we should protect such care or care coordination by limiting protection to outcomes-based payment arrangements in the final rule without protection for outcomes-based payment arrangements that foster these two goals protecting arrangements that may be arrangements to VBE participants, as because we believe that such disguised payments for referrals. We are that term is defined in (ee)(12)(vi) of this arrangements may best facilitate care concerned that arrangements that proposed rule. coordination, encourage provider reward the status quo are more likely to engagement across care settings, and be mere payments for referrals. c. Collaboration and Outcomes-Based promote the shift to value. Because we believe the provision of Payments monetary remuneration presents a As proposed, under the safe harbor f. Outcome Measures higher risk of fraud and abuse than the conditions, all outcomes-based We propose to require the parties to provision of in-kind remuneration, we payments must be made between or an arrangement to establish one or more are considering for the final rule, and among parties that are collaborating to specific evidence-based, valid outcome solicit comments on, whether to impose measurably improve quality of patient measures that the agent must satisfy to a different, potentially stricter standard care appropriately and materially receive the outcomes-based monetary for outcome measures in this proposed reduce costs while maintaining quality, remuneration. This requirement largely safe harbor than in the proposed care or both. Moreover, if specific services mirrors the outcome-measure coordination arrangements safe harbor are to be performed, the agreement must requirement in the proposed care at paragraph (ee). To mitigate this risk, specify all of the services the parties coordination arrangements safe harbor we propose to require the parties to perform (or refrain from performing) to at paragraph (ee), and we refer readers regularly monitor and assess the agent’s qualify for the outcomes-based to the discussion of this requirement in performance on each outcome measure payments. We are mindful that with the preamble above. That being said, we under the agreement. This condition is some value-based payment note certain key differences, such as: similar to the assessment and

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monitoring requirements in the care g. Methodology separately from other compensation or coordination arrangements safe harbor To increase transparency of outcomes- whether to substitute the fair market at paragraph (ee). For example, regularly based payment arrangements, we value requirement with a different monitoring and assessing the agent’s propose that the methodology for safeguard that would help ensure that performance could include: (i) determining the aggregate compensation payments are for legitimate Determining whether the arrangement (including any outcomes-based participation in arrangements that drive has measurably improved quality of payments) paid between or among the value-based care and are not merely patient care, (ii) evaluating any parties over the term of the agreement disguised payments for referrals). deficiencies in the delivery of quality is: Set in advance; commercially ii. Volume or Value of Referrals care, and (iii) measuring the agent’s reasonable; consistent with fair market satisfaction of the specific, evidence- value; and not determined in a manner We propose to require that the based, valid outcome measure(s) in the that directly takes into account the compensation methodology for outcomes-based arrangement. volume or value of any referrals or determining the outcomes-based We recognize that outcomes-based business otherwise generated between payment not be determined in a manner payment arrangements may vary in the parties for which payment may be that directly takes into account the structure and strive to provide made in whole or in part by a Federal volume or value of referrals or other flexibility for parties to design health care program. We view these business generated between the parties. We recognize that to incentivize care arrangements to achieve appropriate conditions as essential safeguards to coordination and appropriate behavioral quality of patient care as well as ensuring any outcomes-based payment changes through outcomes-based appropriate efficiency and cost savings arrangement is not a vehicle to reward payments, parties may need to establish goals. However, we are proposing to referrals and generate revenue but rather payment methodologies that at least include an express requirement that reflects a deliberate, collaborative effort indirectly take into account the volume parties rebase the benchmark or by the parties to the arrangement to or value of referrals or other business outcome measure for outcomes-based realize improved outcomes, cost savings generated between the parties. We payments periodically in outcomes- to payors, or both. believe it should be possible to structure based payment arrangements where Because our proposed set-in-advance payments so that they do not directly rebasing is feasible under paragraph and commercially reasonable requirements are consistent with our take into account the volume or value of (d)(2)(vii)(B). By ‘‘rebasing’’ we mean referrals of other business. resetting the benchmark used to existing personal services arrangement determine whether payments will be and management contracts safe harbor h. Writing and Monitoring made to take into account (as proposed to be amended with respect to the set-in-advance We propose that the outcomes-based improvements already achieved. We payment be made between or among anticipate periodic ‘‘rebasing’’ will requirement), we do not address these requirements here in further detail. We parties that are collaborating, pursuant prevent parties from inappropriately to a written agreement signed by the carrying over savings from previous discuss our proposed fair market value and volume or value conditions below. parties in advance of, or performance periods or from receiving contemporaneous with, the payments that do not reflect legitimate i. Fair Market Value commencement of the terms of the achievement of outcomes. We propose that the methodology for outcomes-based payment arrangement. This proposed requirement is determining the aggregate compensation We further propose that the written intended to address a concern that (including any outcomes-based agreement specify all of the services the ‘‘evergreen’’ outcomes-based payment payments) paid between or among the parties would perform for the term of arrangements, in which outcome parties over the term of the agreement the agreement. As detailed in the above measures are not properly monitored or be consistent with fair market value. We section, while this does not mandate assessed, could be used as a vehicle to acknowledge our proposed aggregate that parties to an outcomes-based reward referrals well after the desired fair market value requirement may pose payment arrangement include services, provider behavior change or savings challenges to the extent there are not if services are furnished pursuant to the benchmark has been met. Such industry standards yet developed to parties’ arrangement, such services must perpetual arrangements might also fail determine fair market value for some be documented in writing. to meet the proposed requirement that outcomes-based payment arrangements We further propose to require that the the measures be evidence-based. We are in the value-based care arena and written agreement include the outcome considering for the final rule, and solicit because we understand that some of the measure(s), the evidence-based data or comments on, whether a specific outcomes-based payment arrangements information upon which the parties timeframe within a specified we propose to protect do not necessarily relied to select the outcome measure(s), performance period under the correlate payments with actual services and the schedule for the parties to arrangement (e.g., 3 years) or a shorter performed (and in some cases, reward regularly monitor and assess the (e.g., 1-year) or longer (e.g., 5-year) not performing services). outcome measure(s). In addition to the timeframe is appropriate and realistic Nonetheless, we anticipate the writing requirements set forth in for requiring parties to rebase the industry will evolve and adapt to assess (d)(2)(viii), parties may consider benchmarks for outcomes-based fair market value for value-driven documenting and retaining such payments. We solicit comments on the outcomes-based payment arrangements, documentation necessary to definition of ‘‘rebase’’ and when and even where the provision of traditional demonstrate compliance with each how frequently rebasing would be services may be a less prominent prong of this safe harbor. For example, necessary and appropriate to ensure that component. We solicit comments on the parties may document payments outcomes-based payments are based on this approach. We are considering for made pursuant to the outcomes-based valid, measurable outcomes, reducing the final rule whether we should take a payment arrangement and data showing the risk that the payments would be different approach (including whether the agent’s achievement of the outcome mere payments for referrals. to value outcomes-based payments measure(s).

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i. Impact on Patient Quality of Care section’’ to ‘‘paragraphs (g)(1) and (g)(2) access to a wound specialist and an Properly structured and operated, of this section.’’ For ease of reference, online wound documentation system, outcomes-based payments hold the we propose to amend the safe harbor by that the requestor made available to 82 potential to improve the delivery of moving the undesignated definition at buyers of its products. the end of the safe harbor to a new care; however, when improperly a. Inclusion of Services in Bundled structured and operated, they hold the paragraph (g)(7). Warranties potential to incentivize behavior 1. Bundled Warranties We are proposing to protect warranty harmful to patients, such as stinting on The warranties safe harbor protects arrangements that apply to one or more care (underutilization), cherry picking remuneration consisting of ‘‘any items and services (provided the lucrative or adherent patients, or lemon payment or exchange of anything of warranty covers at least one item). This dropping costly or noncompliant value under a warranty provided by a modification would allow patients.79 Accordingly, we are manufacturer or supplier of an item to manufacturers and suppliers to warrant proposing to require that the agreement the buyer (such as a health care provider that certain services, in combination neither limits any party’s ability to make or beneficiary) of the item,’’ as long as with one or more items, will result in a medically appropriate decisions for the buyer and seller comply with the specified level of performance.83 We are patients, nor induces the reduction of safe harbor’s requirements.80 We mindful that the provision of certain medically necessary services. confirmed in Advisory Opinion No. 18– warranted services, such as medication j. Additional Safeguards 10 that this safe harbor applies only to adherence services by manufacturers We propose that the term of the warranties for a single item and not to and suppliers, could increase the risk of 81 agreement is not less than 1 year and bundled items. We received patient harm and inappropriate that the services performed under the comments in response to the OIG RFI utilization because manufacturers and agreement do not involve the counseling requesting revisions to the warranties many suppliers do not necessarily have or promotion of a business arrangement safe harbor to protect warranty direct patient care responsibilities and or other activity that violates any State arrangements that pertain to bundled thus may not have the same patient or Federal law. These conditions are items and services. Commenters safety considerations that physicians identical to those included in the suggested that such revisions would and providers with direct patient care personal services and management promote beneficial and innovative responsibilities have. Using medication contracts safe harbor. arrangements. Based on these adherence services offered by drug comments, other input OIG has manufacturers as an example, we are k. Technical Modifications received, and our own consideration of concerned that manufacturers may Due to the proposed additions of the potential benefits of expanding the promote patients’ adherence to paragraphs (d)(2) and (d)(3), setting warranties safe harbor to foster value, forth provisions on outcomes-based we propose to revise the safe harbor to 82 Adv. Op. No. 01–08, available at https:// protect bundled warranties for one or www.oig.hhs.gov/fraud/docs/advisoryopinions/ payments and definitions, we propose 2001/ao01-08.pdf. OIG acknowledged that the to move the existing personal services more items and related services, when arrangement at issue in advisory opinion number and management contracts provisions, certain conditions are met. This 01–08 implicated the anti-kickback statute and did as proposed to be amended in this modification would allow not fit in the warranties safe harbor but approved manufacturers and suppliers to warrant the arrangement on the basis that it presented a rulemaking, to a new paragraph (d)(1). sufficiently low risk of fraud and abuse under the that a bundle of items or one or more K. Warranties (1001.952(g)) anti-kickback statute. items in combination with related 83 We clarify that our proposed changes would In an effort to update the existing safe services, such as product support not protect free or reduced-price items or services harbor for warranties at 42 CFR services, will meet a specified level of that sellers provide either as part of a bundled warranty agreement or ancillary to a warranty 1001.952(g) and to promote higher value performance under a warranty agreement. Whether a seller’s provision of free or items covered by warranties, we agreement. reduced-price items or services in connection with propose to modify the safe harbor to: (i) We believe this proposed a warranty arrangement would implicate and Protect warranties for one or more items modification could promote beneficial potentially violate the anti-kickback statute would arrangements between sellers and depend on whether other safe harbor protection and related services upon certain exists for the arrangement, and if not, whether those conditions; (ii) exclude beneficiaries buyers by allowing them to enter into items or services have independent value to a buyer from the reporting requirements warranty arrangements conditioned on other than for purposes of determining whether the applicable to buyers; and (iii) define the collective value of the warranted terms of a warranty have been met. For example, items and related services. We also laboratory testing required for patient care may be ‘‘warranty’’ directly and not by necessary to determine if a warranted outcome was reference to 15 U.S.C. 2301(6). We also believe this proposed modification achieved, but the laboratory test would have propose to make a technical correction could enhance the use and utility of independent value to the buyer. A seller’s provision to paragraph (3)(i) to change the text warranted items by protecting of laboratory testing for free or at a reduced charge warranties that encompass services, as part of a warranty agreement would implicate the from ‘‘paragraphs (a)(1) and (a)(2) of this anti-kickback statute. Additionally, the provision of such as support and educational medication adherence services for free or below fair 79 We note that section 1128A(b)(1) of the Act (the services. For example, this proposed market value would implicate the anti-kickback ‘‘Gainsharing CMP’’) prohibits a hospital from modification would protect statute. In contrast, if sellers provide items and knowingly making payments, directly or indirectly, arrangements such as the one at issue in services with no independent value to a buyer, to a physician to induce the physician to reduce or other than to determine whether the conditions of limit medically necessary services to Medicare or Advisory Opinion No. 01–08, where the a warranty have been satisfied, the items and Medicaid beneficiaries who are under the requestor operated a warranty program services may not constitute remuneration under the physician’s direct care. Hospitals that make (and covering wound care products and anti-kickback statute, and thus, may not implicate physicians who receive) payments prohibited by certain related support services, such as the statute. See OIG Compliance Program Guidance this provision are liable for civil money penalties for Pharmaceutical Manufacturers, 68 FR 23731, for each patient for which the prohibited payment 23735 (May 5, 2003), for a discussion of was made. However, our proposed condition is in 80 42 CFR 1001.952(g). pharmaceutical manufacturers’ provision of limited recognition that other parties, besides hospitals and 81 Adv. Op. No. 18–10, available at https:// support services tailored to the manufacturers’ physicians, may seek protection under this safe www.oig.hhs.gov/fraud/docs/advisoryopinions/ products that may not implicate the anti-kickback harbor. 2018/AdvOpn18-10.pdf. statute.

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prescribed medications, even when a safe harbor protection for warranties to contain their costs because the patient is experiencing harmful side applying only to services if sufficient providers would receive reimbursement effects, or the medication is not safeguards exist to mitigate these risks, for each discrete item and service they achieving the purpose for which it was and we are soliciting comments on the order, regardless of whether those items prescribed. Because manufacturers have potential fraud and abuse risks that may and services present the best value. financial incentives for patients to use arise if we expand the safe harbor to Without cost-containment incentives, and reorder their medications but do not include services-only warranties and providers may order devices or drugs have the medical expertise the potential safeguards to mitigate these subject to a bundled warranty, prescribing physicians have to risks. regardless of whether lower-cost, determine whether continued use of b. Conditions on Bundled Warranties equally effective devices or drugs are medications is clinically appropriate for available, because providers would be a specific patient, medication adherence We propose to impose the following reimbursed separately for each item and services offered by manufacturers, such conditions on bundled warranty reimbursable service and could be as phone or message communications arrangements: (i) All federally eligible to receive the full cost of the directing patients to take their reimbursable items and services subject separately billed items and reimbursable medications, could result in patient to bundled warranty arrangements must services in the bundle if even one item harm or inappropriate utilization of be reimbursed by the same Federal or reimbursable service fails to perform drugs. health care program and in the same as expected. We are considering safeguards we payment; (ii) a manufacturer or supplier We believe these risks are mitigated must not pay any individual (other than could include in the final rule to protect when bundled warranties apply only to a beneficiary) or entity for any medical, against these risks, such as a safeguard federally reimbursable items and surgical, or hospital expense incurred that would prohibit direct patient services that are reimbursed by the same by a beneficiary other than for the cost outreach by a seller offering a warranty Federal health care program payment, of the items and services subject to the but that would allow the seller to pay such as under an MS–DRG payment. warranty; and (iii) manufacturers and an independent intermediary to perform However, we are aware that bundled suppliers cannot condition bundled services that require direct patient warranties could result in barriers to warranties on the exclusive use of one outreach, as long as compensation for entry for certain manufacturers and or more items or services or impose the patient outreach services is not tied suppliers that cannot offer bundled minimum-purchase requirements of any to the volume or value of any warranted warranties, and we are considering for item used by the patient. items or services. We believe these the final rule, and solicit comments on, Our proposed expansion of this safe requirements would promote beneficial additional safeguards we should include harbor does not protect warranties arrangements while protecting covering only services. We believe beneficiaries and the Federal health care to limit the potential anti-competitive warranties for services that are not tied programs from harmful practices, such effects that bundled warranties may to one or more related items could as inappropriate utilization and product have in the drug and device markets. present heightened fraud and abuse steering, as explained below. Additionally, we solicit specific risks. Manufacturers and suppliers examples where the protections we c. Requirement for Federally could warrant that services will achieve propose would not be sufficient to Reimbursable Items and Services certain clinical goals and offer protect against anti-competitive Subject to Bundled Warranty remuneration to induce referrals from conduct. Arrangements To Be Reimbursed by the referral sources under the guise of We recognize that the proposed Same Federal Health Care Program and warranty remedies. The services requirement above might inhibit in the Same Payment manufacturers and suppliers may offer warranties conditioned on the collective could take many different forms, and it Under a new paragraph (5), we performance of warranted items across a may be difficult to verify whether propose to require that all federally patient population (population-based services, which can more subjective in reimbursable items and services subject warranties) because these items would nature than items, failed to achieve the to the bundled warranty be reimbursed not be reimbursed in the same payment. clinical goals established by a warranty by the same Federal health care program We are considering whether, and if so, arrangement. Additionally, because the and in the same payment. This how, we might craft the safe harbor to services subject to a warranty may not requirement would be satisfied when allow for population-based warranties be federally reimbursable, it may be federally reimbursable items and without creating risks of increased costs difficult to determine whether the services subject to a bundled warranty to the Federal health care programs, as services being warranted are bona fide are reimbursed by, for example, the described above. For example, we are services or sham services offered as part same Part A Medicare Severity- considering for the final rule whether of a warranty agreement and designed to Diagnosis Related Group (MS–DRG) we could require that all items and transfer remuneration to referral sources payment, the same Medicare Part B services be reimbursed according to the upon the failure of such services to ambulatory payment classification same payment methodology, but not achieve the warranted result. If payment, or the same Medicaid necessarily the same payment, to allow physicians, for example, could warrant managed care payment. Allowing sellers for population-based warranties. We that their services will achieve certain to bundle items and services reimbursed solicit comments on this approach and clinical results, the potential to receive by different Federal health care program the potential benefits and fraud and money as a warranty remedy may payments could create incentives for abuse risks it may present. We note that induce patients to select physicians overutilization or inappropriate retrospective reconciliation payments, offering warranties over other utilization of items and services such as those often used under the physicians, particularly where the included in the bundle. Unlike bundled Innovation Center payment models, clinical results being warranted are not payments, such as MS–DRG payments, would not constitute one payment, as easily achievable, regardless of which payments that reimburse providers required under our proposal, when the physician a patient selects. We are separately for each item and service reconciliation payments are paid to one considering for the final rule extending they order do not incentivize providers entity but are not direct payment for

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items and services provided only by that under the safe harbor to better facilitate warranty arrangements conditioned on entity. warranties tied to clinical outcomes. We clinical outcome guarantees, provided In addition, we are considering for the understand that delayed reporting may the warranty arrangements meet all the final rule, and seek comments on, be necessary when, for example, the safe harbor’s requirements. whether we should include any efficacy of a drug therapy may not be L. Local Transportation (1001.952(bb)) exceptions to the requirement that all known for several years after the initial federally reimbursable items and purchase. We are considering ways in Increasingly, experts are recognizing services subject to a bundled warranty which we could modify the reporting the important role transportation plays be paid by the same payment, such as requirements under the safe harbor to in patient access to care, quality of care, when bundled items are reimbursed accommodate outcomes-based warranty healthcare outcomes, and effective according to the same payment under arrangements while protecting the coordination of care for patients, the Medicare program but are Government’s interest in having an particularly for patients who lack their reimbursed separately under Medicaid. accurate and timely report of any price own transportation or who live in For example, in Advisory Opinion No. reductions a seller offers a buyer under ‘‘transportation deserts.’’ As part of this 18–10, we noted that the items subject a warranty arrangement protected by the rulemaking, we are revisiting certain to the requestor’s warranty program safe harbor. We also propose to provisions of the existing safe harbor for were reimbursable under the same MS– expressly exclude beneficiaries from the local transportation at 42 CFR DRG payment but potentially were reporting requirement applicable to 1001.952(bb) and, as described above, separately reimbursable under certain other buyers since beneficiaries do not proposing new safe harbor protection states’ Medicaid programs. We report costs to the Government. for certain patient engagement tools and encourage commenters to provide supports. The proposed patient specific examples where an exception 4. Definition of ‘‘Warranty’’ engagement and support safe harbor may be needed. We propose to define ‘‘warranty’’ would include transportation services directly and not by reference to 15 for patients that meet the proposed safe 2. Capped Amount of Warranty U.S.C. 2301(6). The Magnuson-Moss Act harbor requirements. Remedies; Prohibition on Exclusivity enacted 15 U.S.C. 2301, which in We propose to modify the existing and Minimum-Purchase Requirements paragraph (6) defines ‘‘written safe harbor for local transportation at 42 We propose to modify paragraph (4) warranty’’ in connection with the sale of CFR 1001.952(bb) to: (i) Expand the of the safe harbor by limiting the a ‘‘consumer product.’’ However, courts distance which residents of rural areas remuneration a manufacturer or have held that an item regulated under may be transported; and (ii) remove any supplier may pay to any individual the Federal Food, Drug, and Cosmetic mileage limit on transportation of a (other than a beneficiary) or entity for Act is not a ‘‘consumer product’’ for patient from a healthcare facility from any medical, surgical, or hospital purposes of the Magnuson-Moss Act.84 which the patient has been discharged expense incurred by a beneficiary to the The reference to 15 U.S.C. 2301(6) in the to the patient’s residence. cost of the items and services subject to definition of ‘‘warranty’’ therefore For purposes of clarification, we also the warranty. We view this limitation as creates unintentional ambiguity as to provide guidance on the application of an important protection against whether the safe harbor covers the safe harbor to transportation through manufacturers and suppliers providing warranties for drugs and devices ride-sharing services. We are not excessive remuneration to induce regulated under the Federal Food, Drug, proposing to amend the safe harbor to further business. In a new paragraph (6), and Cosmetic Act. We propose revisions explicitly include such services, we also propose to prohibit to the definition of ‘‘warranty’’ to clarify because we believe that nothing in the manufacturers and suppliers from that the warranties safe harbor applies existing language excludes them from conditioning warranties on the to FDA-regulated drugs and devices. protection. exclusive use of one or more items or We propose a definition for Finally, for ease of reference, we services and from imposing minimum- ‘‘warranty’’ that largely models the propose to amend the safe harbor by purchase requirements of any items or definition in 15 U.S.C. 2301(6) but moving the undesignated definitions set services. We view such steering replaces references to a ‘‘product,’’ forth in the note to paragraph (bb) to a practices as highly problematic and where applicable, with ‘‘item or bundle new paragraph (bb)(3). solicit comments on the prevalence of of items, or services in combination 1. Expansion of Mileage Limit for these practices in warranty with one or more related items,’’ to Patients Residing in Rural Areas arrangements. We also solicit comments allow for single-item and bundled on the effectiveness of the proposed warranties. Additionally, the proposed The safe harbor provides that safeguards in preventing or mitigating definition substitutes references to the transportation is protected if provided fraud and abuse risks, as well as ‘‘material’’ of a product with ‘‘quality’’ ‘‘[w]ithin 25 miles of the health care additional safeguards we could impose. to reflect the inclusion of warranted provider or supplier to or from which services in addition to items. The the patient would be transported, or 3. Reporting Requirements proposed definition of ‘‘warranty’’ within 50 miles if the patient resides in Stakeholders have expressed concern continues to include a ‘‘written a rural area, as defined in this paragraph that the reporting requirements under affirmation of fact or written promise (bb).’’ 85 In response to the OIG RFI, the safe harbor may not allow for [that] affirms or promises that [items some commenters stated that the 50- outcomes-based warranty arrangements and services] . . . will meet a specified mile limit for residents of rural areas is in which buyers could receive return level of performance over a specified insufficient, as many rural residents payments from manufacturers over period of time.’’ We interpret this need to travel more than 50 miles to several years if a therapy does not meet provision to provide protection for obtain medically necessary services. clinical outcomes at designated points Accordingly, we are proposing to in time. We solicit comments on any 84 See, e.g., Kanter v. Warner-Lambert Co., 99 Cal. increase the limit on transportation of burden the current reporting App. 4th 780, 798 (2002); Goldsmith v. Mentor Corp., 913 F. Supp. 56, 63 (D.N.H. 1995); Kemp v. residents of rural communities to 75 requirements impose and the need for Pfizer, Inc., 835 F. Supp. 1015, 1024–25 (E.D. Mich. more flexible reporting requirements 1993). 85 42 CFR 1001.952(bb)(1)(iv)(B).

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miles, but we solicit comments on of the patient’s choice, including to locations that do not relate to a whether an increase to 75 miles is another healthcare facility. We are particular patient’s medical care. We sufficient. We urge commenters to soliciting comment on the fraud and also stated that we would consider in a provide data or other evidence to abuse risks that may arise from future rulemaking whether permitting support the most appropriate distance permitting transportation to another transportation to non-medical services for the purposes of this rulemaking. We healthcare facility. In addition, we are that are part of care coordination request that commenters provide considering for the final rule whether, arrangements or are related to specific information, if available, about and under what circumstances, improving healthcare would be the patients within the commenters’ transportation home or to another appropriate.86 communities or service areas who facility should be protected when a In response to the OIG RFI, we cannot obtain care within the existing patient has not been admitted to an received comments suggesting that the distance limits. We also seek comments inpatient facility. For example, we are local transportation safe harbor should on how an entity would provide soliciting comments on whether protect transportation for non-medical transportation over distances in excess transportation should be protected after purposes that may nevertheless improve of 50 miles (e.g., by shuttle, as defined a patient has been seen in the or maintain health. Such transportation in the existing safe harbor), ride-sharing emergency room, under observation might be to food stores or food banks, programs, reimbursement of mileage, status at a hospital for an extended social services facilities (such as to reimbursement of bus or taxi fare, or period, but not admitted, or after a apply for food stamps or housing other means. Such information will procedure at an ambulatory surgery assistance), exercise facilities, or assist us in determining whether an center (ASC). If transportation is chronic disease support groups, for increased distance limit is necessary protected under these circumstances, example. In many cases, such and practical and whether it is likely to we welcome comments on what transportation might help address both be subject to abuse. While the current limitations should be imposed (e.g., patients’ health outcomes as well as safe harbor does not require any observation status at a hospital for at social determinants of health, such as showing of need on the part of patients, least 24 hours, or a procedure at an ASC transportation, nutrition, and housing. we solicit comments on whether the or medical condition evaluated or We are considering including non- final rule should protect transportation treated at an emergency department that medical purposes in the final safe in excess of the current limits only results in a patient being unable to harbor, and we seek comments on where there is a demonstration of travel home safely unaccompanied). whether and how the safe harbor could financial, medical, or transportation The safe harbor does not require an be expanded in this manner to foster need. We also solicit comments on what entity to offer transportation to patients, innovative arrangements that are likely safeguards would be necessary to and an entity may impose its own to improve health outcomes and address prevent abuse of an expansion of these mileage limits on any transportation non-medical needs that significantly limits for rural or other patients. offer, as long as it imposes such limits influence those outcomes, without consistently and makes the creating an unacceptable risk of fraud 2. Elimination of Distance Limit on transportation available without regard and abuse, such as inducing Transportation of Discharged Patients to the volume or value of Federal health beneficiaries to receive unnecessary Comments on the OIG RFI and other care program business. For example, the healthcare items and services. We are information raise concerns about entity sponsoring the transportation considering whether such expansion of patients discharged from healthcare cannot offer the transportation only to the safe harbor should be limited to facilities who do not have a ride home. facilities affiliated with it. certain beneficiary populations, such as In some cases, these patients have been As with our proposal to increase the chronically ill patients, or to patients brought to the facility from a great mileage limit for transportation of rural who are being discharged from a distance. Some patients in behavioral patients, we solicit comments on hospital or other facility. Responses to health facilities are brought to the whether transportation of discharged this solicitation of comments will facility over long distances by law patients, if in excess of otherwise inform our consideration of potentially enforcement personnel. Commenters applicable safe harbor mileage limits, extending this safe harbor in the final urged that the local transportation safe should be limited to patients with rule to include these arrangements or harbor be expanded to protect facilities demonstrated need (either financial potentially protecting arrangements in that want to provide safe transportation need or transportation need), and if so, the patient engagement and support safe home. what standards should apply to such harbor, if finalized. We agree that transportation home demonstration of need. Finally, we Elsewhere in this rulemaking, we are after discharge from an inpatient facility solicit comments on whether, if this proposing a new safe harbor for patient does not pose the same level of risk of proposal to eliminate any mileage limit engagement tools and supports provided inducing patient referrals as for discharged patients is adopted, there by VBE participants, which could transportation to the facility. remains a need to increase the distance include transportation for health- Accordingly, we are proposing to limit for transportation of patients who related, non-medical purposes. The eliminate any distance limit on reside in rural areas. protection of this safe harbor would not transportation of a patient who has been be available outside the context of a discharged from a facility after 3. Local Transportation for Health- VBE, however, since the proposed safe admission as an inpatient, regardless of Related, Non-Medical Purposes harbor limits protection to patient whether the patient resides in an urban In the preamble to the final rule engagement tools and supports or rural area, if the transportation is to establishing the local transportation safe furnished by VBE participants. We refer the patient’s residence, another harbor, we declined to extend safe commenters to the standards and residence of the patient’s choice (such harbor protection to transportation for safeguards proposed for the separate as the residence of a friend or relative purposes other than to obtain medically safe harbor for patient engagement tools who is caring for the patient post- necessary items or services, although we and supports (proposed at discharge). We are also considering noted that a shuttle service protected by protecting transportation to any location the safe harbor could make stops at 86 See 81 FR 88368, 88384 (Dec. 7, 2016).

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1001.952(hh)), and we solicit comments their facilities. It cannot, however, patient population, fosters coordination on whether these standards and advertise that it provides free or of items and services under Medicare safeguards are also appropriate for the discounted transportation to a particular Parts A and B, encourages investment in local transportation safe harbor, to the healthcare provider or group of infrastructure and redesigned care extent that were to apply to providers. Such customer-specific processes for high-quality and efficient transportation for non-medical advertising is within the control of the healthcare service delivery, and purposes. In addition, we seek customer to prohibit, and therefore promotes higher value care. The comments on whether an extension of would be imputed to the customer (i.e., Medicare Shared Savings Program is a the local transportation safe harbor in the entity paying for the transportation, voluntary program that encourages this manner is needed or appropriate, if regardless of whether that entity pays groups of doctors, hospitals, and other the proposed separate safe harbor for for the advertising), thus disqualifying healthcare providers to come together as patient engagement and support offered the arrangement from safe harbor an ACO to lower growth in expenditures by VBE participants is adopted protection. and improve quality. An ACO agrees to (proposed 1001.952(hh)). To the extent that the ride-sharing be held accountable for the quality, cost, 4. Use of Ride-Sharing Services service provides services other than and experience of care of an assigned transportation for the purpose of Medicare FFS beneficiary population. We are aware that some entities are obtaining medical care, such services ACOs that successfully meet quality and providing transportation for medical would not be protected by the safe savings requirements share a percentage items and services through the use of harbor. Like a taxi driver, a ride-share of the achieved savings with Medicare. ride-sharing services. As we understand driver could assist a patient in getting Section 1899(m)(1)(A) of the Act, as the use of these services, a hospital, for from a residence into a vehicle and from added by section 50341 of the Budget example, could arrange with a ride- a vehicle into a medical provider’s Act of 2018,89 permits ACOs under sharing service to provide rides for its facility, and this could include assisting certain two-sided models to operate patients, for which the hospital would the patient with a wheelchair, oxygen CMS-approved beneficiary incentive be billed. We are aware that some equipment, or the like. This would be programs to provide incentive payments members of the public may be uncertain considered part of the transportation to assigned beneficiaries who receive about the application of the safe harbor service. In addition, a ride-sharing qualifying primary care services. in these circumstances. driver, taxi driver, or shuttle could, for According to CMS, and as intended by In the preamble to the final rule example, provide the patient with section 1899(m)(1)(A) of the Act, the establishing the local transportation safe transportation from a physician’s office beneficiary incentive programs will harbor, we noted the possibility that or hospital to a pharmacy, for the encourage beneficiaries assigned to patient transportation would be purpose of obtaining a prescription (a certain ACOs to obtain medically provided via taxi.87 Although we did medically necessary item) before taking necessary primary care services while not explicitly refer to ride-sharing the patient home. As noted in the requiring such ACOs to comply with services, we see no difference between preamble to the 2016 final rule program integrity and other these services and taxis, for purposes of establishing this safe harbor, a shuttle requirements.90 CMS, in a final rule the safe harbor. We believe that nothing establishing regulations governing ACO in the language of the safe harbor could also include a food store among 88 Beneficiary Incentive Programs states precludes their use. (By the same logic, its stops. However, transportation to a that the agency ‘‘believe[s] that such the safe harbor does not preclude food store or any other location not for amendments will empower individuals transportation via self-driving cars or the purpose of obtaining medically necessary items or services, when and caregivers in care delivery.’’ 91 other similar technology that serve as a Specifically, the Budget Act of 2018 taxi service, should they become provided on a patient-specific basis (i.e., added section 1899(m)(1)(A) of the Act, available.) We invite any commenters not by a shuttle), is not protected by this which allows ACOs to apply to operate who disagree to provide comments safe harbor. Such transportation may be an ACO Beneficiary Incentive Program. explaining the possible basis for the protected by the proposed safe harbor The Budget Act of 2018 also added a exclusion of ride-sharing programs from for value-based arrangements, as new subsection (m)(2) to section 1899 of protection from the existing safe harbor. discussed elsewhere in this proposed the Act, which provides clarification If we find such comments persuasive, rule. regarding the general features, we will consider an amendment to the Finally, we note that, as with all safe implementation, duration, and scope of safe harbor to explicitly protect harbors, the local transportation safe approved ACO Beneficiary Incentive transportation through ride-sharing harbor applies only to the Federal anti- Programs. In addition, the Budget Act of programs. kickback statute (and the beneficiary 2018 added section 1899(b)(2)(I) of the We note, however, that the same safe inducements CMP). Providers of Act, which requires ACOs that seek to harbor requirements that apply to other transportation remain subject to all operate a beneficiary incentive program forms of transportation also apply to other federal, state and local laws and to apply to operate the program at such transportation provided by ride-sharing regulations that may be applicable to time, in such manner, and with such services. These include the requirement their activities and arrangements. information as the Secretary may that the availability of free or M. ACO Beneficiary Incentive Program require.92 discounted transportation not be advertised. A taxi company, ride- 1. Overview of Medicare Shared Savings 89 Public Law 115–123, 132 Stat. 64. sharing service, or other provider of Program and Provisions of the Budget Act of 2018 for ACO Beneficiary 90 Medicare Program; Medicare Shared Savings transportation could advertise that it Program; Accountable Care Organizations— provides transportation to medical Incentive Programs Pathways to Success and Extreme and appointments and suggest contacting Section 1899 of the Act established Uncontrollable Circumstances Policies for Performance Year 2017, 83 FR 67816, 67823 (Dec. medical providers to determine if free or the Medicare Shared Savings Program, 31, 2018). discounted transportation is available to which promotes accountability for a 91 Id. at 67980. 92 For additional background information on 87 81 FR at 88387. 88 81 FR 88384. section 1899(m) and 1899(b)(2)(I), see Medicare

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In order to implement the changes set exception to the definition of that were enacted in the Budget Act of forth in section 1899(b)(2) and (m) of the ‘‘remuneration’’ under the Federal anti- 2018. This proposed rule would add an Act, CMS added regulation text at 42 kickback statute. In other words, we exception for the provision of certain CFR 425.304(c) that allows ACOs believe that for an incentive payment to telehealth technologies related to in- participating under certain two-sided satisfy the ACO Beneficiary Incentive home dialysis services to the definition models to establish CMS-approved Program statutory exception, and the of ‘‘remuneration’’ applicable to the beneficiary incentive programs to corresponding safe harbor proposed at beneficiary inducements CMP, which provide incentive payments to assigned paragraph 1001.952(kk), all of the prohibits offering inducements to beneficiaries who receive qualifying requirements enumerated at section Medicare or Medicaid beneficiaries that services. 1899(m)—related both to ACO the offeror knows or should know are Beneficiary Incentive Programs and 2. ACO Beneficiary Incentives Program likely to influence the selection of incentive payments made pursuant to Statutory Exception and Proposed Safe particular providers, practitioners or such programs—must, and would be Harbor (1001.952(kk)) suppliers. required to, be satisfied. Section 50341(b) of the Budget Act of While section 1899(m) of the Act also A. Statutory Exception for Telehealth 2018, which added section includes a provision that states, ‘‘[t]he Technologies for In-Home Dialysis 1128B(b)(3)(K) of the Act, states that Secretary shall permit such an ACO to ‘‘illegal remuneration’’ under the anti- establish such a program at the As part of the Creating High-Quality kickback statute does not include ‘‘. . . Secretary’s discretion and subject to Results and Outcomes Necessary to an incentive payment made to a such requirements, including program Improve Chronic Care Act of 2018, Medicare fee-for-service beneficiary by integrity requirements, as the Secretary section 50302 of the Budget Act of 2018 an ACO under an ACO Beneficiary determines necessary,’’ 93 we do not amends section 1881(b)(3) of the Act to Incentive Program established under interpret the statutory exception found permit an individual with ESRD subsection (m) of section 1899, if the at section 1128B(b)(3)(K) of the Act to receiving home dialysis to elect to payment is made in accordance with the require satisfaction of any requirements receive their monthly ESRD-related requirements of such subsection and found outside of section 1899(m) (e.g., clinical assessments via telehealth, if meets such other conditions as the the regulatory requirements established certain other conditions are met.95 Secretary may establish.’’ by CMS implementing the ACO Section 50302(c) of the Budget Act of We propose to codify the statutory Beneficiary Incentive Program, found at 2018 creates a new exception to the exception to the definition of 42 CFR 425.304(c)).94 In other words, definition of ‘‘remuneration’’ in the ‘‘remuneration’’ at section OIG interprets the statutory exception beneficiary inducements CMP. 1128B(b)(3)(K) of the Act in our found at section 1128B(b)(3)(K) of the Specifically, section 50302(c) of the regulations at proposed paragraph Act and would interpret the Budget Act of 2018 adds the following 1001.952(kk). We propose to adopt corresponding safe harbor proposed at exception as new section 1128A(i)(6)(J) regulatory language nearly identical to paragraph 1001.952(kk), to require that of the Act: the statutory language, with two the incentive payment is made in exceptions. First, the text of the accordance with the requirements found The provision of telehealth proposed safe harbor would make it in section 1899(m) of the Act. technologies (as defined by the clear that an ACO may furnish incentive Given the requirements imposed on Secretary) on or after January 1, 2019, by payments only to assigned beneficiaries. ACO Beneficiary Incentive Programs a provider of services or a renal dialysis Second, the safe harbor would modify and incentive payments made pursuant facility (as such terms are defined for the statutory language stating, ‘‘if the to an ACO Beneficiary Incentive purposes of title XVIII) to an individual payment is made in accordance with the Program, found in section 1899(m), at with end stage renal disease who is requirements of such subsection,’’ to ‘‘if this time, we do not believe it is receiving home dialysis for which the incentive payment is made in necessary to create additional payment is being made under part B of accordance with the requirements found conditions under the proposed ACO such title, if: in such subsection.’’ Note that we do Beneficiary Incentives Program safe not propose the establishment of any harbor, paragraph 1001.952(kk). 95 Section 50302(b) of the Budget Act of 2018 additional safe harbor conditions that made additional changes related to the provision of However, we are considering and seek telehealth services to ESRD patients, such as the incentive payments made by an ACO to comment on whether OIG should inclusion of a renal dialysis facility and the home an assigned beneficiary under an ACO include additional conditions in this of an individual as telehealth originating sites but Beneficiary Incentive Program safe harbor. only for the purposes of the monthly ESRD-related established under section 1899(m) of the clinical assessments furnished through telehealth Act must satisfy. IV. Provisions of the Proposed Rule: provided under section 1881(b)(3)(B) of the Act. For Beneficiary Inducements CMP additional information, see Medicare Program; The ACO Beneficiary Incentive Revisions to Payment Policies Under the Physician Program statutory exception, found at Exception Fee Schedule and Other Revisions to Part B for CY section 1128B(b)(3)(K) of the Act, This proposed rule would amend 42 2019; Medicare Shared Savings Program requires that ‘‘the payment is made in Requirements; Quality Payment Program; Medicaid CFR 1003.110 by codifying amendments Promoting Interoperability Program; Quality accordance with the requirements of Payment Program-Extreme and Uncontrollable [section 1899(m)].’’ We read this 93 Section 1899(m)(1)(A) of the Act. Circumstance Policy for the 2019 MIPS Payment provision to broadly incorporate all of 94 CMS, in the final rule establishing the ACO Year; Provisions From the Medicare Shared Savings the requirements found in section Beneficiary Incentive Program, determined that the Program-Accountable Care Organizations-Pathways 1899(m) as requirements of the ACO ACO Beneficiary Incentive Program required to Success; and Expanding the Use of Telehealth additional program integrity safeguards. CMS Services for the Treatment of Opioid Use Disorder Beneficiary Incentive Program statutory included several requirements at 42 CFR 425.304(c) Under the Substance Use-Disorder Prevention That to help mitigate the program integrity risks Promotes Opioid Recovery and Treatment Program; Medicare Shared Savings Program; associated with ACO Beneficiary Incentive (SUPPORT) for Patients and Communities Act 83 Accountable Care Organizations—Pathways to Programs. Under 42 CFR 425.304(c)(4)(iv), for FR 59452, 59495 (Nov. 23, 2018), available at Success and Extreme and Uncontrollable example, ACOs are prohibited from offering an https://www.govinfo.gov/content/pkg/FR-2018-11- Circumstances Policies for Performance Year 2017, incentive payment as part of an advertisement or 23/pdf/2018-24170.pdf. See also 42 CFR 410.78, 83 FR 67816 (Dec. 31, 2018). solicitation to beneficiaries. 414.65.

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(i) The telehealth technologies are not in-home dialysis care, furnished by their considering for the final rule and seek offered as part of any advertisement or physician. comments on whether the exception solicitation; The first criterion included in the should protect telehealth technologies (ii) the telehealth technologies are statutory exception provides that that provide the beneficiary with no provided for the purpose of furnishing protected items or services may not be more than a de minimis benefit for any telehealth services related to the offered as part of any advertisement or purpose other than furnishing telehealth individual’s end stage renal disease; and solicitation. We are including this services related to the individual’s (iii) the provision of the telehealth requirement in our proposed regulation ESRD. We also are considering for the technologies meets any other at proposed condition (ii). As we have final rule and seek comments on requirements set forth in regulations said in other rulemakings, we propose another standard that would protect promulgated by the Secretary. that stakeholders interpret the terms telehealth technologies only when This exception would be available ‘‘advertisement’’ and ‘‘solicitation’’ furnished predominantly for the consistent with their common usage in purpose of furnishing telehealth only for telehealth technologies, as 96 defined below, furnished by a provider the healthcare industry. services related to the individual’s The second criterion included in the of services or a renal dialysis facility to ESRD. statutory exception requires the patients with ESRD who receive in- We propose to interpret ‘‘telehealth telehealth technologies to be provided home dialysis that is payable by services related to the individual’s end for the purpose of furnishing telehealth Medicare Part B. We propose to stage renal disease’’ to mean only those services related to the individual’s interpret this exception, in our proposed telehealth services paid for by Medicare ESRD. At proposed condition (iii), we condition (i), to require that the Part B. CMS maintains a list of services propose to interpret ‘‘for the purpose of telehealth technologies be furnished to payable under the Medicare Physician furnishing telehealth services related to Fee Schedule when furnished via the individual by the provider of the individual’s end stage renal disease’’ telehealth. We solicit comments on this services or the renal dialysis facility (as to mean that the technology contributes interpretation. those terms are defined in title XVIII of substantially to the provision of the Act) that is currently providing the telehealth services related to the The statutory exception’s third in-home dialysis, telehealth visits, or individual’s ESRD, is not of excessive criterion allows the Secretary to develop other ESRD care to the patient. The value, and is not duplicative of additional requirements not specified in underlying intent of this proposed technology that the beneficiary already the statutory exception and requires the condition (i) is to prevent arrangements owns if that technology is adequate for Secretary to define ‘‘telehealth where providers and suppliers offer the telehealth purposes. We would technologies.’’ Below we propose a telehealth technologies to patients with consider technology to be of excessive definition of ‘‘telehealth technologies’’ whom they do not have a prior clinical value if the retail value of the and further enumerate requirements relationship in an attempt to steer technology is substantially more than is under the new exception to the patients to a particular provider or required for the telehealth purpose. For definition of ‘‘remuneration’’ for the supplier. We seek comment on this example, if a readily available $300 beneficiary inducements CMP. proposed condition (i), and in smartphone would adequately run the B. Additional Proposed Conditions for particular, any challenges this condition telehealth technology, the safe harbor the Telehealth Technologies Exception would create. In addition, while we are would not protect a donation of a $600 aware of the increasing proliferation of smartphone. To ensure that this Under proposed condition (iv), a telehealth services, and the likely desire proposed safe harbor protects the person must not bill Federal health care of other healthcare industry provision of telehealth technologies ‘‘for programs, other payors, or individuals stakeholders to furnish telehealth the purpose of furnishing telehealth for the telehealth technologies, claim technologies to patients receiving services related to the individual’s end the value of the item or service as a bad telehealth services, the statutory stage renal disease’’ and not to induce debt for payment purposes under a exception, and therefore, this proposal, referrals, we are also considering for the Federal health care program, or is limited to a subset of patients final rule, and seek comment on, a otherwise shift the burden of the value receiving in-home dialysis and certain, condition that would require the of the telehealth technologies onto a enumerated providers in the statutory provider or facility to retain ownership Federal health care program, other exception. We further note that the of any hardware and make reasonable payors, or individuals. This proposed provision of telehealth technologies efforts to retrieve the hardware once the requirement is designed to protect might qualify for protection under other beneficiary no longer needs it for the against the telehealth technologies existing or proposed exceptions or safe permitted telehealth purposes (such that resulting in inappropriately increased harbors, including the proposed safe the hardware is loaned to the costs to Federal health care programs, harbor for patient engagement and beneficiary). other payors, and patients. In this support, paragraph 1001.952(hh). That We remain concerned that the requirement, we propose to prohibit being said, we seek comment on provision of telehealth technology with claiming the cost of the telehealth whether we should, for purposes of the substantial independent value to the technologies and any operational costs final rule, interpret the statutory beneficiary might serve to induce the attendant to providing telehealth exception to apply not only to the beneficiary to choose a particular technologies as bad debt for payment ‘‘provider of services or the renal provider or facility. We are considering, purposes under Medicare or a State dialysis facility (as those terms are and solicit comments about, whether healthcare program or otherwise shifting defined in tile XVIII of the Act),’’ but the final rule should interpret ‘‘for the the burden of the cost of the telehealth also suppliers, as defined in title XVIII purpose of furnishing telehealth technologies and any operational costs of the Act. We solicit comments on this services related to the individual’s end attendant to the provision of patient issue, in recognition of the underlying stage renal disease’’ in a more restrictive incentives to Medicare, a State congressional intent and policy goals set manner. For example, we are healthcare program, other payors, or forth in Section 50302(b) of the Budget individuals. We seek comments on this Act of 2018: Expanding patient access to 96 See, e.g., 81 FR 88368, 88373 (Dec. 7, 2016). proposed condition.

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C. Defining Telehealth Technologies 42 CFR 410.78(a)(3), should be excluded incentives due to the potential cost of We propose to define ‘‘telehealth from our definition of ‘‘telehealth furnishing the incentive to all qualifying technologies’’ for the purposes of the technologies.’’ We are also considering patients rather than a smaller subset. definition of the term ‘‘remuneration’’ as for the final rule, and seek comment on, Similarly, we are interested in why set forth in 42 CFR 1003.110 and the whether to define ‘‘telehealth offering remuneration to a smaller telehealth technologies exception to technologies’’ to include technologies subset of qualifying patients might be section 50302(c) of the Budget Act of such as software, a webcam, data plan, appropriate and not increase the risk of 2018. In proposing such definition, we or broadband internet access that fraud and abuse. facilitates the telehealth encounter. This consulted with CMS and solicited 2. Necessary Technology might include, for example, software comments in the OIG RFI regarding how For purposes of the final rule, we are OIG should define ‘‘telehealth that allows a patient to use his or her existing smartphone, tablet, or computer considering allowing a person to furnish technologies’’ and if the definition telehealth technologies under the safe should include ‘‘services.’’ Based on the to receive telehealth consultations. We are interested in comments on whether harbor only after making a good faith collective input we received, we determination that the individual to propose to adopt, as part of our and how broadening the exception to include these kinds of technologies whom the technology is furnished does definition of ‘‘telehealth technologies,’’ not already have the necessary the definition of ‘‘interactive might impact access to medically necessary care for beneficiaries. We are telehealth technology, and that such telecommunications system’’ found at technology is necessary for the 42 CFR 410.78. Under 42 CFR 410.78, further interested in comments on whether such broadening would create telehealth services provided. For Medicare Part B pays for covered instance, if an application on a patient’s telehealth services included on the an undue risk of remuneration that would inappropriately steer existing phone would be sufficient, but telehealth list when furnished using an the patient is furnished a new tablet, ‘‘interactive telecommunications beneficiaries to particular providers or suppliers to obtain federally this would be considered duplicative or system’’ if certain conditions are met. 42 unnecessary. Should the recipient CFR 410.78(a)(3) defines an ‘‘interactive reimbursable items and services, and whether there would be limitations or already possess technology that allows telecommunications system’’ to mean the telehealth visit to occur, we are ‘‘multimedia communications conditions on the provision of telehealth technologies that we could concerned that a person may furnish equipment that includes, at a minimum, additional valuable or duplicative audio and video equipment permitting include in an exception to curb potential abuses, such as a limitation on technology for inappropriate purposes two-way, real-time interactive (e.g., to induce a patient to select a communication between the patient and the value of the remuneration (e.g., a cap on the retail value of the telehealth particular provider for in-home dialysis, distant site physician or practitioner. or to seek other items and services from Telephones, facsimile machines, and technologies furnished, such as $100, $200, $500, or another amount that that provider). We seek comment on this electronic mail systems do not meet the potential safeguard. We also are definition of an interactive would be of sufficient magnitude to protect the most beneficial arrangements considering, and seek comment telecommunications system.’’ regarding, a condition in the final rule For the purposes of this exception, we while also preventing the most abusive ones). that would require the person who propose to define ‘‘telehealth furnishes the telehealth technologies to technologies’’ as the following: D. Other Potential Safeguards take reasonable steps to limit the use of ‘‘multimedia communications the telehealth technologies by the equipment that includes, at a minimum, 1. Consistent Provision of Telehealth Technologies individual to the telehealth services audio and video equipment permitting described on the Medicare telehealth two-way, real-time interactive In addition to the proposed list. communication between the patient and conditions set forth above, we are distant site physician or practitioner considering for the final rule and seek 3. Notice to Patients used in the diagnosis, intervention or comment on whether, as a condition of One commenter to the OIG RFI noted ongoing care management—paid for by safe harbor protection, parties should be that patients may be confused by the Medicare Part B—between a patient and prohibited from discriminating in the technology, or the reason they are the remote healthcare provider. offering of telehealth technologies. Such receiving a piece of technology, and Telephones, facsimile machines, and a safe harbor condition would require unaware of costs associated with electronic mail systems do not meet the providers and renal dialysis facilities to telehealth visits. We are considering definition of ‘telehealth technologies.’ ’’ provide the same telehealth adding in the final rule a condition that For the purposes of our definition of technologies to any Medicare Part B requires providers or facilities to ‘‘telehealth technologies,’’ smart phones eligible patient receiving in-home provide a written explanation of the that allow for two-way, real-time dialysis, or to otherwise consistently reason for the technology and any interactive communication through offer telehealth technologies to all potential ‘‘hidden’’ costs associated secure, video conferencing applications patients satisfying specified, uniform with the telehealth services to any would not be considered ‘‘telephones.’’ criteria. This potential condition could patient who elects to receive telehealth We solicit comments this definition, reduce the likelihood that telehealth technology. We solicit comments on and are interested in comments that technologies would be offered these perceived risks to patients, and explain whether, and why, this selectively based on whether the patient whether to include a written notice definition would be too narrow, or too generates other billable business for the requirement in the final rule, and if so, broad, and elaborate upon any attendant provider or facility. We solicit what that notice should state. risks of fraud and abuse associated with comments on this issue. In particular, the adoption of this definition. We also we are interested in understanding 4. Patient Freedom of Choice solicit comments on whether whether this proposed safeguard would We also are considering finalizing a ‘‘[t]elephones, facsimile machines, and limit providers of services’ or renal condition that is designed to preserve electronic mail systems,’’ as used in in dialysis facilities’ ability to offer patient freedom of choice among

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healthcare providers and the manner in by these proposed revisions. The a regulatory impact analysis if a rule which he or she receives dialysis changes to the safe harbors and CMP under Titles XVIII or XIX or section B services under arrangements that would exceptions would allow providers to of Title XI of the Act may have a use the proposed exception. In enter into certain beneficial significant impact on the operations of particular, we are considering a arrangements. In doing so, this a substantial number of small rural condition in the exception that would regulation would impose no hospitals. For the reasons stated above, require offerors of telehealth requirements on any party. Providers we do not believe that any provisions or technologies to advise patients when would be allowed to voluntarily seek to changes finalized here would have a they receive such technology that they comply with these provisions so that significant impact on the operations of retain the freedom to choose any they would have assurance that rural hospitals. Thus, an analysis under provider or supplier of dialysis services participating in certain arrangements section 1102(b) of the Act is not and to receive dialysis in any would not subject them to liability required for this rulemaking. appropriate setting. We are also under the anti-kickback statute and the concerned that some patients may be beneficiary inducements CMP. These C. Unfunded Mandates Reform Act persuaded to opt for telehealth visits safe harbors and exceptions facilitate Section 202 of the Unfunded due to the generous telehealth providers’ ability to provide important Mandates Reform Act of 1995, Public technologies and services being offered, healthcare and related services to Law 104–4, also requires that agencies rather than clinical appropriateness. We communities in need. We believe that assess anticipated costs and benefits solicit comments on including this the aggregate economic impact of the before issuing any rule that may result potential safeguard, and whether adding changes to these regulations would be in expenditures in any one year by freedom of choice language to a patient minimal and would have no effect on State, local, or Tribal Governments, in notification would reduce this concern. the economy or on Federal or State the aggregate, or by the private sector, of expenditures. Accordingly, we believe $100 million, adjusted for inflation. We 5. Materials and Records Requirement that the likely aggregate economic effect believe that no significant costs would The proposed exception would not of these regulations would be be associated with these proposed include a materials and records or other significantly less than $100 million. revisions that would impose any documentation requirement given the However, this rule is considered mandates on State, local, or Tribal somewhat narrow scope of the significant under Executive Order Governments or the private sector that remuneration that would be excepted 12866. Notwithstanding our would result in an expenditure of $154 from the definition of ‘‘remuneration’’ determination that the aggregate million (after adjustment for inflation) and consistent with other exceptions to economic impact of the changes to these in any given year. the definition of ‘‘remuneration’’ set regulations would be minimal and forth in 42 CFR 1003.110. We solicit would have no effect on the economy or D. Executive Order 13132 comments on this approach and any on Federal or State expenditures, we Executive Order 13132 establishes fraud and abuse risks presented by not solicit comments on whether certain requirements that an agency including a condition related to stakeholders believe there would be must meet when it promulgates a rule materials and records. increases or decreases in utilization or that imposes substantial direct costs savings or expenses to the requirements or costs on State and local V. Regulatory Impact Statement Government as a result of this proposed Governments, preempts State law, or As set forth below, we have examined rule. We are interested in potential otherwise has Federalism implications. the impact of this proposed rule as behavioral changes as well. In reviewing this rule under the required by Executive Order 12866, the threshold criteria of Executive Order B. Regulatory Flexibility Act Regulatory Flexibility Act (RFA) of 13132, we have determined that this 1980, the Unfunded Mandates Reform The RFA and the Small Business proposed rule would not significantly Act of 1995, Executive Order 13132, and Regulatory Enforcement and Fairness affect the rights, roles, and Executive Order 13771. We provide Act of 1996, which amended the RFA, responsibilities of State or local additional supporting analyses in require agencies to analyze options for Governments. sections F, G, and H. regulatory relief of small businesses. For purposes of the RFA, small entities E. Executive Order 13771 A. Executive Order 12866 include small businesses, nonprofit Executive Order 13771 (January 30, Executive Order 12866 directs organizations, and Government 2017) requires that the costs associated agencies to assess all costs and benefits agencies. Most providers are considered with significant new regulations ‘‘to the of available regulatory alternatives and small entities by having revenues of $7 extent permitted by law, be offset by the if regulations are necessary, to select million to $35.5 million or less in any elimination of existing costs associated regulatory approaches that maximize one year. For purposes of the RFA, most with at least two prior regulations.’’ net benefits (including potential physicians and suppliers are considered This proposed rule has been designated economic, environmental, public health small entities. We estimate the changes a significant regulatory action as defined and safety effects; distributive impacts; to the CMP exceptions and the anti- by Executive Order 12866 but imposes and equity). A regulatory impact kickback statute safe harbors would not no more than de minimis costs. The analysis must be prepared for major significantly affect small providers, as designation of this rule, if finalized, will rules with economically significant these changes would not impose any be informed by public comments effects (i.e., $100 million or more in any requirement on any party. As a result, received; however, this proposed rule, if given year). This proposed rule would we have concluded that this proposed finalized as proposed, would be neither codify a new CMP exception and rule likely will not have a significant a regulatory nor a deregulatory action implement new or revised anti-kickback impact on a substantial number of small under Executive Order 13771. statute safe harbors. The vast majority of providers and that a regulatory providers and Federal health care flexibility analysis is not required for F. Statement of Need programs would be minimally impacted this rulemaking. In addition, section The Department has identified the from an economic perspective, if at all, 1102(b) of the Act requires us to prepare broad reach of the Federal anti-kickback

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statute and beneficiary inducements It is difficult to gauge the effects of equipment and supplies merchant CMP as potentially inhibiting beneficial this regulatory action in a rapidly wholesaler firms; 482,522 ambulatory arrangements that would advance the evolving and diverse healthcare healthcare service firms; 3,293 hospital ability of providers, suppliers, and ecosystem of substantial innovation, firms; and 9,153 nursing care facility others to transition more effectively and experimentation, and deployment of firms operating in the US in 2015.97 We efficiently to value-based care and to technology and digital data. For request public comment on the entities better coordinate care among providers, example, it is difficult to gauge affected by the rule. suppliers, and others in both the Federal reductions in wasteful healthcare We anticipate that a growing health care programs and commercial spending and improved health proportion of such providers and sectors. Industry stakeholders have outcomes as a result of new suppliers would be interested in informed us that, because the arrangements made possible by this reviewing and using these voluntary consequences of potential proposed rule. It is also difficult to rules over time. Because compliance noncompliance with the Federal anti- quantify savings or losses that could with safe harbors and CMP exceptions kickback statute and beneficiary occur as a result of new fraudulent or is voluntary and an arrangement need inducements CMP could be significant, abusive conduct that could increase not fit in a safe harbor or exception to providers, suppliers, and others may be costs or lead to poor outcomes as a be legal, we anticipate that not all discouraged from entering into result of new arrangements. In some providers and suppliers would review innovative arrangements that could cases, innovations and the availability the new regulations and use them. We improve quality outcomes, produce of more actionable, transparent data estimate that 5 percent of affected health system efficiencies, and lower may enhance program integrity and entities that would be eligible to use the healthcare costs (or slow their rate of protect against fraud and abuse, proposed rules may be interested in growth). To the extent providers are reducing costs and increasing benefits. exploring value-based arrangements discouraged from entering into these There is a compelling concern that made possible by the rule in each of the innovative arrangements, patient care uncertainty and regulatory barriers first 10 years following publication of may not be provided as efficiently as under current regulations could prevent the final rule, leading those entities to possible. In addition, the potential the best and most efficacious review the rule. We estimate that consequences of noncompliance with innovations from emerging and being reviewing the final rule will require an these statutes may impede the ability of tested in the marketplace. Our goal is to average of one hour of time each from providers, suppliers, and others, finalize safe harbors that protect a compliance officer and a lawyer. To including small providers and suppliers arrangements that foster beneficial estimate the costs associated with this or those serving rural or medically arrangements and promote value, while review, we use a 2018 wage rate of underserved populations, to raise also protecting programs and $34.86 for compliance officers and capital to invest in the transition to beneficiaries against harms cause by $69.34 for lawyers from the Bureau of 98 value-based care or to obtain fraud and abuse. Labor Statistics, and we double those wages to account for overhead and infrastructure necessary to coordinate G. Anticipated Effects patient care, including technology. This benefits. As a result, we estimate total This proposed rule would add a new unnecessarily slows the transition regulatory review costs of $5.2 million CMP exception and anti-kickback in each of the first 10 years following toward more efficient patient care. This statute safe harbors and modify existing proposed rule attempts to address these finalization of the rule. We note that anti-kickback statute safe harbors. these costs are divided among concerns by removing unnecessary Specifically, we propose to add several impediments to the transformation of approximately 25,000 entities each year, new safe harbor protections for certain and therefore should be considered de the healthcare system into one that value-based arrangements, including better pays for and delivers value. minimis from the perspective of affected care coordination arrangements, entities. We seek public comment on To remove regulatory barriers to care arrangements with varying levels of these assumptions. coordination and support value-based downside financial risk, as well as The Department does not collect data arrangements, we faced the challenge of outcomes-based payment arrangements, regarding the number of providers, designing safe harbor protections for and protection for certain remuneration suppliers, and other individuals and emerging healthcare arrangements, the provided to Federal health care program entities that have entered into an optimal form, design, and efficacy of beneficiaries in the form of incentives arrangement that meets an existing safe which remain unknown or unproven. and supports. harbor. Compliance with safe harbors is These arrangements will be driven by We anticipate that the proposed rule voluntary, and generally the question the determinations and experiences of a would have potential relevance to the whether an arrangement complies with wide range of providers, suppliers, and majority of the types of providers and a safe harbor arises in the context of a others as they innovate in delivering suppliers participating in Federal health defense raised by a defendant in an value-based care. This challenge is care programs and others in commercial enforcement matter. Therefore, we further complicated by the substantial sectors, as well as the Federal health cannot quantify with certainty the variation in care coordination and care programs and Federal health care number of arrangements or number of value-based arrangements contemplated program beneficiaries. We note that healthcare providers, suppliers, and by the healthcare industry and others certain categories of providers, others who may avail themselves of (meaning that one-size-fits-all safe suppliers, and others are not eligible to these protections. For this reason, it is harbor designs may not be optimal), use the proposed rule: Pharmaceutical variation among patient populations manufacturers; manufacturers, 97 U.S. Census Bureau, 2015 SUSB Annual Data and provider characteristics, emerging distributors, and suppliers of DMEPOS; Tables by Establishment Industry, https:// health technologies and data and laboratories. To estimate the www.census.gov/data/tables/2015/econ/susb/2015- capabilities, the still-developing science number of providers and suppliers susb-annual.html. 98 U.S. Department of Labor, Bureau of Labor of quality and performance affected by this rule, we use US Census Statistics, May 2018 National Occupational measurement, and our desire not to chill data. According to the US Census, there Employment and Wage Estimates United States, beneficial innovations. were 7,370 medical, dental, and hospital https://www.bls.gov/oes/2018/may/oes_nat.htm.

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difficult, if not impossible, to assess the the sunset date. The EHR safe harbor uniform requirements under the anti- costs and benefits of these proposals, would continue to be available to health kickback statute and beneficiary and to estimate changes in the number plans and any individuals or entities, inducements CMP for those models that of arrangements that meet new or other than laboratories, that provide qualify, further reducing burden on existing safe harbors. We seek public services covered by, and submit claims entities, such as hospitals and physician comment on the effect of this rule on or requests for payment to, a Federal practices, that participate in multiple changes in the number of agreements or health care program. We would expect models that currently have different arrangements that meet new or existing the same entities that are currently conditions for each waiver. We seek safe harbors. using the EHR safe harbor to continue public comment on the extent to which Many affected providers and to use the safe harbor with minimal, if these provisions will affect these suppliers currently incur costs related to any, additional regulatory review or models. structuring arrangements to comply compliance costs above current levels. Finally, the proposed rule would add with existing fraud and abuse laws. We seek public comment on these a new safe harbor related to beneficiary While these proposals may not result in assumptions. incentives under the Medicare Shared a reduction in compliance-related costs, We propose to modify the existing Savings Program and a new CMP we do not expect this rulemaking to local transportation safe harbor slightly exception for certain telehealth increase total incremental costs. Rather, to expand mileage limits for rural areas technologies offered to patients we expect that providers and suppliers and for transportation for discharged receiving in-home dialysis, pursuant to interested in taking advantage of these patients. This would primarily expand the Budget Act of 2018. Although we new arrangements in order to more protection under the AKS for hospitals cannot calculate the number of ACOs efficiently deliver care will shift and physician practices in rural areas and their participants who would enter resources currently devoted to voluntarily to transport patients to into arrangements that may qualify for complying with existing requirements to necessary medical appointments or to protection under this safe harbor, we create and analyze new arrangements their homes following a hospital stay. believe that this regulatory action would under these proposals. By way of We anticipate no incremental regulatory not create incremental costs for ACOs example only, should a hospital expend costs to hospitals or others from the because it would reduce the amount of resources to review—from a Federal proposed rule, which changes only the compliance resources ACOs currently anti-kickback statute perspective—a distance traveled and no other use to provide beneficiary incentives. financial arrangement with a skilled regulatory requirements. This safe For example, we believe this action nursing facility, any newly promulgated harbor would continue to be available would reduce time, effort, and financial or revised safe harbors would be only to established patients and eligible resources ACOs typically would incur unlikely to change the amount of entities, which do not include to provide these beneficiary incentives resources necessary to conduct such a individuals or entities (or family under the applicable fraud and abuse review. As another example, should a members or others acting on their waivers. We believe that the proposed hospital already document—by a behalf) that primarily supply healthcare telehealth technologies exception would written agreement—any financial items. reduce barriers to the use of in-home arrangement with a skilled nursing Further, the proposed rule would add dialysis and could encourage increased facility, any newly promulgated or a new safe harbor to protect certain use of home dialysis for beneficiaries. revised safe harbors would be unlikely arrangements and patient incentives This could result in increased use of in- to change the amount of resources provided by and among parties home dialysis for patients who would necessary to enter into that written participating in CMS-sponsored models. benefit relative to other treatment agreement. We seek public comment on CMS and OIG collectively, and OIG options. Ultimately, this could result in these assumptions. individually, have issued fraud and improved quality of care for We also propose to add or revise safe abuse waivers for 14 of these models. beneficiaries with end-stage renal harbor protections under the Federal This proposed safe harbor would reduce disease and overall cost savings to anti-kickback statute for donations of the need for issuance of waivers, saving Federal health care programs because cybersecurity technology, EHR OIG 1,040 employee hours per year. dialysis providers will have certainty arrangements, warranties, and local We expect that CMS, including the that their arrangements will not result in transportation. The new proposed safe Innovation Center, will continue to test CMP liability. This will also reduce harbor for cybersecurity technology and these models and others in the future. burden by eliminating unnecessary related services would be available to The purpose of this safe harbor is to travel costs for patients where in-home any provider, supplier, or other streamline participation in existing and dialysis is more appropriate. We do not individual or entity. We expect broad future CMS-sponsored models to reduce anticipate that this proposed rule will use of this proposed safe harbor, with complexity and the administrative add any incremental costs to the reduced costs for smaller and less well- burden on participants that seek regulatory costs dialysis providers equipped providers and overall savings protection under the fraud and abuse already incur to comply with the new for the national health system in laws while participating in a CMS- program rules under the Budget Act of reduced costs from cyberattacks, sponsored model. Although we cannot 2018 because our requirements closely ransomware, and similar threats. calculate the number of arrangements track CMS program rules. We seek Proposed modifications to the EHR safe that CMS-sponsored model participants public comment on the proposed rule’s harbor are modest and would clarify and CMS-sponsored model parties effects on in-home dialysis. that protection for certain cybersecurity would undertake in the future, we Given the information we have, technology is included as part of an expect this proposal would reduce the including comments we received from electronic health records arrangement, burden of documentation and the time, the OIG RFI, we believe these proposals update provisions regarding effort, and financial resources necessary present the best approach to removing interoperability to align with newer to implement CMS-sponsored model potential barriers to designing care CMS and ONC standards in a manner arrangements and to provide CMS- coordination and other value-based that is not expected to increase costs as sponsored model patient incentives. arrangements that result in greater a result of this rulemaking and remove The proposal also would result in efficiency and improved care outcomes,

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while minimizing the potential for the (ee), (ff), (gg), and (hh), but we ■ g. Revising paragraphs (bb)(1)(iv)(B) costs associated with fraud, waste, and concluded that the fraud and abuse risks and (bb)(2)(iii); abuse. We believe that the proposed rule of protecting arrangements without the ■ h. Designating the note to paragraph would, on average, result in a net guardrails created by the value-based (bb) as paragraph (bb)(3) and revising it; benefit to the healthcare industry, framework were too high. We believe ■ i. Adding reserved paragraphs (cc) beneficiaries, and Federal health care these risks are significant because our and (dd); and programs and could alleviate the proposed safe harbors in (ee) and (hh) ■ j. Adding paragraphs (ee), (ff), (gg), concerns expressed above. We believe could potentially protect arrangements (hh), (ii), (jj), and (kk). there would be no incremental costs to under which providers and suppliers The revisions and additions read as providers and suppliers that already are paid on a fee-for-service basis by follows: spend resources reviewing arrangements Medicare, which rewards the volume of § 1001.952 Exceptions. for compliance with fraud and abuse services performed and items furnished. * * * * * laws. Moreover, by adding flexibility to VI. Paperwork Reduction Act (d) Personal services and engage in certain innovative business management contracts and outcomes- This document does not impose arrangements without risk of liability based payment arrangements. under the statutes, we believe that these information collection and (1) As used in section 1128B of the proposed regulations reduce the recordkeeping requirements. Act, ‘‘remuneration’’ does not include stringency of the existing regulatory Consequently, it need not be reviewed any payment made by a principal to an scheme as it would otherwise apply to by the Office of Management and agent as compensation for the services certain value-based arrangements; in Budget under the authority of the of the agent, as long as all of the addition, by offering new pathways to Paperwork Reduction Act of 1995. following standards are met: protect value-based arrangements, the List of Subjects (i) The agency agreement is set out in proposed regulations would reduce writing and signed by the parties. inefficient behaviors, particularly 42 CFR Part 1001 (ii) The agency agreement covers all of industry behaviors that drive volume- Administrative practice and the services the agent provides to the based healthcare. procedure, Fraud, Grant programs— principal for the term of the agreement We would benefit from public input health, Health facilities, Health and specifies the services to be provided and information during the comment professions, Maternal and child health, by the agent. period regarding whether these Medicaid, Medicare, Social Security. (iii) The term of the agreement is not proposals likely would have a net less than 1 year. benefit on the industry and whether 42 CFR Part 1003 (iv) The methodology for determining different or modified proposals would Fraud, Grant programs—health, the compensation paid to the agent over better facilitate the goals outlined in this Health facilities, Health professions, the term of the agreement is set in proposed rule. Medicaid, Reporting and recordkeeping. advance, is consistent with fair market H. Alternatives Considered For the reasons set forth in the value in arm’s-length transactions and is not determined in a manner that takes We carefully considered the option of preamble, the Office of Inspector General, Department of Health and into account the volume or value of any not pursuing regulatory action. referrals or business otherwise However, based on comments to the Human Services, proposes to amend 42 CFR parts 1001 and 1003 as follows: generated between the parties for which OIG RFI, responses to OIG’s annual payment may be made in whole or in Solicitation of New Safe Harbors and PART 1001—PROGRAM INTEGRITY— part under Medicare, Medicaid, or other Special Fraud Alerts, and other industry MEDICARE AND STATE HEALTH Federal health care programs. feedback, we believe a need for CARE PROGRAMS (v) The services performed under the regulatory reform exists in order to agreement do not involve the counseling provide stakeholders with the flexibility ■ 1. The authority citation for part 1001 or promotion of a business arrangement necessary for innovative care delivery continues to read as follows: or other activity that violates any State and payment redesign. or Federal law. We also considered several other Authority: 42 U.S.C. 1302, 1320a–7, 1320a–7a, 1320a–7b, 1320a–7d, 1395u(j), (vi) The aggregate services contracted alternative approaches to the proposed 1395u(k), 1395w–104(e)(6), 1395y(d), for do not exceed those which are safe harbors, revisions to safe harbors, 1395y(e), 1395cc(b)(2)(D), (E) and (F), and reasonably necessary to accomplish the and proposed exception as explained in 1395hh; and sec. 2455, Pub. L. 103–355, 108 commercially reasonable business great detail in the preceding preamble. Stat. 3327 (31 U.S.C. 6101 note). purpose of the services. For example, our proposals endeavor to ■ 2. Section 1001.952 is amended by: (2) As used in section 1128B of the distinguish between beneficial care ■ a. Revising paragraphs (d), (g) Act, ‘‘remuneration’’ does not include coordination arrangements and introductory text, (g)(1), (g)(3)(i), and any outcomes-based payment as long as payment-for-referral schemes that do (g)(4); all of the standards in paragraphs not serve, and may be contrary to, the ■ b. Adding paragraphs (g)(5) and (6) (d)(2)(i) through (ix) of this section are goals of coordinated care and the shift before the undesignated text at the end met: to value. We considered, and would of paragraph (g); (i) The outcomes-based payment is benefit from public comment on, the ■ c. Designating the undesignated text at made between or among parties that are benefits of our proposals and efficient the end of paragraph (g) as paragraph collaborating to: ways we may distinguish payments to (g)(7) and revising it; (A) Measurably improve (or maintain reward or induce referrals from ■ d. Revising paragraph (y) introductory improvement in) quality of patient care; remuneration provided to promote or text, the second sentence of paragraph or support legitimate care coordination (y)(2), and paragraph (y)(3); (B) Appropriately and materially activities. ■ e. Removing and reserving paragraphs reduce costs to, or growth in We also considered not using the (y)(7) and (13); expenditures of, payors while value-based terms, definitions, and ■ f. Designating the note to paragraph improving, or maintaining the framework for proposed safe harbors (y) as paragraph (y)(14) and revising it; improved, quality of care for patients.

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(ii) To receive an outcomes-based correct identified material performance submitted to the buyer and inform the payment, the agent satisfies one or more failures or material deficiencies in buyer of its obligations under specific evidence-based, valid outcome quality of care resulting from the paragraphs (g)(1) and (2) of this section. measures that are: outcomes-based payment arrangement. * * * * * (A) Related to: (3) For purposes of this paragraph (d): (4) The manufacturer or supplier must (1) Measurably improving, or (i) An agent of a principal is any not pay any remuneration to any maintaining the improved, quality of person, other than a bona fide employee individual (other than a beneficiary) or patient care; of the principal, who has an agreement entity for any medical, surgical, or (2) Appropriately and materially to perform services for, or on behalf of, hospital expense incurred by a reducing costs to, or growth in the principal. beneficiary other than for the cost of the expenditures of, payors while (ii) Outcomes-based payments are items and services subject to the improving, or maintaining the improved limited to payments from a principal to warranty. quality of care for patients; or an agent that: (5) If a manufacturer or supplier offers (3) Both; and (A) Reward the agent for improving a warranty for more than one item or (B) Selected based upon clinical (or maintaining improvement in) patient one or more items and related services, evidence or credible medical support. or population health by achieving one the federally reimbursable items and (iii) The methodology for determining or more outcome measures that services subject to the warranty must be the aggregate compensation (including effectively and efficiently coordinate reimbursed by the same Federal health any outcomes-based payments) paid care across care settings; or care program and in the same Federal between or among the parties over the (B) Achieve one or more outcome health care program payment. term of the agreement is: Set in advance; measures that appropriately reduce (6) The manufacturer or supplier must commercially reasonable; consistent payor costs while improving, or not condition a warranty on a buyer’s with fair market value; and not maintaining the improved quality of exclusive use of, or a minimum determined in a manner that directly care for patients. purchase of, any of the manufacturer’s takes into account the volume or value (iii) Outcomes-based payments or supplier’s items or services. of any referrals or business otherwise exclude any payments: (7) For purposes of this paragraph (g), generated between the parties for which (A) Made, directly or indirectly, by a the term warranty means: payment may be made in whole or in pharmaceutical manufacturer; a (i) Any written affirmation of fact or part by a Federal health care program. manufacturer, distributor, or supplier of written promise made in connection (iv) The agreement neither limits any durable medical equipment, prosthetics, with the sale of an item or bundle of party’s ability to make decisions in their orthotics, or supplies; or a laboratory; or items, or services in combination with patients’ best interest nor induces any (B) That relate solely to the one or more related items, by a party to reduce or limit medically achievement of internal cost savings for manufacturer or supplier to a buyer, necessary items or services. the principal. which affirmation of fact or written (v) The term of the agreement is not promise relates to the nature of the * * * * * less than 1 year. quality or workmanship and affirms or (vi) The services performed under the (g) Warranties. As used in section promises that such quality or agreement do not involve the counseling 1128B of the Act, ‘‘remuneration’’ does workmanship is defect free or will meet or promotion of a business arrangement not include any payment or exchange of a specified level of performance over a or other activity that violates any State anything of value under a warranty specified period of time; or Federal law. provided by a manufacturer or supplier (ii) Any undertaking in writing in (vii) For each outcome measure under of one or more items and services connection with the sale by a the agreement, the parties: (provided the warranty covers at least manufacturer or supplier of an item or (A) Regularly monitor and assess the one item) to the buyer (such as a bundle of items, or services in agent’s performance, including the healthcare provider or beneficiary) of combination with one or more related impact of the outcomes-based payment the items and services, as long as the items, to refund, repair, replace, or take arrangement on patient quality of care; buyer complies with all of the following other remedial action with respect to and standards in paragraphs (g)(1) and (2) of such item or bundle of items in the (B) Periodically rebase during the this section and the manufacturer or event that such item or bundle of items, term of the agreement, to the extent supplier complies with all of the or services in combination with one or applicable. following standards in paragraphs (g)(3) more related items, fails to meet the (viii) The parties set forth in a signed through (6) of this section: specifications set forth in the writing, in advance of, or (1) The buyer (unless the buyer is a undertaking, which written affirmation, contemporaneous with, the Federal health care program beneficiary) promise, or undertaking becomes part of commencement of the terms of the must fully and accurately report any the basis of the bargain between a seller outcomes-based payment arrangement. price reduction of an item or service and a buyer for purposes other than The writing states, at a minimum: The (including a free item or service) that resell of such item or bundle of items; services to be performed by the parties was obtained as part of the warranty, in or for the term of the agreement; the the applicable cost reporting mechanism (iii) A manufacturer’s or supplier’s outcome measure(s) the agent must or claim for payment filed with the agreement to replace another satisfy to receive an outcomes-based Department or a State agency. manufacturer’s or supplier’s defective payment; the clinical evidence or * * * * * item or bundle of items (which is credible medical support relied upon by (3) * * * covered by an agreement made in the parties to select the outcome (i) The manufacturer or supplier must accordance with this paragraph (g)), on measure(s); and the schedule for the fully and accurately report any price terms equal to the agreement that it parties to regularly monitor and assess reduction of an item or service replaces. the outcome measure(s). (including free items and services) that * * * * * (ix) The principal has policies and the buyer obtained as part of the (y) Electronic health records items procedures to promptly address and warranty on the invoice or statement and services. As used in section 1128B

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of the Act, ‘‘remuneration’’ does not the patient would be transported, or (1) The VBE participants establish one include nonmonetary remuneration within 75 miles if the patient resides in or more specific evidence-based, valid (consisting of items and services in the a rural area, as defined in this paragraph outcome measures against which the form of software or information (bb), except that, if the patient is being recipient will be measured and which technology and training services, discharged from an inpatient facility the parties reasonably anticipate will including certain cybersecurity software and transported to the patient’s advance the coordination and and services) necessary and used residence, or another residence of the management of care of the target patient predominantly to create, maintain, patient’s choice, the mileage limits in population. transmit, receive, or protect electronic this paragraph (bb)(1)(iv)(B) shall not (2) The value-based arrangement is health records, if all of the conditions in apply; and commercially reasonable, considering paragraphs (y)(1) through (13) of this * * * * * both the arrangement itself and all section are met: (2) * * * value-based arrangements within the * * * * * (iii) The eligible entity makes the VBE. (2) * * * For purposes of this shuttle service available only within the (3) In advance of, or contemporaneous paragraph (y)(2), software is deemed to eligible entity’s local area, meaning with, the commencement of the value- be interoperable if, on the date it is there are no more than 25 miles from based arrangement or any material provided to the recipient, it is certified any stop on the route to any stop at a change to the value-based arrangement, by a certifying body authorized by the location where healthcare items or the offeror of the remuneration and any National Coordinator for Health services are provided, except that if a recipient(s) of such remuneration have Information Technology to electronic stop on the route is in a rural area, the set forth the terms of the value-based health record certification criteria distance may be up to 75 miles between arrangement in a signed writing. The identified in 45 CFR part 170. that stop and any providers or suppliers writing states, at a minimum: (3) The donor (or any person on the on the route; (i) The value-based activities to be donor’s behalf) does not engage in a undertaken by the parties to the value- * * * * * practice constituting information based arrangement; (3) For purposes of this paragraph blocking, as defined in 45 CFR part 171, (ii) The term of the value-based (bb), the following definitions apply: in connection with the donated items or arrangement; (i) An eligible entity is any individual services. (iii) The target patient population; or entity, except for individuals or (iv) A description of the * * * * * entities (or family members or others (7) [Reserved] remuneration; acting on their behalf) that primarily (v) The offeror’s cost for the * * * * * supply healthcare items; (13) [Reserved] remuneration; (ii) An established patient is a person (vi) The percentage of the offeror’s * * * * * who has selected and initiated contact cost contributed by the recipient; (14) For purposes of this paragraph to schedule an appointment with a (vii) If applicable, the frequency of the (y), the following definitions apply: provider or supplier, or who previously recipient’s contribution payments for (i) Cybersecurity means the process of has attended an appointment with the protecting information by preventing, ongoing costs; and provider or supplier; (viii) The specific evidence-based, detecting, and responding to (iii) A shuttle service is a vehicle that cyberattacks; valid outcome measure(s) against which runs on a set route, on a set schedule; the recipient will be measured. (ii) Health plan shall have the (iv) A rural area is an area that is not meaning set forth at § 1001.952(l)(2); (4) The remuneration exchanged: an urban area, as defined in paragraph (i) Is in-kind; (iii) Interoperable shall mean able to: (bb)(3)(v) of this section; and (A) Securely exchange data with, and (ii) Is used primarily to engage in (v) An urban area is: use data from other health information value-based activities that are directly (A) A Metropolitan Statistical Area technology without special effort on the connected to the coordination and (MSA) or New England County part of the user; management of care for the target (B) Allow for complete access, Metropolitan Area (NECMA), as defined patient population; exchange, and use of all electronically by the Executive Office of Management (iii) Does not induce VBE participants accessible health information for and Budget; or to furnish medically unnecessary items authorized use under applicable State or (B) The following New England or services or reduce or limit medically Federal law; and counties, which are deemed to be parts necessary items or services furnished to (C) Does not constitute information of urban areas under section 601(g) of any patient; and blocking as defined in 45 CFR part 171; the Social Security Amendments of (iv) Is not funded by, and does not and 1983 (Pub. L. 98–21, 42 U.S.C. 1395ww otherwise result from the contributions (iv) Electronic health record shall (note)): Litchfield County, Connecticut; of, any individual or entity outside of mean a repository of electronic health York County, Maine; Sagadahoc County, the applicable VBE. information that: Maine; Merrimack County, New (5) The offeror of the remuneration (A) Is transmitted by or maintained in Hampshire; and Newport County, does not take into account the volume electronic media; and Rhode Island. or value of, or condition the (B) Relates to the past, present, or (cc)–(dd) [Reserved] remuneration on: future health or condition of an (ee) Care coordination arrangements (i) Referrals of patients who are not individual or the provision of healthcare to improve quality, health outcomes, part of the target patient population; or to an individual. and efficiency. As used in section 1128B (ii) Business not covered under the * * * * * of the Act, ‘‘remuneration’’ does not value-based arrangement. (bb) * * * include the exchange of anything of (6) The recipient pays at least 15 (1) * * * value pursuant to a value-based percent of the offeror’s cost for the in- (iv) * * * arrangement if all of the standards in kind remuneration. If a one-time cost, (B) Within 25 miles of the healthcare paragraphs (ee)(1) through (12) of this the recipient makes such contribution in provider or supplier to or from which section are met: advance of receiving the in-kind

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remuneration. If an ongoing cost, the (12) For purposes of this paragraph manufacturer, distributor, or supplier of recipient makes such contribution at (ee), the following definitions apply: durable medical equipment, prosthetics, reasonable, regular intervals. (i) Coordination and management of orthotics, or supplies; or a laboratory. (7) The value-based arrangement: care (or coordinating and managing (vii) Value-based purpose means: (i) Is directly connected to the care) means, for purposes of the anti- (A) Coordinating and managing the coordination and management of care of kickback statute safe harbors at care of a target patient population; the target patient population; § 1001.952, the deliberate organization (B) Improving the quality of care for (ii) Does not place any limitation on of patient care activities and sharing of a target patient population; VBE participants’ ability to make information between two or more VBE (C) Appropriately reducing the costs decisions in the best interest of their participants or VBE participants and to, or growth in expenditures of, payors patients; patients, tailored to improving the without reducing the quality of care for (iii) Does not direct or restrict referrals health outcomes of the target patient a target patient population; or to a particular provider, practitioner, or population, in order to achieve safer and (D) Transitioning from healthcare supplier if: more effective care for the target patient delivery and payment mechanisms (A) A patient expresses a preference population. for a different practitioner, provider, or based on the volume of items and (ii) Target patient population means services provided to mechanisms based supplier; an identified patient population (B) The patient’s payor determines the on the quality of care and control of selected by the VBE or its VBE provider, practitioner, or supplier; or costs of care for a target patient (C) Such direction or restriction is participants using legitimate and population. contrary to applicable law or regulations verifiable criteria that: (ff) Value-based arrangements with (A) Are set out in writing in advance under titles XVIII and XIX of the Act; substantial downside financial risk. As and of the commencement of the value- used in section 1128B of the Act, (iv) Does not include marketing to based arrangement; and ‘‘remuneration’’ does not include the patients of items or services or engaging (B) Further the value-based exchange of payments or anything of in patient recruitment activities. enterprise’s value-based purpose(s). value between a VBE and a VBE (8) The VBE, a VBE participant in the (iii) Value-based activity participant pursuant to a value-based value-based arrangement acting on the (A) Means any of the following arrangement if all of the standards in VBE’s behalf, or the VBE’s accountable activities, provided that the activity is paragraphs (ff)(1) through (8) of this body or responsible person monitors reasonably designed to achieve at least section are met: and assesses, and reports such one value-based purpose of the value- (1) The VBE (directly or through a monitoring and assessment to the VBE’s based enterprise: VBE participant acting on the VBE’s (1) The provision of an item or accountable body or responsible person behalf) has assumed (or is contractually service; as applicable, no less frequently than obligated to assume in the next 6 (2) The taking of an action; or annually or at least once during the term months) substantial downside financial (3) The refraining from taking an of the value-based arrangement for risk (as defined in this paragraph (ff)) arrangements with terms of less than 1 action. (B) Does not include the making of a from a payor for providing or arranging year: for the provision of items and services (i) The coordination and management referral. (iv) Value-based arrangement means for a target patient population. of care for the target population in the (2) Under the value-based value-based arrangement; an arrangement for the provision of at least one value-based activity for a target arrangement, the VBE participant (ii) Any deficiencies in the delivery of meaningfully shares in the VBE’s quality care under the value-based patient population between or among: (A) The value-based enterprise and substantial downside financial risk for arrangement; and providing or arranging for the provision (iii) Progress toward achieving the one or more of its VBE participants; or (B) VBE participants in the same of items and services for the target evidence-based, valid outcome patient population. For purposes of this measure(s) in the value-based value-based enterprise. paragraph (ff), a VBE participant arrangement. (v) Value-based enterprise or VBE meaningfully shares in the VBE’s (9) The parties terminate the means two or more VBE participants: arrangement within 60 days if the VBE’s (A) Collaborating to achieve at least substantial downside financial risk if accountable body or responsible person one value-based purpose; the value-based arrangement provides determines that the value-based (B) Each of which is a party to a that the VBE participant is subject to arrangement: value-based arrangement with the other risk under one of the following three (i) Is unlikely to further the or at least one other VBE participant in methodologies: coordination and management of care the value-based enterprise; (i) A risk-sharing payment pursuant to for the target patient population; (C) That have an accountable body or which the VBE participant is at risk for (ii) Has resulted in material person responsible for financial and 8 percent of the amount for which the deficiencies in quality of care; or operational oversight of the value-based VBE is at risk under its agreement with (iii) Is unlikely to achieve the enterprise; and the applicable payor; evidence-based, valid outcome (D) That have a governing document (ii) A partial or full capitation measure(s). that describes the value-based enterprise payment or similar payment (10) The offeror does not, and should and how the VBE participants intend to methodology, excluding the Medicare not, know that the remuneration is achieve its value-based purpose(s). inpatient prospective payment system likely to be diverted, resold, or used by (vi) Value-based enterprise or other like payment methodology; or the recipient for an unlawful purpose. participant or VBE participant means an (iii) In the case of a VBE participant (11) The VBE or VBE participant individual or entity that engages in at that is a physician, a payment that makes available to the Secretary, upon least one value-based activity as part of meets the requirements of the regulatory request, all materials and records a value-based enterprise. VBE exception for value-based arrangements sufficient to establish compliance with participant does not include a with meaningful downside financial the conditions of this paragraph (ee). pharmaceutical manufacturer; a risk at § 411.357(aa)(2) of this title.

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(3) The remuneration provided by, or (C) Such direction or restriction is (1) The VBE (directly or through a shared among, the VBE and VBE contrary to applicable law or regulations VBE participant acting on behalf of the participant: under titles XVIII and XIX of the Act; or VBE) has assumed (or is contractually (i) Is used primarily to engage in (iii) Include marketing to patients of obligated to assume in the next 6 value-based activities that are directly items or services or engaging in patient months) full financial risk from a payor connected to the items and services for recruitment activities. and has a signed writing with the payor which the VBE is at substantial (7) The VBE or VBE participant makes that specifies the target patient downside financial risk and that are set available to the Secretary, upon request, population and contains terms forth in writing pursuant to all materials and records sufficient to evidencing that the VBE is at full paragraph(ff)(4) of this section; establish compliance with the financial risk for that population for a (ii) Is directly connected to one or conditions of this paragraph (ff). period of at least 1 year. more of the VBE’s value-based purposes, (8) For purposes of this paragraph (ff), (2) The value-based arrangement is set at least one of which must be the the following definitions apply: out in a writing signed by the parties coordination and management of care (i) Substantial downside financial risk that specifies the material terms of the for the target patient population; means risk, for the entire term of the value-based arrangement, including the (iii) Does not induce VBE participants value-based arrangement, in the form of: value-based activities to be undertaken (A) Shared savings with a repayment to reduce or limit medically necessary by the parties, and is for a period of at obligation to the payor of at least 40 items or services furnished to any least 1 year. percent of any shared losses, where loss patient; (3) The VBE participant does not is determined based upon a comparison (iv) Does not include the offer or claim payment in any form directly or of costs to historical expenditures, or to receipt of an ownership or investment indirectly from a payor for items or the extent such data is unavailable, interest in an entity or any distributions services covered under the value-based evidence-based, comparable related to such ownership or investment arrangement. expenditures; interest; and (4) The remuneration exchanged (B) A repayment obligation to the between the VBE and a VBE participant: (v) Is not funded by, and does not payor under an episodic or bundled otherwise result from the contributions (i) Is used primarily to engage in the payment arrangement of at least 20 value-based activities set forth in of, any individual or entity outside of percent of any total loss, where loss is the VBE. writing pursuant to paragraph (gg)(2) of determined based upon a comparison of this section; (4) In advance of, or contemporaneous costs to historical expenditures, or to with, the commencement of the value- (ii) Is directly connected to one or the extent such data is unavailable, more of the VBE’s value-based purposes, based arrangement or any material evidence-based, comparable change to the value-based arrangement, at least one of which must be the expenditures; coordination and management of care the VBE and VBE participant set forth (C) A prospectively paid population- in a signed writing the terms of the for the target patient population; based payment for a defined subset of (iii) Does not induce the VBE or VBE value-based arrangement. The writing the total cost of care of a target patient states all material terms of the value- participants to reduce or limit medically population, where such payment is necessary items or services furnished to based arrangement, including: A determined based upon a review of description of the nature and extent of any patient; historical expenditures, or to the extent (iv) Does not include the offer or the VBE’s substantial downside such data is unavailable, evidence- receipt of an ownership or investment financial risk for the target patient based, comparable expenditures; or interest in an entity or any distributions population; a description of the manner (D) A partial capitated payment from related to such ownership or investment in which the recipient meaningfully the payor for a set of items and services interest; and shares in the VBE’s substantial for the target patient population, where (v) Is not funded by, and does not downside financial risk; the value-based such capitated payment reflects a otherwise result from the contributions activities; the target patient population; discount equal to at least 60 percent of of, any individual or entity outside of and the type and the offeror’s cost of the the total expected fee-for-service the VBE. remuneration. payments based on historical (5) The VBE or VBE participant does (5) The VBE or VBE participant expenditures, or to the extent such data not take into account the volume or offering the remuneration does not take is unavailable, evidence-based, value of, or condition the remuneration into account the volume or value of, or comparable expenditures of the VBE on: condition the remuneration on: participants to the value-based (i) Referrals of patients who are not (i) Referrals of patients who are not arrangement. part of the target patient population; or part of the target patient population; or (ii) Coordination and management of (ii) Business not covered under the (ii) Business not covered under the care, target patient population, value- value-based arrangement. value-based arrangement. based activity, value-based (6) The VBE provides or arranges for: (6) The value-based arrangement does arrangement, value-based enterprise, (i) An operational utilization review not: value-based purpose, and VBE program; and (i) Place any limitation on VBE participant shall have the meaning set (ii) A quality assurance program that participants’ ability to make decisions forth in paragraph (ee) of this section. protects against underutilization and in the best interest of their patients; (gg) Value-based arrangements with specifies patient goals, including (ii) Direct or restrict referrals to a full financial risk. As used in section measurable outcomes, where particular provider, practitioner, or 1128B of the Act, ‘‘remuneration’’ does appropriate. supplier if: not include the exchange of payments or (7) The value-based arrangement does (A) A patient expresses a preference anything of value between the VBE and not include marketing to patients of for a different practitioner, provider, or a VBE participant pursuant to a value- items or services or engaging in patient supplier; based arrangement if all of the standards recruitment activities. (B) The patient’s payor determines the in paragraphs (gg)(1) through (8) of this (8) The VBE or VBE participant makes provider, practitioner, or supplier; or section are met: available to the Secretary, upon request,

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all materials and records sufficient to (B) Adherence to a drug regimen induce or reward, any Federal health establish compliance with the determined by the patient’s licensed care program referrals or other Federal conditions of this paragraph (gg). healthcare provider. health care program business generated (9) For purposes of this paragraph (C) Adherence to a follow-up care outside of the CMS-sponsored model; (gg), the following definitions apply: plan established by the patient’s (iv) The CMS-sponsored model (i) Full financial risk means the VBE licensed healthcare provider. parties, in advance of, or is financially responsible for the cost of (D) Management of a disease or contemporaneous with the all items and services covered by the condition as directed by the patient’s commencement of, the CMS-sponsored applicable payor for each patient in the licensed healthcare provider. model arrangement, set forth the terms target patient population and is (E) Improvement in measurable of the CMS-sponsored model prospectively paid by the applicable evidence-based health outcomes for the arrangement in a signed writing. The payor; patient or for the target patient writing must specify, at a minimum, the (ii) Items and services shall have the population. activities to be undertaken by the CMS- meaning set forth in § 1001.952(t)(2)(iv); (F) Ensuring patient safety. sponsored model parties and the nature and (4) The offeror does not, and should of the remuneration to be exchanged (iii) Coordination and management of not, know that the remuneration is under the CMS-sponsored model care, target patient population, value- likely to be diverted, sold, or utilized by arrangement; based activity, value-based the patient other than for the express (v) The parties to the CMS-sponsored arrangement, value-based enterprise, purpose for which the patient model arrangement make available to value-based purpose, and VBE engagement tool or support is provided. the Secretary, upon request, all participant shall have the meaning set (5) The aggregate retail value of materials and records sufficient to forth in paragraph (ee) of this section. patient engagement tools and supports establish whether the remuneration was (hh) Arrangements for patient furnished to a patient by a VBE exchanged in a manner that meets the engagement and support to improve participant on an annual basis does not conditions of this safe harbor; and quality, health outcomes, and efficiency. exceed $500 unless such patient (vi) The CMS-sponsored model As used in section 1128B of the Act, engagement tools and supports are parties satisfy such programmatic ‘‘remuneration’’ does not include a furnished to patients based on a good requirements as may be imposed by patient engagement tool or support faith, individualized determination of CMS in connection with the use of this furnished by a VBE participant to a the patient’s financial need. safe harbor. patient in a target patient population if (6) The VBE participant makes (2) As used in section 1128B of the all of the conditions in paragraphs available to the Secretary, upon request, Act, ‘‘remuneration’’ does not include a (hh)(1) through (6) of this section are all materials and records sufficient to CMS-sponsored model patient incentive met: establish that the patient engagement under a model for which CMS has (1) The patient engagement tool or tool or support was distributed in a determined that this safe harbor is support is furnished directly to the manner that meets the conditions of this available, if all of the conditions of patient by a VBE participant. paragraph (hh). paragraph (ii)(2)(i) through (v) are met of (2) No individual or entity outside of (7) For purposes of this paragraph the applicable VBE funds or otherwise this section: (hh), coordination and management of (i) The CMS-sponsored model contributes to the provision of the care, target patient population, value- participant reasonably determines that patient engagement tool or support. based purpose, VBE, and VBE (3) The patient engagement tool or the CMS-sponsored model patient participant shall have the meaning set support: incentive will advance one or more forth in paragraph (ee) of this section. (i) Is an in-kind preventive item, good, goals of the CMS-sponsored model; (ii) CMS-sponsored model or service, or an in-kind item, good, or (ii) The CMS-sponsored model patient arrangements and CMS-sponsored service such as health-related incentive has a direct connection to the model patient incentives. technology, patient health-related patient’s healthcare; (1) As used in section 1128B of the monitoring tools and services, or (iii) The CMS-sponsored model Act, ‘‘remuneration’’ does not include supports and services designed to participant makes available to the an exchange of anything of value identify and address a patient’s social Secretary, upon request, all materials between or among CMS-sponsored determinants of health; and records sufficient to establish (ii) That has a direct connection to the model parties under a CMS-sponsored whether the CMS-sponsored model coordination and management of care of model arrangement in a model for patient incentive was distributed in a the target patient population; which CMS has determined that this manner that meets the conditions of this (iii) Does not include any gift card, safe harbor is available if all of the paragraph; and cash, or cash equivalent; following conditions are met: (iv) The CMS-sponsored model (iv) Does not include any in-kind (i) The CMS-sponsored model parties participant satisfies such programmatic item, good, or service used for patient reasonably determine that the CMS- requirements as may be imposed by recruitment or marketing of items or sponsored model arrangement will CMS in connection with the use of this services to patients; advance one or more goals of the CMS- safe harbor. (v) Does not result in medically sponsored model; (v) For purposes of this paragraph unnecessary or inappropriate items or (ii) The exchange of value does not (ii)(2), a patient may retain any services reimbursed in whole or in part induce CMS-sponsored model parties or incentives received prior to the by a Federal health care program; other providers or suppliers to furnish termination or expiration of the (vi) Is recommended by the patient’s medically unnecessary items or services participation documentation of the licensed healthcare provider; and or reduce or limit medically necessary CMS-sponsored model participant. (vii) Advances one or more of the items or services furnished to any (3) For purposes of this paragraph (ii), following goals: patient; the following definitions apply: (A) Adherence to a treatment regimen (iii) The CMS-sponsored model (i) CMS-sponsored model means: determined by the patient’s licensed parties do not offer, pay, solicit, or (A) A model being tested under healthcare provider. receive remuneration in return for, or to section 1115A(b) of the Act or a model

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expanded under section 1115A(c) of the nature of the technology or services to renal disease who is receiving home Act; or be donated, on future referrals. dialysis for which payment is being (B) The Medicare shared savings (3) Neither the recipient nor the made under part B of such title, if— program under section 1899 of the Act; recipient’s practice (or any affiliated (i) The telehealth technologies are (ii) CMS-sponsored model individual or entity) makes the receipt furnished to the individual by the arrangement means an arrangement of technology or services, or the amount provider of services or the renal dialysis between or among CMS-sponsored or nature of the technology or services, facility that is currently providing the model parties to engage in activities a condition of doing business with the under the CMS-sponsored model and donor. in-home dialysis, telehealth visits, or that is consistent with, and is not a type (4) The arrangement is set forth in a other end stage renal disease care to the of arrangement prohibited by, the written agreement that: patient; participation documentation; (i) Is signed by the parties; (ii) The telehealth technologies are (iii) CMS-sponsored model (ii) Describes the technology and not offered as part of any advertisement participant means an individual or services being provided and the amount or solicitation; entity that is subject to, and is operating of the recipient’s contribution, if any; (iii) The telehealth technologies under, participation documentation and with CMS to participate in a CMS- contribute substantially to the provision (5) The donor does not shift the costs sponsored model; of telehealth services related to the of the technology or services to any (iv) CMS-sponsored model party individual’s end stage renal disease, is Federal health care program. means: not of excessive value, and is not (6) For purposes of this paragraph (jj) (A) A CMS-sponsored model duplicative of technology that the the following definitions apply: participant; or beneficiary already owns if that (B) Other individual or entity who the (i) Cybersecurity means the process of technology is adequate for the telehealth protecting information by preventing, participation documentation specifies purposes; and may enter into a CMS-sponsored model detecting, and responding to (iv) The provider of services or a renal arrangement; cyberattacks. (v) CMS-sponsored model patient (ii) Technology means any software or dialysis facility does not bill Federal incentive means remuneration not of a other types of information technology, health care programs, other payors, or type prohibited by the participation other than hardware. individuals for the telehealth documentation and is furnished (kk) ACO Beneficiary Incentive technologies, claim the value of the consistent with the CMS-sponsored Program. As used in section 1128B of telehealth technologies as a bad debt for model by a CMS-sponsored model the Act, ‘‘remuneration’’ does not payment purposes under a Federal participant (or by an agent of the CMS- include an incentive payment made by health care program, or otherwise shift sponsored model participant under the an ACO to an assigned beneficiary the burden of the value of the telehealth CMS-sponsored model participant’s under a beneficiary incentive program technologies onto a Federal health care direction and control) directly to a established under section 1899(m) of the program, other payors, or individuals. patient under the CMS-sponsored Act, as amended by Congress from time * * * * * model; and to time, if the incentive payment is (vi) Participation documentation made in accordance with the Telehealth technologies, for purposes means the participation agreement, requirements found in such subsection. of the definition of the term cooperative agreement, regulations, or ‘‘remuneration’’ as set forth in this model-specific addendum to an existing PART 1003—CIVIL MONEY section and the telehealth technologies contract with CMS that: PENALTIES, ASSESSMENTS AND exception to section 50302(c) of the (A) Is currently in effect, and EXCLUSIONS Bipartisan Budget Act of 2018, which adds an exception as new section (B) Specifies the terms of a CMS- ■ 3. The authority citation for part 1003 1128A(i)(6)(J) of the Act, means sponsored model. continues to read as follows: (jj) Cybersecurity technology and multimedia communications equipment related services. As used in section Authority: 42 U.S.C. 262a, 1302, 1320–7, that includes, at a minimum, audio and 1128B of the Act, ‘‘remuneration’’ does 1320a–7a, 1320b–10, 1395u(j), 1395u(k), video equipment permitting two-way, not include nonmonetary remuneration 1395cc(j), 1395w–141(i)(3), 1395dd(d)(1), 1395mm, 1395nn(g), 1395ss(d), 1396b(m), real-time interactive communication (consisting of certain types of 11131(c), and 11137(b)(2). between the patient and distant site cybersecurity technology and services), physician or practitioner used in the if all of the conditions in paragraphs ■ 4. Section 1003.110 is amended by diagnosis, intervention, or ongoing care (jj)(1) through (5) of this section are met: adding paragraph (10) to the definition management—paid for by Medicare Part (1) The technology and services are of ‘‘remuneration’’ and adding in B—between a patient and the remote necessary and used predominantly to alphabetical order a definition for healthcare provider. Telephones, implement and maintain effective ‘‘telehealth technologies’’ to read as facsimile machines, and electronic mail follows: cybersecurity. systems are not telehealth technologies. (2) The donor does not: § 1003.110 Definitions. (i) Directly take into account the * * * * * volume or value of referrals or other * * * * * Dated: September 30, 2019. Remuneration *** business generated between the parties Alex M. Azar II, when determining the eligibility of a * * * * * Secretary. potential recipient for the technology or (10) The provision of telehealth services, or the amount or nature of the technologies by a provider of services or Joanne M. Chiedi, technology or services to be donated; or a renal dialysis facility (as such terms Acting Inspector General. (ii) Condition the donation of are defined for purposes of title XVIII of [FR Doc. 2019–22027 Filed 10–9–19; 4:15 pm] technology or services, or the amount or the Act) to an individual with end stage BILLING CODE 4152–04–P

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