[Federal Register Volume 62, Number 100 (Friday, May 23, 1997)]
[Proposed Rules]
[Pages 28410-28413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13718]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
42 CFR Part 1001
RIN 0991-AA91
Health Care Programs, Fraud and Abuse; Intent To Form the
Negotiated Rulemaking Committee for the Shared Risk Exception
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Intent to form negotiated rulemaking committee and notice of
meetings.
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SUMMARY: We have been statutorily-mandated under section 216 of the
Health Insurance Portability and Accountability Act (HIPAA) of 1996, to
establish a negotiated rulemaking committee in accordance with the
Negotiated Rulemaking Act and the Federal Advisory Committee Act
(FACA). The committee's purpose would be to negotiate the development
of the interim final rule addressing the shared risk exception, in
section 216 of HIPAA, to the Federal health care programs' anti-
kickback provisions. The committee will consist of representatives of
interests that are likely to be significantly affected by the interim
rule. The committee will be assisted by an impartial facilitator. We
are requesting public comments on whether we have properly identified
interests that will be affected by key issues discussed below.
DATES: Comments will be considered if we receive them at the address
provided below by no later than 5 p.m. on June 9, 1997.
The meetings will be held at 9:00 a.m. on June 17-18, 1997, and
July 28-30, 1997.
ADDRESSES: Please mail or deliver your written comments (1 original and
3 copies) to the following address: Office of Inspector General,
Department of Health and Human Services, Attention: OIG-33-NOI, Room
5246, Cohen Building, 330 Independence Avenue, SW., Washington, DC
20201.
Because of staffing and resource limitations, we cannot accept
comments by facsimile (FAX) transmission. In commenting, please refer
to file code OIG-33-NOI. Comments received timely will be available for
public inspections as they are received, generally beginning
approximately 2 weeks after publication of a document, in Room 5550 of
the Office of Inspector General at 330 Independence Avenue, S.W.,
Washington, D.C., on Monday through Friday of each week from 8:00 a.m.
to 4:30 p.m., (202) 619-0335.
The meetings will be held at the Holiday Inn Capitol, 550 C Street,
SW., Washington, DC 20024.
FOR FURTHER INFORMATION CONTACT:
Joel Schaer, (202) 619-0089, OIG Regulations Officer; Judy Ballard,
(202) 690-7419, Convener.
SUPPLEMENTARY INFORMATION:
I. Negotiated Rulemaking Act
The Negotiated Rulemaking Act, Public Law 101-648 (5 U.S.C. 561-
569), establishes a framework for the conduct of negotiated rulemaking
and encourages agencies to use negotiated rulemaking to enhance the
informal rulemaking process. Under the Act, the head of an agency must
consider whether--
There is a need for a rule;
There are a limited number of identifiable interests that
will be significantly affected by the rule;
There is a reasonable likelihood that a committee can be
convened with a balanced representation of person who (1) Can
adequately represent the interests identified, and (2) are willing to
negotiate in good faith to reach a consensus on the rulemaking;
There is reasonable likelihood that a committee will reach
a consensus on the rulemaking within a fixed period of time;
The negotiated rulemaking process will not unreasonably
delay the development and issuance of a final rule;
The agency has adequate resources and is willing to commit
such resources, including technical assistance, to the committee; and
The agency, to the maximum extent possible consistent with
the legal obligations of the agency, will use the consensus of the
committee with respect to developing the rule proposed by the agency
for notice and comment.
Negotiations are conducted by a committee chartered under the FACA
(5 U.S.C. App. 2). The committee includes an agency representative and
is assisted by an impartial facilitator. The goal of the committee is
to reach consensus on the language or issues involved in a rule. If
consensus is reached, it is used as the basis of the interim final
rule. The process does not affect otherwise
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procedural requirements of the FACA, the Administrative Procedure Act
and other statutes.
II. Subject and Scope of the Rule
A. Need for the Rule
Section 216 of HIPAA (Public Law 104-191) mandates a negotiated
rulemaking process for establishing standards for a statutory exception
to the anti-kickback statute.
B. Subject and Scope of the Rule
The Federal health care programs' anti-kickback statute, set forth
in section 1128B(b) of the Social Security Act (the Act), provides
criminal penalties for individuals or entities that knowingly and
willfully offer, pay, solicit or receive bribes, kickbacks or other
remuneration in order to induce business reimbursed by Medicare or
other Federal health care programs. In addition, for violations of
section 1128B(b), the Department has the authority to exclude a person
or entity from participation in the Medicare or State health care
programs, in accordance with section 1128(b)(7) of the Act.
Because the statutory language of the anti-kickback statute is
quite broad, there was concern that many innocuous or even beneficial
arrangements would be covered by the statute. As a result, section 14
of Public Law 100-93, the Medicare and Medicaid Patient and Program
Protection Act of 1987, authorized the promulgation of regulations
``specifying payment practices that shall not be treated as a criminal
offense under section 1128B(b) of the Social Security Act and shall not
serve as the basis for an exclusion under section 1128(b)(7) of such
Act.'' These have come to be known as the ``safe harbor'' regulations.
To date, we have promulgated two final rules that have established 13
specific areas for ``safe harbor'' protection under the anti-kickback
statute (July 21, 1991 (56 FR 35952) and January 25, 1996 (61 FR
2122)).
Section 216 of HIPAA specifically amends section 128B(b)(3)(F) of
the Act to include a new statutory exception for risk-sharing
arrangements. The provision establishes a new statutory exception from
liability under the anti-kickback statute for remuneration between an
eligible organization under section 1876 of the Act and an individual
or entity providing items or services, or any combination thereof, in
accordance with a written agreement between these parties. The
provision also allows remuneration between an organization and an
individual or entity if a written agreement places the individual or
entity at ``substantial financial risk'' for the cost or utilization of
the items or services provided. Section 216 requires the Department, in
consultation with the Department of Justice, to engage in a negotiated
rulemaking process to establish standards related to this exception for
risk-sharing arrangements. The factors to be considered are (1) The
level of risk appropriate to the size and type of arrangement; (2) the
frequency of assessment and distribution of incentives; (3) the level
of capital contribution; and (4) the extent to which the risk-sharing
arrangement provides incentives to control the cost and quality of
health care services.
C. Issues and Questions To Be Resolved
We anticipate some discussions about the basic approach to the
rule, including what policy issues are properly considered in
determining whether arrangements should be excepted from the anti-
kickback provisions, whether flexibility or certainty in the rule is
more important, and whether the definitions of terms used in the
exception must be consistent with use of those terms in other contexts.
In addition, we anticipate discussion on a limited number of specific
issues.
Specific Issues for Discussion
The negotiated rulemaking will address the following specific
issues.
How is the term ``written agreement'' to be defined?
We expect discussion on whether the agreement should be of minimum
duration, what the agreement should contain and whether unwritten side
agreements should be prohibited.
What does the term ``eligible organization under section
1876 of the Social Security Act'' mean?
We expect discussion on whether this phrase is limited to Medicare
risk contractors (and to arrangements for services provided under
Medicare contracts) or has a broader meaning. In addition, we expect
discussions on whether the first part of the exception applies to
remuneration only if it is in accordance with an agreement where an
``eligible organization'' is a party, or also if in accordance with
``lower level'' agreements, such as one between a physician and a
physician group practice that has an agreement with a health
maintenance organization. There may also be some discussion of the term
``organization'' as used in the second part of the exception.
What is an ``individual or entity providing items or
services or a combination thereof''?
We expect discussion on whether this includes entities such as drug
companies or device manufacturers providing combinations of items and
services, and when this constitutes ``bundling'' that would be harmful
to the Federal health care programs without further protections. We
also expect to address whether the services must be health care
services or could be other services, such as marketing services.
What constitutes ``substantial financial risk for the cost
of utilization of items or service''?
The legislative history of the exception lists certain factors
(such as the level of capital contribution) to be taken into account in
determining whether the risk is substantial. We expect discussion on
how these factors should be taken into account, what constitutes risk
(for example, should bonuses and withholds be treated the same), and
whether special treatment should be given to encourage providers to
assume risk where they do not ordinarily do so or where risk is
difficult to measure. In addition, we anticipate discussion about how
to take into account the total risk-sharing arrangement between the
parties.
Issues Outside the Scope of the Rule
With regard to parameters outside the scope of the rule, the OIG
does not plan to negotiate the following issues--
Whether any existing regulatory exceptions to the anti-
kickback provisions (safe harbors) should be amended, or proposed safe
harbors enacted;
Whether any other new safe harbors should be enacted; or
How the OIG should implement a requirement that it issue
advisory opinions.
In addition, the OIG will not agree to adopt any practices or
concepts that do not contain adequate controls on potential abuse or
manipulation.
We invite public comment on issues not identified.
III. Affected Interests and Potential Participants
The convener has proposed, and we have agreed to accept, the
following organizations as negotiation participants. We believe these
organizations represent an appropriate mix of interests and backgrounds
affected.
American Association of Health Plans
American Association of Retired Persons
American Health Care Association
American Hospital Association
American Medical Association
[[Page 28412]]
American Medical Group Association
Blue Cross Blue Shield Association
Consumer Coalition on Quality in Health Care
Coordinated Care Coalition
Department of Justice
Federation of American Health Systems
Health Industry Manufacturers Association
Heath Insurance Association of America
National Association of Community Health Centers
Independent Insurance Agents of America/National Association of Health
Underwriters
National Association of Medicaid Fraud Control Units
National Association of State Medicaid Directors
Nation Rural Health Association
Pharmaceutical Research and Manufacturers Association
The IPA Association of America
The interests identified included law enforcement agencies, health
programs, health plans, provider organizations, health care
professionals and consumers. In determining whether the potential
effect of the rule on provider and professional groups which sought to
participate is ``significant,'' we considered the extent to which--
Items or services provided by group members are covered by
the relevant programs;
Group members are entering into risk-sharing arrangements;
The anti-kickback provisions have been applied to
prosecute or prohibit arrangements which group members have used or
considered using (either where one party is an ``eligible
organization'' or where risk-sharing may be involved); and
The group actively lobbied for the exception or commented
on related provisions. We also sought to reflect differences in the
type of risk that might be assumed and in the ways individuals or
entities organize to provide items or services.
The intent in establishing the negotiating committee is that all
interests are represented, not necessarily all parties. We believe this
proposed list of participants represents all interests associated with
the rule to be negotiated. We invite comment on this list of
negotiation participants.
IV. Schedule for the Negotiation
We have set a deadline of 6 months beginning with the date of the
first meeting for the committee to complete work on developing the
interim final rule. We intend to terminate the activities of the
committee if it does not appear likely to reach consensus within this
time period.
The first meeting is schedule for June 17-18, 1997 at the Holiday
Inn Capitol, 550 C Street, S.W., Washington, D.C. 20024. The first
day's meeting will begin at 9:00 a.m. The purpose of this meeting will
be discuss in detail how the negotiations will proceed and how the
committee will function. The committee will--
Agree to ground rules for committee operation;
Hear presentations on the anti-kickback statute and
related provisions, as well as what risk-sharing arrangements are being
developed;
Determine how best to address the principal issues; and
If time permits, begin to address those issues.
A second meeting is scheduled for July 28-30, 1997 at the Holiday
Inn Capitol, 550 C Street, S.W., Washington, D.C. 20024, beginning at
9:00 a.m. We expect that by this meeting the committee can complete
action on any procedural matters outstanding from the organizational
meeting, and either begin or continue to address the issues.
Subsequent meetings of the committee would be held approximately
one month apart, in the Washington, D.C. area.
V. Formation of the Negotiating Committee
A. Procedure for Establishing an Advisory Committee
As a general rule, an agency of the Federal Government is required
to comply with the requirements of FACA when it establishes or uses a
group that includes nonfederal members as a source of advice. Under
FACA, an advisory committee is established once the charter has been
approved by the Secretary. We will not begin negotiations until the
charter is approved.
B. Participants
The number of participants in the group should not exceed 25. A
number larger than this could make it difficult to conduct effective
negotations. One purpose of this notice to help determine whether the
interim final rule would significantly affect interests not adequately
represented by the proposed participants. We do not believe that each
potentially affected organization or individual must necessarily have
its own representative. However, each interest must be adequately
represented. Moreover, we must be satisfied that the group as a whole
reflects a proper balance and mix of interests.
C. Requests for Representation
If, in response to this notice, an additional individual or
representative of an interest requests membership or representation in
the negotiating group, we will determine, in consultation with the
convener, whether that individual or representative should be added to
the group. We will make that decision based on whether the individual
or interest--
Would be significantly affected by the rule; and
Is already adequately represented in the negotiating
group.
D. Establishing the Committee
After reviewing any comments on this notice and any requests for
representation, we will take the final steps to form the committee.
VI. Negotiation Procedures
When the committee is formed, the following procedures and
guidelines will apply, unless they are modified as a result of comments
received on this notice or during the negotiating process.
A. Facilitator
We will use an impartial facilitator. The facilitator will not be
involved with the substantive development or enforcement of the
regulation. The facilitator's role is to--
Chair negotiating sessions;
Help the negotiation process run smoothly; and
Help participants define and reach consensus.
B. Good Faith Negotiations
Participants must be willing to negotiate in good faith and be
authorized to do so. We believe this must be accomplished by selection
of senior officials as participants. We believe senior officials are
best suited to represent the interests and viewpoint of their
organizations. This applies to the OIG as well, and we are designating
D. McCarty Thornton, Chief Counsel to the Inspector General, to
represent the OIG.
C. Administrative Support
We will supply logistical, administrative and management support.
If deemed necessary and appropriate, we will provide technical support
to the committee in gathering and analyzing additional data or
information.
D. Meetings
Meetings will be held at the Holiday Inn Capitol, 550 C Street,
S.W., Washington, D.C. 20024 at the convenience of the committee. We
are announcing the first two meetings through this notice, and will
announce
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committee meetings and agendas through further notices in the Federal
Register. Unless announced otherwise, meetings are open to the public.
E. Committee Procedures
Under the general guidance and direction of the facilitator, and
subject to any applicable legal requirements, the members will
establish the detailed procedures for committee meetings that they
consider most appropriate.
F. Defining Consensus
The goal of the negotiating process is consensus. Under the
Negotiated Rulemaking Act, consensus means that each interest concurs
in the result, unless the term is defined otherwise by the committee.
We expect the participants to fashion their working definition of this
term.
G. Failure of Advisory Committee To Reach Consensus
If the committee is unable to reach consensus, the OIG will proceed
to develop an interim final rule. Parties to the negotiation may
withdraw at any time. If this happens, the remaining committee members
and the OIG will evaluate whether the committee should continue.
H. Record of Meetings
In accordance with FACA's requirements, minutes of all committee
meetings will be kept. The minutes will be placed in the public
rulemaking record.
I. Other Information
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
Dated: April 11, 1997.
June Gibbs Brown,
Inspector General.
Approved: May 19, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 97-13718 Filed 5-21-97; 10:02 am]
BILLING CODE 4150-04-M
