Revisions to the Fraud and Abuse Rules

The federal fraud and abuse rules strike fear into health care providers because they are so broad and vague and the Office of Inspector General and the federal district attorneys have used the rules to obtain many large settlements and have imposed criminal penalties in a number of cases.  The rules supposedly are also inhibiting adoption of value-based purchasing and other innovative reimbursement methods.  So CMS and OIG have issued proposed changes (“clarifications” in bureaucratese) to the rules.   (F & A Rules)   The changes focus on the self-referral aspect of the fraud and abuse rules, which prohibit physicians from referring patients to entities in which they have a financial interest.  Before releasing the proposed changes CMS invited comments and received several hundred, which addressed the need to allow new reimbursement methods among providers that facilitate coordination of care and the reduction of regulatory burdens.  Interestingly, comments also centered on the ability to donate cybersecurity tools to providers.  The essence of the changes is a new exception tied to participation in a value-based enterprise, which basically involves coordinating care, improving quality or reducing costs for a specific population.  As you can imagine, the rules are long, detailed and will require extensive work by lawyers to aid providers in figuring out if the way they do business is safe.  And since OIG and HHS are releasing separate rules, instead of doing the obvious and having a common rule, people have to deal with two agencies.  Your government at work.  In other words, no real change.  The application of the exception is also tied to how much financial risk the providers are accepting.  More financial risk means the activities are more likely to be safe.  Certain entities are proposed to be excluded, including drug and device and durable medical equipment manufacturers and PBMs, wholesalers and distributors.  Not sure what the rationale for that is, since they are responsible for a lot of spending and spending growth and bringing them into supposed value-based arrangement might help ameliorate that spending as well.  While we don’t doubt CMS’ sincerity in trying to remove obstacles to potentially innovative reimbursement arrangements, the length and complexity of the rules is itself a significant inhibitor and burden.