1. NCAHRMM EDUCATION SESSION
DISCUSSION AND CLARIFICATION OF
SAFE HARBOR ACT
Shirley Ham, CMRP
September 15-16, 2016

2. Learning Objectives Review the history of the Safe Harbor Act
Discuss key components of the Act
Review implications of violations of the Act
Discuss “best practices” for ensuring compliance

3. Anti-Kickback Statute
Under the Anti-kickback Statute, it is illegal to knowingly or willfully:
Offer, pay, solicit, or receive remuneration
Directly or indirectly
In cash or in kind
In exchange for
Referring an individual or
Furnishing or arranging for a good or service and
For which payment may be made under Medicare or Medicaid

4. What is Remuneration?
Extremely Broad Scope, whether in cash or in kind and whether made directly or indirectly including:
Kickbacks
Bribes
Rebates
Gifts
Above or below market rent or lease payments
Discounts
Furnishing of supplies, services or equipment either
free, above or below market
Waivers of payments due

5. Anti-Kickback Statute - Penalties
Criminal penalties and administrative sanctions for violating the AKS include:
Felony Crime
Up to 5 years imprisonment and/or
$25,000 fine
And can include exclusion from participation in the Federal health care programs

6. Anti-Kickback Statute - Penalties
Civil penalties for violating the Statute can:
Cost as much $50,000 per kickback and
Three times the amount of damages sustained by the government

7. Real Life Examples of Illegal Conduct
Pharmaceutical company offers 1,000 frequent flier miles every time physician starts patient on certain drug and completes a marketing questionnaire; after 50 patients, physician has free plane ticket anywhere in U.S. (OIG Special Fraud Alert, August 1994)
Pacemaker Manufacturer offers doctor $250 for each of its pacemakers doctor implants; a competitor offers $400--in the end, doctor receives $238,000 from two firms and implants scores of unnecessary pacemakers. (Excerpted from Marc. A. Rodwin, Medicine, Money, and Morals, (1993))
Ambulance service seeking exclusive contract with city hires city employee who is part of bid committee to be a “consultant,” reimbursing him with cash, cars, and trips. (United States v. Bay State Ambulance, 874 F.2d 20 (1st Cir. 1989))

8. Safe Harbor Provisions
Describe various payment and business practices that, although they potentially implicate the Federal anti-kickback statute, are not treated as offenses under the statute
Were developed “to limit the reach of the statute somewhat by permitting certain non-abusive arrangements, while encouraging beneficial or innocuous arrangements” 56 FR 35953, (July 29, 1991)

9. Safe Harbor Act
To fit into an Anti-Kickback safe harbor, you must fit squarely within the requirements. If the safe harbor or exception contains multiple elements or conditions, you must satisfy each element or condition.

10. SAFE HARBOR PROVISIONS 42 C. F.R. 1001.952
Investment Interests
Space and equipment rental
Personal services and management contracts
Sale of medical practice
Referral services
Warranties
Employees
GPOs and discounts
Waiver of beneficiary co-insurance and deductible amounts
Health Plan/Managed care

11. SAFE HARBOR PROVISIONS 42 C. F.R. 1001.952
Investment in Ambulatory Surgical Centers
Joint ventures in underserved areas
Sales of physician practices to hospitals in underserved areas
Subsidies for Obstetrical malpractice insurance in underserved areas
Investments in group practices
Specialty referral arrangements between providers
Cooperative Hospital Services Organization

12. Best Practices for Compliance & Investigation Responsiveness

13. Best Practices: Minimizing Exposure
Reasonable measures, not perfection: A strong internal compliance program may not prevent a rogue employee from committing fraud, but it may defeat scienter
Adopt a formal business ethics compliance program and internal control system
Develop standards and procedures to prevent, detect, and respond to improper conduct
Monitor compliance through regular internal and external audits
Create a compliance hotline and conduct formal investigations into complaints
Conduct employee compliance training and consistently inform employees of outlets for grievances

14. Best Practices: Risk Assessment
Monitor government interactions
Understand express certification in government contracts and programs
Account for use of government contract funds and grants
Evaluate business partners, especially government subcontractors
Take care in responding to billing inquiries as incorrect explanations may be used as evidence of fraud
Documentation and transparency are key

15. Best Practices: Investigation Responsiveness
Critical to know of FCA complaints as soon as possible
Whistleblower warning signs:
HR issues; exit interview statements
Unexpected audits
Requests for billing explanations
Increased web activity
Former employees contacted
Contact and present your case to DOJ and USAO
The most critical juncture is the government’s intervention decision

16. Best Practices: Investigation Responsiveness
Once in litigation:
File motion to dismiss
Consider privilege and potential waiver issues early on
Identify “sources of corporate knowledge”: Whose scienter matters?
Conduct a damage analysis
If government declines intervention, keep lines of communication open
Ability to settle often depends on the government

17. Best Practices: Privileged Internal Investigation
Internal investigation must include an attorney to preserve privilege
Work should be performed at the direction of the attorney
Employees should receive Upjohn warning in interviews
Consider retaining independent counsel for employee-witnesses and employees who may face individual exposure.

18. QUESTIONS?