The safe harbor provisions were added by Section 431 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA). Anti-kickback safe harbor provisions specify various payment and business practices that would limit the reach of the federal anti-kickback statute. The safe harbors are permitted to enhance the resources available to health centers in order to help them achieve their community benefit mission. The regulation implementing the MMA safe harbors was published as a final rule on October 4, 2007. The MMA specifically excludes from the reach of the anti-kickback statute any remuneration between a federally qualified health center health center (FQHC) and an individual or entity providing good, items, services, donations, loans, or a combination thereof, to the health center pursuant to a contract, lease grant, loan, or other agreement, if such agreement contributes to the ability of the health center to maintain or increase the availability, or enhance the quality, of services provided to a medically underserved population (MUP) that is served by the health center.
Protected remuneration is the transfer of “goods, items, services, donations or loans (whether the donation or loan is in cash or in-kind), or a combination thereof from an individual or entity to a health center” as long as nine standards are met (as outlined below). Remuneration must be medical or clinical in nature and relate directly to the services provided by the health center as part of the scope of the health center’s Section 330 grant. The phrase “medical or clinical in nature” broadly covers all medical and clinical services, including screening and diagnostic laboratory services. Further, donors that offer to provide goods, items, or services must accept all referrals of patients from the health center who clinically qualify for the goods, items or services, regardless of payer status or ability to pay.
According to the federal Office of the Inspector General, Congress enacted Section 431 of the MMA to enable some health centers to converse limited Section 330 and other monies by accepting needed goods, items, services, donations or loans for free or at reduced rates from willing providers and suppliers. The Congressional intent in adopting anti-kickback safe harbors for health centers was to permit health centers to accept certain remunerations that would otherwise implicate the anti-kickback statute, when the remuneration furthers a core purpose of the Federal health centers programs: ensuring the availability and quality of safety net health care services to otherwise underserved population.
To the extent California law references the federal law regarding the anti-kickback safe harbors applicable to FQHCs, the federal regulations apply. The federal law is referenced both in California’s Business & Professions Code and California’s Welfare & Institutions Code to protect health centers and donors of remuneration to health centers from the reach of the state’s anti-kickback statute.
Remuneration does not include the transfer of any goods, items, services, donations or loans (whether the donation or loan is in cash or in-kind), or combination thereof from an individual or entity to a federally qualified health center, as long as the following nine standards are met (per 42 CFR 1001.952(w)). Health centers are encouraged to develop internal policies and procedures to ensure that the nine standards are met in order to maintain compliance with the law.
1. The transfer is made pursuant to a contract, lease, grant, loan, or other agreement that is set out in writing, is signed by the parties, and covers and specifies the amount of, all goods, items, services, donations, or loans to be provided by the individual or entity to the health center. The amount of goods, items, services, donations, or loans specified in the agreement may be a fixed sum, fixed percentage, or set forth by a fixed methodology. The amount may not be conditioned on the volume or value of Federal health care program business generated between the parties. The written agreement will be deemed to cover all goods, items, services, donations, or loans provided by the individual or entity to the health center if all separate agreements between the individual or entity and the health center incorporate each other by reference or if they cross-reference a master list of agreements that is maintained centrally, is kept up to date, and is available for review by the Secretary upon request. The master list should be maintained in a manner that preserves the historical record of arrangements.
2. The goods, items, services, donations, or loans are medical or clinical in nature or relate directly to services provided by the health center as part of the scope of the health center's section 330 grant (including, by way of example, billing services, administrative support services, technology support, and enabling services, such as case management, transportation, and translation services, that are within the scope of the grant).
3. The health center reasonably expects the arrangement to contribute meaningfully to the health center's ability to maintain or increase the availability, or enhance the quality, of services provided to a medically underserved population served by the health center, and the health center documents the basis for the reasonable expectation prior to entering the arrangement. The documentation must be made available to the Secretary upon request.
4. At reasonable intervals, but at least annually, the health center must re-evaluate the arrangement to ensure that the arrangement is expected to continue to satisfy the standard set forth in requirement #3, and must document the re-evaluation contemporaneously. The documentation must be made available to the Secretary upon request. Arrangements must not be renewed or renegotiated unless the health center reasonably expects the standard set forth in #3 to be satisfied in the next agreement term. Renewed or renegotiated agreements must comply with the requirements of #3.
5. The individual or entity does not require the health center (or its affiliated health care professionals) to refer patients to a particular individual or entity, OR restrict the health center (or its affiliated health care professionals) from referring patients to any individual or entity.
6. Individuals and entities that offer to furnish goods, items, or services without charge or at a reduced charge to the health center must furnish such goods, items, or services to all patients from the health center who clinically qualify for the goods, items, or services, regardless of the patient’s payor status or ability to pay. The individual or entity may impose reasonable limits on the aggregate volume or value of the goods, items, or services furnished under the arrangement with the health center, provided such limits do not take into account a patient’s payor status or ability to pay.
7. The agreement must not restrict the health center’s ability, if it chooses, to enter into agreements with other providers or suppliers of comparable goods, items, or services, or with other lenders or donors. Where a health center has multiple individuals or entities willing to offer comparable remuneration, the health center must employ a reasonable methodology to determine which individuals or entities to select and must document its determination. In making these determinations, health centers should look to the procurement standards for recipients of Federal grants set forth in 45 CFR 74.40 through 74.48 (go to http://www.gpoaccess.gov/cfr/).
8. The health center must provide effective notification to patients of their freedom to choose any willing provider or supplier. In addition, the health center must disclose the existence and nature of an agreement (of the type described in #1) to any patient who inquires. The health center must provide such notification or disclosure in a timely fashion and in a manner reasonably calculated to be effective and understood by the patient.
9. The health center may, at its option, elect to require that an individual or entity charge a referred health center patient the same rate it charges other similarly situated patients not referred by the health center or that the individual or entity charge a referred health center patient a reduced rate (where the discount applies to the total charge and not just to the cost-sharing portion owed by an insured patient).