Changes to the Anti-Kickback Statute’s Personal Services Safe Harbor and Value-Based Care Models

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The Office of Inspector General (“OIG”) modified the personal services and management contracts safe harbor of the federal Anti-Kickback Statute (“AKS”) earlier this year. These modifications expand protections to payment structures that incorporate value-based care models.

The personal services and management contracts safe harbor was revised in three meaningful ways: (i) replaced the requirement to specify aggregate compensation in advance with a more lenient requirement to specify compensation methodology in advance; (ii) eliminated certain written requirements for part-time or periodic contracts; and (iii) created new protections for outcome-based payment arrangements.

The OIG substituted the requirement that aggregate compensation be set in advance with a requirement that the methodology for determining compensation be set in advance. This change allows more flexibility in designing agreements and mitigates the difficulty of satisfying this Safe Harbor by generating compensation schedules (instead of the methodology) in advance.

Additionally, the new rule better aligns the Safe Harbor with the equivalent Stark Law exception, which streamlines and simplifies drafting of personal services agreements.

Such methodologies must still adhere to Safe Harbor’s other conditions, including requirements that the methodology be commercially reasonable, consistent with fair market value, and not take into account referrals or other business implicating federal healthcare programs. The Safe Harbor will not protect arrangements that do not meet the above conditions.

Since the 2021 rule modification of the personal services and management contracts safe harbor is so recent, there are no opinions reflecting the interpretation of what “methodology for determining compensation” from the OIG. However, OIG commentary on the rule changes gives some insight as to the language change under the AKS. OIG commentary indicates that it believes that other safe harbor conditions mitigate the risk of structured agreements that may arguably take into consideration the volume and value of referrals.

OIG has stated that it is possible to structure an arrangement to fit within the safe harbor by using an hourly rate or other set, verifiable formula provided that all other conditions of the safe harbor are met. OIG has also cautioned that parties seeking protection under this safe harbor must evaluate the specific facts and circumstances of their arrangement to determine whether the compensation methodology over the term of the agreement is set in advance before any payment under the arrangement is made. Any remuneration also must meet all other conditions of the safe harbor for protection.

Questions about whether a business practice violates the Federal Anti-Kickback Statute, or whether these new modifications to the Personal Services Safe Harbor are applicable? Call us today for a consultation.

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Changes to the Anti-Kickback Statute’s Personal Services Safe Harbor and Value-Based Care Models

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

The Office of Inspector General (“OIG”) modified the personal services and management contracts safe harbor of the federal Anti-Kickback Statute (“AKS”) earlier this year. These modifications expand protections to payment structures that incorporate value-based care models.

The personal services and management contracts safe harbor was revised in three meaningful ways: (i) replaced the requirement to specify aggregate compensation in advance with a more lenient requirement to specify compensation methodology in advance; (ii) eliminated certain written requirements for part-time or periodic contracts; and (iii) created new protections for outcome-based payment arrangements.

The OIG substituted the requirement that aggregate compensation be set in advance with a requirement that the methodology for determining compensation be set in advance. This change allows more flexibility in designing agreements and mitigates the difficulty of satisfying this Safe Harbor by generating compensation schedules (instead of the methodology) in advance.

Additionally, the new rule better aligns the Safe Harbor with the equivalent Stark Law exception, which streamlines and simplifies drafting of personal services agreements.

Such methodologies must still adhere to Safe Harbor’s other conditions, including requirements that the methodology be commercially reasonable, consistent with fair market value, and not take into account referrals or other business implicating federal healthcare programs. The Safe Harbor will not protect arrangements that do not meet the above conditions.

Since the 2021 rule modification of the personal services and management contracts safe harbor is so recent, there are no opinions reflecting the interpretation of what “methodology for determining compensation” from the OIG. However, OIG commentary on the rule changes gives some insight as to the language change under the AKS. OIG commentary indicates that it believes that other safe harbor conditions mitigate the risk of structured agreements that may arguably take into consideration the volume and value of referrals.

OIG has stated that it is possible to structure an arrangement to fit within the safe harbor by using an hourly rate or other set, verifiable formula provided that all other conditions of the safe harbor are met. OIG has also cautioned that parties seeking protection under this safe harbor must evaluate the specific facts and circumstances of their arrangement to determine whether the compensation methodology over the term of the agreement is set in advance before any payment under the arrangement is made. Any remuneration also must meet all other conditions of the safe harbor for protection.

Questions about whether a business practice violates the Federal Anti-Kickback Statute, or whether these new modifications to the Personal Services Safe Harbor are applicable? Call us today for a consultation.

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