[Federal Register Volume 63, Number 136 (Thursday, July 16, 1998)]
[Rules and Regulations]
[Pages 38311-38326]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18874]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
42 CFR Part 1008
RIN 0991-AA85
Medicare and State Health Care Programs: Fraud and Abuse;
Issuance of Advisory Opinions by the OIG
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Final rule.
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SUMMARY: In accordance with section 205 of the Health Insurance
Portability and Accountability Act of 1996, this final rule sets forth
the specific procedures by which the Department, through the Office of
Inspector General (OIG), in consultation with the Department of Justice
(DoJ), will issue advisory opinions to outside parties regarding the
interpretation and applicability of certain statutes relating to the
Federal and State health care programs. The procedures for submitting a
request and obtaining an advisory opinion from the OIG were established
through interim final regulations published in the Federal Register on
February 19, 1997. In response to public comments received on these
interim final regulations, this final rule revises and clarifies
various aspects of the earlier rulemaking.
EFFECTIVE DATE: This rule is effective on July 16, 1998.
FOR FURTHER INFORMATION CONTACT: Joel Schaer, (202) 619-0089, OIG
Regulations Officer.
SUPPLEMENTARY INFORMATION:
I. Background
A. Section 205 of Public Law 104-191
The Health Insurance Portability and Accountability Act of 1996
(HIPAA), Public Law 104-191, specifically required the Department to
provide a formal guidance process to requesting individuals and
entities regarding the application of the anti-kickback statute, the
safe harbor provisions, and other OIG health care fraud and abuse
sanctions. In accordance with section 205 of HIPAA, the Department, in
consultation with the DoJ, issues written advisory opinions to parties
with regard to: (1) what constitutes prohibited remuneration under the
anti-kickback statute; (2) whether an arrangement or proposed
arrangement satisfies the criteria in section 1128B(b)(3) of the Social
Security Act (the Act), or established by regulation, for activities
which do not result in prohibited remuneration; (3) what constitutes an
inducement to reduce or limit services to Medicare or Medicaid program
beneficiaries under section 1128A(b) of the Act \1\; and (4) whether an
activity or proposed activity constitutes grounds for the imposition of
civil or criminal sanctions under sections 1128, 1128A, or 1128B of the
Act. Thus, advisory opinions may be issued with regard to the criminal
provisions of section 1128B of the Act, which includes the anti-
kickback statute, as well as the provisions of section 1128 of the Act,
which authorizes the Department to exclude individuals and entities
from participation in Federal and State health care programs.
Exclusions are authorized in a wide variety of circumstances,
including, for example, conviction of health care related offenses,
State licensure action, and submission of claims in excess of usual
charges or for services that fail to meet professionally recognized
standards of health care. In addition, advisory opinions are available
regarding the civil money penalty provisions of section 1128A of the
Act, which authorizes penalties for a variety of acts, including, among
others, presentation of a false or fraudulent Medicare or Medicaid
claim and hospital payments to physicians to induce them to reduce or
limit care to any Medicare or Medicaid beneficiary under their direct
care.
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\1\ Public Law 104-191 erroneously cited this provision as
section 1128B(b) of the Act. Section 4331(a) of the Balanced Budget
Act of 1997, Public Law 105-33, corrected this citation to section
1128A(b) of the Act.
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B. OIG Interim Final Regulations
Because HIPAA required that specific procedures and final
regulations on the advisory opinion process be in place by February 21,
1997, the Secretary determined that it was both impracticable and
contrary to the public interest to first issue regulations in proposed
rulemaking form. As a result, on February 19, 1997, the OIG published
interim final regulations (62 FR 7350) establishing a new part 1008 in
42 CFR chapter V addressing the various procedural issues and aspects
of the advisory opinion process. Specifically, the interim final rule
set forth (1) the procedures to be followed by parties applying for
advisory opinions and by the OIG in responding to these requests; (2)
the time frames pursuant to which the OIG will receive and respond to
requests; (3) the type and amount of fees to be charged to requesting
parties; and (4) the manner in which the public will be informed of the
issuance of any advisory opinions.
The interim final rule also set forth a 60-day public comment
period for specific comments and recommendations for refining the
advisory opinion process.
C. Summary of the Interim Final Rule
The establishment of a new part 1008 in 42 CFR chapter V
specifically addressed, among other provisions, the following
procedural aspects of the advisory opinion process:
1. Responsibilities of Outside Parties
Section 1008.15 of the interim final rule indicated that any
individual or entity may submit a request for an advisory opinion, but
that the arrangement in question must, at the time of the request for
an opinion, either be in existence or be an arrangement into which the
parties have a good faith intention to enter in the future.\2\ Section
1008.15(b) stated that requests presenting general questions of
interpretation, posing hypothetical situations, or seeking an opinion
about the activities of third parties would not qualify for advisory
opinions. Section 1008.11 stated that the OIG would not provide
advisory opinions to persons not involved directly in the arrangement.
In addition, Secs. 1008.53 and 1008.55(b) of the rule stated that an
advisory opinion would be legally binding on the Department and the
requesting party only with respect to the specific conduct of the
requesting party; it would not be legally binding with respect to third
party conduct, even if such conduct appears similar to the conduct of
the initial requestor.
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\2\ Any individual or entity may submit a request for an
advisory opinion. However, we anticipate that most requests will
apply to health care business arrangements. Therefore, for purposes
of this discussion, we will generally use the term ``arrangement''
to refer to the factual circumstances about which an advisory
opinion is requested, even though we realize that some requests will
involve facts not related to a business arrangement.
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Section 1008.36 of the interim final rule indicated that a request
for an advisory opinion must be submitted to the OIG in written form
and must present all facts relevant to the subject matter for which the
opinion is being requested. Section 1008.37 provided that all parties
and potential parties to the arrangement must be identified.
[[Page 38312]]
Section 1008.38 of the regulations required the requesting party to
certify to the truth, correctness, and completeness of all information
submitted to the OIG, to the requestor's best knowledge. It also
required a requesting party seeking an advisory opinion about a
proposed arrangement to certify its good faith intent to enter into the
arrangement upon receipt of a favorable advisory opinion.
Section 1008.18 of the interim final rule provided that requestors
may contact the OIG directly to inquire about the type and scope of
information needed to process their requests, and that the OIG could
provide requestors with a list of suggested preliminary questions to
aid in formulating their requests. As set forth in Sec. 1008.39, at any
time after the preliminary request for an advisory opinion, the OIG may
request additional information that the OIG deems necessary to address
the advisory opinion request.
2. Fees To Be Charged
In accordance with HIPAA, subpart C of 42 CFR part 1008 of the
regulations addressed fees for the cost of advisory opinions.
Specifically, Sec. 1008.31 of the regulations stated that the OIG will
charge a fee to the requestor (payable to the U.S. Treasury) equal to
the costs incurred by the Department in responding to the request. The
regulations stated that the fees will factor in the salary, benefits,
and overhead costs of attorneys and others who work on analyzing the
request and writing the advisory opinion. Because processing fees will
vary according to the complexity of the request and the time needed to
prepare the response, the rule did not establish specific processing
costs in advance. The interim final rule's preamble discussion,
however, contains broad estimates of costs and staff time to aid
prospective requestors.
3. Responding to the Advisory Opinion Request
Subpart E of the interim final rule addressed the obligations and
responsibilities of the OIG in accepting and issuing formal advisory
opinions. Section 1008.41 specifically indicated that the OIG would
promptly examine the request for an advisory opinion upon receipt and
determine whether additional information would be required. The
regulations established that within ten (10) working days of receiving
the request, the OIG would notify the requestor in writing that (i) it
was formally accepting the request, (ii) it was declining to accept the
request, or (iii) it needed additional information to process the
request.
In accordance with Sec. 1008.43(c) of the rule, once sufficient
information is provided to the OIG, the OIG will consult with DoJ and
issue an advisory opinion within sixty (60) days after formally
accepting the advisory opinion request. Section 1008.45 of the
regulations addresses the OIG's right to rescind an advisory opinion
after its issuance in limited circumstances.
4. Dissemination of Advisory Opinions
Section 1008.47 of the interim final rule addressed the
circumstances under which the OIG may disclose information submitted by
requestors, including making copies of issued opinions available for
public inspection and on the OIG's Internet web site.\3\
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\3\ http://www.dhhs.gov/progorg/oig
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II. Response to Comments and Summary of Revisions
As indicated above, the interim final rule established a 60 day
comment period for soliciting relevant public comments on the scope and
applicability of the provisions set forth in 42 CFR part 1008. We
received a total of twenty (20) timely-filed public comments from
various health care associations and organizations and from several
State and professional medical societies. The comments included both
broad concerns about the issuance of advisory opinions in general and
more detailed comments on specific aspects of the advisory opinion
process. In addition, based on informal discussions with potential
requestors and experience gained in reviewing and processing advisory
opinion requests since issuance of the interim final rule, the OIG is
using this opportunity to clarify portions of the regulations
consistent with the statute and the intent of this procedural
rulemaking. Set forth below is a synopsis of the various comments
received and a summary of the specific revisions and clarifications
being made to the regulations in 42 CFR part 1008.
A. General Comments
Comment: Many commenters welcomed the prospect of advisory opinions
and expressed general support for the advisory opinion process
established by the interim final rule. One commenter indicated that the
interim final rule is an attempt ``to develop an effective advisory
opinion process as a method of bringing clarity to the current Federal
fraud and abuse statutory and regulatory system.'' Another commenter
stated that the interim final rule was a ``positive step in the right
direction.'' A third commenter, reflecting the view of several, stated
that ``the best deterrent to fraud and abuse in the health care
industry is clear guidance from the Government concerning its view of
the applicable requirements.''
The general support of these remarks notwithstanding, these
commenters and others expressed concerns about the advisory opinion
process. Several commenters viewed the regulations as overly
restrictive and complex. Commenters stated that the requirements for
submitting substantial amounts of supporting information would dissuade
parties from seeking advisory opinions. One commenter stated that other
agencies rendering advisory opinions have less onerous requirements,
citing the DoJ Antitrust Division Procedures for Business Review
Letters, 28 CFR 50.6, and the Federal Trade Commission (FTC) Advisory
Opinion Procedures, 16 CFR 1.1 through 1.4. This commenter and others
believed that the OIG advisory opinion process could be simplified
without compromising the OIG's position. One commenter suggested that
the requirements, which it perceived as burdensome, reflect the OIG's
opposition to issuing advisory opinions during the legislative process.
Response: The OIG intends to carry out Congress' mandate in good
faith and to the best of our ability. We are hopeful that an effective
advisory opinion program will further the OIG's fraud-fighting mission
by aiding requestors in complying with the fraud and abuse laws.
Deterring fraud and abuse in the Federal health care programs continues
to be an integral part of that mission. For example, the OIG special
fraud alerts and model compliance plans are specifically targeted at
deterring fraudulent and abusive activities. Consistent with the OIG
mission, we endeavored to develop an advisory opinion process that
balances the industry's desire for a process that is not overly
burdensome with the OIG's need for full and complete disclosure of
facts pertaining to the arrangements under review.
Our goal is to render meaningful and informed opinions based on a
complete and comprehensive understanding of the relevant facts and
circumstances of a given arrangement, protecting in the process only
those arrangements that pose little or no risk of fraud or abuse to the
Federal health care programs. For complex arrangements, this may
require relatively extensive submissions by a requestor. We believe
that it is difficult to develop bright line rules for the
[[Page 38313]]
submission of information uniformly applicable to the wide array of
arrangements and sanction authorities that may be the subject of
advisory opinions.
The Department is in a unique position among agencies of being
compelled by statute to provide advisory opinions that bind the
Department and the requestors in criminal, as well as civil, matters.
The Department must issue these opinions within a sixty (60) day
period, regardless of the complexity of the arrangement in question.
Accordingly, the OIG has a heightened need to scrutinize arrangements
closely to assure that fraudulent or abusive arrangements are not
inappropriately granted protection from sanction.
As we gain experience in issuing advisory opinions, we will
continue to look for ways to simplify the process. Presently, we are
revising these regulations to provide increased flexibility to respond
to the circumstances of individual situations. As described in greater
detail below, these changes include, among others, expressly permitting
submission of requests by counsel; allowing submission of drafts,
models, or narrative descriptions of operative documents for proposed
arrangements; providing for informal consultation with requestors to
aid the OIG's deliberative process; and providing for notice, an
opportunity to respond, and a reasonable unwinding period in the
unlikely event of termination of a favorable advisory opinion. In
addition, these regulations add a procedure for obtaining initial non-
binding fee estimates.
Comment: One commenter recommended that the OIG publish generic
standards and criteria by which the ``case specific'' safe harbors
afforded by advisory opinions would be granted. The commenter believed
that without the promulgation of such standards and criteria, the
advisory opinion process could be viewed as arbitrary and capricious.
Response: These regulations are designed to establish procedures
for obtaining advisory opinions that will provide the public with
meaningful advice regarding the anti-kickback statutes and other OIG
sanction authorities as applied to specific factual situations. The
statutory and regulatory safe harbors to the anti-kickback statute
describe generalized, hypothetical arrangements that are protected. In
contrast, an advisory opinion is a means of relating the anti-kickback
statute, as well as other OIG sanction authorities, to the facts of a
particular arrangement. There are likely to be factors that make some
specific arrangements appropriate for a favorable advisory opinion,
even in subject matter areas where a generalized safe harbor may be
impractical. Thus, we believe that particularized or ``case specific''
safe harbor treatment is appropriate where the specific arrangement
contains limitations, requirements, or controls that give adequate
assurance that Federal health care programs cannot be abused. Our use
of the phrase ``particularized'' or ``case specific'' safe harbors
refers simply to a determination by the OIG, in the exercise of
prosecutorial discretion, not to impose sanctions for specific
arrangements that may constitute technical violations of OIG
authorities.
B. Specific Comments on the Advisory Opinion Process
Section 1008.1, Basis and Purpose
Comment: A number of commenters suggested that requiring a
requestor to be a party to the arrangement, or proposed arrangement,
that is the subject of a request appears to prevent an attorney from
requesting an advisory opinion on behalf of a client.
Response: We recognize that many requesting parties will employ
attorneys to assist them in preparing advisory opinion requests. We
believe that it is appropriate for an attorney, acting as counsel, to
submit an advisory opinion request on behalf of a client, provided that
the client is a proper requesting party in all respects under these
regulations. This means that the client itself must comply with all
requirements for being a proper requesting party under these
regulations, including, but not limited to, the requirements under
Sec. 1008.36 that the requesting party be specifically identified, and
under Sec. 1008.38 that the requesting party provide certain
certifications (these certifications must be signed by the client, not
by the attorney). Section 1008.1 is being clarified accordingly.
Section 1008.5, Matters Subject to Advisory Opinions
Comment: One commenter requested that we clarify the meaning of the
term ``authority'' as we used it in our preamble to the interim final
rule at page 7352. Specifically, the preamble stated:
``To the extent that the subject matter of the request is the
requestor's potential liability under one sanction authority, we
believe the request should provide a complete description of the
facts addressing the elements of that authority. Under these interim
final regulations, if the request asks the OIG to advise on whether
an arrangement is subject to sanction under more than one legal
authority, we believe the submission should include a complete
description of the facts regarding the different sanction
authorities in those statutes.''
Response: We agree with the commenter that clarification of our use
of the term ``authority'' would be helpful. ``Authority,'' as used in
the interim final rule preamble cited above, refers to each separate
sanction authority enumerated in sections 1128, 1128A, 1128B of the
Act, i.e., each potential ground for exclusion, civil money penalty, or
criminal penalty. The section 1128, 1128A, and 1128B sanction
authorities cover a wide range of conduct, from kickbacks to false
claims to doing business with sanctioned persons. It is unlikely that
any one arrangement that is the subject of an advisory opinion would
implicate all of the section 1128, 1128A, and 1128B sanction
authorities. Because it is most familiar with the circumstances of its
arrangement, a requesting party is in the best position, as an initial
matter, to identify those authorities that may be implicated in its
arrangement and thus expedite processing of its advisory opinion
request. Accordingly, when submitting advisory opinion requests,
requestors should identify the specific sanction authority or
authorities within sections 1128, 1128A, and 1128B of the Act about
which they seek an advisory opinion and should describe the facts
relevant to each identified authority. Requesting parties may seek an
advisory opinion on all sanction authorities they believe may be
implicated by their arrangements. However, a blanket designation that a
party seeks an advisory opinion on sections 1128, 1128A, and 1128B of
the Act, without more specificity, is likely to elicit an OIG request
for substantial additional information and delay processing of the
advisory opinion. For these same reasons, requestors seeking opinions
on compliance with the anti-kickback safe harbors should specify those
safe harbors they believe may apply to their arrangements. We have
revised the regulations to require designation of the specific sanction
authorities about which an advisory opinion has been requested.
Comment: In HIPAA, Congress enacted a new statutory safe harbor to
the anti-kickback statute for certain shared-risk arrangements (section
1128B(b)(3)(F) of the Act). This safe harbor is the subject of an on-
going negotiated rulemaking process mandated by HIPAA and being
[[Page 38314]]
conducted under the auspices of the OIG. The goal of the negotiated
rulemaking is the promulgation of regulations governing the safe
harbor. One commenter expressed the view that the OIG should not
withhold advisory opinions on the shared-risk exception pending the
outcome of the negotiated rulemaking.
Response: We discern nothing in HIPAA that permits us to decline to
give advisory opinions on the shared-risk safe harbor pending the
outcome of the negotiated rulemaking and promulgation of applicable
regulations. Accordingly, we will opine on the statute as written. Any
advisory opinion issued will be binding on the Department and the
requesting parties as provided in these regulations. However, favorable
and unfavorable advisory opinions issued before the outcome of the
rulemaking process may be subject to modification or termination based
on the rule eventually promulgated.
Comment: Two commenters believed that the OIG advisory opinions
should address the application of the ``Stark amendment'' under section
1877 of the Act.
Response: Section 4314 of the Balanced Budget Act of 1997, Public
Law 105-33, includes a new requirement that the Department issue
advisory opinions on the ``Stark'' provisions. These opinions will be
issued by the Health Care Financing Administration (HCFA) in accordance
with regulations issued by the Department. To aid in coordinating both
advisory opinion processes, we are modifying our regulations to require
requesting parties to notify the OIG if they apply to HCFA for a
``Stark'' opinion on the same arrangement for which they are seeking an
OIG advisory opinion.
Section 1008.15, Facts Subject to Advisory Opinions
Comment: Several commenters suggested that trade associations
should be permitted to seek advisory opinions on behalf of their
members. These commenters assert that such requests would benefit
association members who may not have sufficient resources to obtain an
advisory opinion independently. One commenter noted that trade
association opinions would be particularly valuable for arrangements
involving ``national issues.'' Several commenters also suggested that
we issue advisory opinions about ``model'' arrangements that might be
duplicated by many individual entities and that we issue non-binding
opinions or business guidance to individual parties and trade
associations similar to advice provided by the FTC and DoJ on antitrust
matters.
Response: Section 205 of HIPAA contemplates advisory opinions
regarding arrangements currently existing or proposed by specific,
identified requestors. This follows from HIPAA's mandate that advisory
opinions be binding on the parties, as well as the Department. It is
difficult to discern how an advisory opinion issued to a trade
association could be made binding for association members or others who
later implement an arrangement described in a trade association
request. The same difficulty would arise with respect to parties
attempting to duplicate protected ``model'' arrangements. HIPAA's
requirements notwithstanding, it is unlikely that a party could
precisely duplicate an approved arrangement; invariably, there would be
differences, some of which might be significant. Sanction authorities
impose liability based on acts by specific people in particular factual
circumstances. Thus, a particular arrangement may be legal with respect
to one party, but not with respect to another. We believe that it is
impossible to identify all hypothetical factors that might lead to
different results.
We will continue, however, to offer other industry guidance in the
form of safe harbor regulations and special fraud alerts. As part of
the OIG's expanded fraud-fighting efforts, we are actively working to
finalize the existing proposed safe harbors, to issue new special fraud
alerts, and to consider new safe harbors proposed by the public. In
accordance with HIPAA, we will formally solicit public comments
annually regarding new proposals for safe harbors and special fraud
alerts. However, we welcome written comments from the public at any
time regarding these topics or other fraud and abuse concerns.
Section 1008.31, Oig Fees for the Cost of Advisory Opinions
Comment: We received several comments regarding the fee provisions
of the regulations. A number of commenters objected to the OIG charging
a fee for processing an advisory opinion. These commenters believed
that a fee would deter some requesting parties and would impose an
undue burden on small companies.
Response: Under section 205 of HIPAA Congress directed that the
Department charge a fee equal to the costs incurred by the Department
in processing an advisory opinion (42 U.S.C. 1320a-7d(b)(5)(B)(ii)).
Comment: Many commenters believed that the amount of the fee
charged for an advisory opinion should be limited. These commenters
contend that uncertainty about the ultimate fee to be charged for an
opinion will be especially problematic for individuals and small
entities. Several commenters suggested that the ``triggering dollar
amount'' provided for in the interim final rule, permitting requestors
to designate the maximum fee they are willing to incur, does not
adequately address the problem of unlimited fees, although some
commenters generally supported the concept and advocated its retention.
One commenter observed that once the triggering dollar amount is
reached, a requesting party ``is faced with the untenable decision of
paying the triggering dollar amount and receiving nothing to show for
its money, or authorizing the OIG to proceed to process the request
regardless of the cost.'' Many commenters suggested that the solution
to this dilemma would be for the OIG to provide a fee estimate based on
an initial review of the request. Commenters essentially proposed two
types of estimates: (1) an initial estimate, with a cap on the final
fee equal to a certain percentage above the original estimate (for
example, 110% of the original estimate), or (2) a non-binding estimate
combined with continued use of the triggering dollar amount
designation, which designation could be amended based on the non-
binding estimate. Additionally, four commenters suggested that the OIG
adopt a fixed fee schedule similar to the one used by the Internal
Revenue Service (IRS) for processing private letter rulings.
Response: In light of our limited experience with the advisory
opinion process, at this time we believe that a binding estimate with a
percentage cap would be contrary to section 205 of HIPAA, which
requires recovery of actual costs incurred. We do not have enough
experience to estimate actual costs with sufficient reliability to make
such estimates binding. Similarly, it is not possible at this time to
develop fee schedules that would reflect actual costs. As the OIG gains
experience, we may be able to provide binding estimates or fee
schedules; nothing in these regulations precludes us from revising
these proposals at a later date if circumstances warrant.
Until such time, we believe that providing an initial, non-binding
estimate is reasonable and feasible. Accordingly, we are revising the
regulations to provide for a non-binding, good faith estimate, if
requested, based on an initial review of an advisory
[[Page 38315]]
opinion request. This initial estimate will be provided at the time an
advisory opinion is accepted. However, we will toll processing of the
advisory opinion request from the date of acceptance of the request
until the requesting party authorizes us in writing to continue the
processing. This tolling will enable requesting parties who find that
the estimated fee is more than they wish to spend to withdraw their
requests before incurring additional costs. We are retaining the
triggering dollar amount designation procedures and providing for
revised designations in response to our non-binding fee estimates. We
note that fees for advisory opinions issued to date generally have been
in the range of $1,500 to $3,000, with several costing considerably
less.
Comment: Some commenters believed that not all requestors may be
able to afford advisory opinions. One commenter suggested that the OIG
use a sliding fee schedule based on after-tax net profits of the
requestor. Further, one commenter believed that the $250 deposit was
excessive for individuals and small entities making simple requests for
which the costs might not total $250, i.e., requesting confirmation of
the applicability of an existing opinion to a new participant in the
arrangement. Another commenter urged the OIG to notify the requestor
prior to processing an advisor opinion if the processing costs are
likely to exceed the designated triggering dollar amount to permit
requestors who do not wish to pay more than the designated amount to
withdraw their requests before incurring costs.
Response: Section 205 of HIPAA contains no financial hardship
exception to the mandate that the Department collect a fee equal to the
costs incurred by the Department. Even if there were such an exception,
the proposal for a sliding scale based on a requestor's after-tax net
profits strikes us as impractical to calculate and administer. It is
unclear how such a system would apply to individual requestors or non-
profit organizations. The $250 initial deposit represents the OIG's
reasonable assessment of the minimum processing costs for advisory
opinion requests. Every request for an advisory opinion takes time to
read and analyze to ensure that the OIG has an accurate understanding
of the facts submitted and the application of the fraud statutes to
those facts. The OIG must then consult with DoJ and write the actual
advisory opinion. Our experience thus far demonstrates that it is
unlikely that even the simplest advisory opinions will cost the agency
less than $250. Where possible, we will try to notify requestors
informally if, as an initial matter, we believe that their designated
triggering dollar amounts are likely to be exceeded.
Comment: One commenter suggested that the OIG notify requestors if
experts for which costs will be incurred will be required.
Response: Section 1008.33 of the interim final rule provided for
notice to requestors, with an estimate of costs, if expert opinions are
required. For purposes of clarity, that provision is being moved to
Sec. 1008.31(e). We are further revising the rule to clarify that
requestors will be responsible for payment of the actual costs of
expert opinions and that the expert's work and opinion will be subject
to the sole direction of the OIG regardless of the source of payment.
Section 1008.33, Expert Opinions From Outside Sources
Comment: One commenter suggested that requestors should be
permitted to review and comment on expert opinions from outside
sources, and should be given an opportunity to provide their own expert
opinions.
Response: Nothing in the regulations precludes a requestor from
submitting an expert opinion if they so desire. In addition, the OIG
can solicit a requestor's views on expert opinions if the OIG believes
such input would aid its deliberative process. However, we do not
believe that it is necessary or cost-efficient to require the OIG to
consult with requestors regarding expert opinions in all cases.
Subpart D, Submission of a Formal Request for an Advisory Opinion
Comment: Subpart D of these regulations enumerates the information
requestors must submit with their advisory opinion requests. A number
of commenters found the requirements of this subpart overly burdensome
and likely to dissuade parties from seeking advisory opinions. These
commenters expressed the view that the advisory opinion process was not
intended as a preliminary enforcement tool by which the OIG could
collect large quantities of information about providers and other
health care entities.
Response: The procedural requirements set forth in this subpart are
intended to ensure that the OIG has a complete record on which to base
its advisory opinion, which will bind the Department and the parties.
An advisory opinion serves as an individualized safe harbor against
criminal and civil penalties; therefore, it is incumbent upon the OIG
to conduct a thorough review.
Section 1008.36, Submission of a Request
Comment: Several commenters stated that requesting parties should
not be required to provide extensive information about potential
participants in an arrangement who are not actual requestors. One
commenter expressed the view that the focus of an advisory opinion
should be on the factual circumstances of an arrangement, not on the
identities of the parties. Additionally, several commenters believed
that sometimes it would be impossible or highly impractical to identify
all potential participants to an arrangement. According to their
concerns, some arrangements might involve hundreds or even thousands of
parties. One commenter cited as an example a request involving all
network providers in a managed care plan. The commenter explained that
there might be practical difficulties in identifying all such
providers; moreover, the problem could be further complicated if the
roster of providers were subject to change as a direct result of
implementation of the arrangement.
Response: We believe that the identity of parties is sometimes
important to rendering an informed decision about an arrangement. There
may be different implications under the sanction authorities for
different parties in similar factual circumstances. For example, the
analysis of a proposed joint venture arrangement under the anti-
kickback statute may depend on whether or not the proposed investors
are potential referral sources or have other business relationships.
Furthermore, identification of parties helps the OIG to determine if
the arrangement in question or a similar arrangement is the subject of
any ongoing investigation or is, or has been, the subject of a
governmental proceeding. As stated in Sec. 1008.15 of these
regulations, the OIG will not opine on any matters under investigation.
Section 1008.36(b)(1) requires disclosure of participants to the
extent known to the requestor. We agree that there may be situations in
which it is not possible or practical to identify all potential
participants in an arrangement. In many of these select cases, the OIG
may be able to render an informed opinion without knowing the
identities of all participants. The managed care network described
above might be one such case. Another example might be a proposed
pricing arrangement affecting hundreds or thousands of potential
customers. In
[[Page 38316]]
these types of circumstances, requesting parties should make clear in
their requests the reasons why the identities of all potential
participants cannot be provided. If it appears to the OIG that the
identities of potential participants are reasonably available, the OIG
may decline to process the request or may accept the request subject to
the subsequent receipt of the identities of potential participants. An
advisory opinion issued in such circumstances will be binding only on
the requesting party. The requesting party may not be protected by an
advisory opinion if the material facts about the unidentified parties
differ from the material facts described in the request. For example,
if a requestor seeking an advisory opinion about a pricing arrangement
describes potential customers as hospitals and the character of the
customers is material, a favorable advisory opinion would not be
binding on sales to non-hospital customers. Parties joining an
arrangement after issuance of an advisory opinion may seek a separate
advisory opinion in their own right.
Comment: Several commenters recommended that requestors be
permitted to submit anonymous requests, identifying themselves only
when it appeared that the OIG would issue a favorable opinion.
Response: Early identification of requestors helps the OIG
determine whether the party making the request is under investigation
or is involved in proceedings involving the Department or other
governmental agencies that would preclude issuance of an advisory
opinion under Sec. 1008.15. By making this determination as early in
the process as practicable, the OIG can minimize processing fees
incurred by requestors.
Comment: Several commenters objected to the required disclosure of
the identities of non-requesting parties. Commenters were concerned
that such disclosures could undermine the business and competitive
interests of all parties to an arrangement. One commenter explained
that non-requesting parties may not want to identify themselves in the
early planning stages of a transaction, before they are assured that
the proposed transaction passes fraud and abuse muster. This is
especially true, according to some commenters, because the anti-
kickback statute reaches mere offers of prohibited remuneration.
Further, they believe there may also be proprietary business reasons
for non-requesting parties to withhold their identities. For example,
they may be engaged in preliminary discussions and not want to risk
being disadvantaged by competitors who may discover their identity. For
these reasons, some commenters believed that the OIG should permit
generic descriptions of non-requesting parties to the transaction.
Response: For reasons previously stated, we believe that the
identities of parties can be essential to rendering an informed opinion
about an arrangement. We recognize that some proposed arrangements may
be presented to us at an early stage before all parties are fully
committed to participate in the arrangement. For example, a group of
surgeons planning an ambulatory surgical center may not have
commitments from all prospective investors. Requestors in such
circumstances run the risk that the OIG response may be rendered
meaningless by subsequent changes in the identities of the parties,
i.e., a non-referral source party is replaced in an arrangement by a
potential referral source. As set forth in Sec. 1008.53, advisory
opinions are operative and binding only for requestors. If parties
desire protection, they must be identified as requestors. Non-
requesting parties seeking protection after the advisory opinion is
issued would need to submit a new request for an advisory opinion.
We are mindful that the risk of disclosures of proprietary
information may be troublesome from a business perspective. The OIG is
subject to the Freedom of Information Act (FOIA), 5 U.S.C. 552, and the
Department's FOIA regulations set forth in 45 CFR part 5. The OIG will
endeavor to protect submissions of proprietary information to the
extent and in the manner permitted by these authorities.
Comment: Several commenters suggested that the OIG not require
requestors to provide complete copies of all operative documents.
Instead, these commenters advocated permitting detailed descriptions of
such documents. In addition, some commenters noted that operative
documents may not be available for proposed arrangements and that
requiring their preparation would impose significant costs for
arrangements that might never be implemented. Commenters also expressed
concerns regarding the potential for disclosure of operative documents
under FOIA. One commenter asked that the OIG clarify the meaning of the
term ``operative documents.''
Response: As used in these regulations, ``operative documents''
broadly encompasses all written documents relevant to the organization
or operation of the arrangement in question. These may include, but are
not limited to, contracts, leases, lease guarantees, deeds, loan
documents (promissory notes, loan agreements, guarantees, mortgages,
etc.), employment agreements, court documents and records, settlement
agreements, licenses, permits, corporate and partnership organizational
documents (articles of incorporation, bylaws, partnership agreements,
operating agreements, etc.), and any documents related to these
documents. The specific documents required for review of a particular
arrangement will depend on the nature of the arrangement.
We are clarifying the regulations to provide that for proposed
arrangements, draft or model documents or detailed descriptions of
material terms to be contained in such documents may be provided in
lieu of operative documents. We caution requestors that material
differences between the drafts, models, or descriptions provided and
the final operative documents, including changes or omissions, may
affect the enforceability of their options. Accordingly, requestors are
encouraged to provide full, complete, and accurate information
regarding material terms of operative documents for proposed
arrangements.
We are further revising these regulations to permit parties to
submit initially only those portions of documents relevant to the
arrangement at issue. Parties submitting partial documents must clearly
identify and describe in general terms those portions that have been
withheld. For example, a diversified corporation may elect to submit
only those portions of its business plan relating to health care items
or services that are the subject of the request. Nothing in these
regulations precludes the OIG from subsequently requesting copies of
the withheld portions (and from tolling the processing time in
accordance with Sec. 1008.39 pending receipt), if the OIG deems those
portions necessary in order to render an informed opinion. The ultimate
determination of the relevancy of operative documents, or portions
thereof, rests in the sole discretion of the OIG.
Comment: One commenter proposed eliminating the requirement that
requesting parties provide Medicare and Medicaid provider numbers.
Response: We agree that provider numbers are not necessary in every
case. We are eliminating the requirement for submitting these numbers,
but reserve the right to request provider numbers, or other identifying
information, if we determine that they are necessary in particular
circumstances. We have
[[Page 38317]]
determined, however, that the Debt Collection Improvement Act of 1996
(section 31001 of Public Law 104-134) requires agencies to collect the
Taxpayer Identification Number (TIN) from all persons or business
entities ``doing business with a Federal agency'' (see 31 U.S.C.
7701(c)). We believe that requesting, receiving and paying for the
OIG's work on an advisory opinion fits into the category of ``doing
business with a Federal agency.'' Therefore, a request for an advisory
opinion must include the requestor's TIN. The TIN will be used for
purposes of collecting and reporting on any delinquent amounts arising
out of the requestor's failure to render proper payment for the
advisory opinion.
Comment: Five commenters stated that requiring requestors to
provide detailed and highly specific information regarding existing or
prospective arrangements raises questions about the requesting and non-
requesting parties' exposure to sanction in the event of an unfavorable
opinion. These commenters considered this potential exposure to be a
disincentive to using the advisory opinion process. One commenter
explained, for example, that if the OIG determines that an arrangement
violates the anti-kickback statute, the requester will have given the
OIG much, if not all, of the information necessary to prosecute. This
commenter suggested that the OIG adopt a ``grace'' period to allow
parties found to be in violation to terminate or restrict an
arrangement without risk of prosecution.
Response: There is an unavoidable risk in submitting a request for
an advisory opinion regarding the potential applicability of a criminal
statute to an existing arrangement. A thorough and detailed
understanding of arrangements about which advisory opinions are sought
is necessary for the OIG to render an informed opinion. to the extent
the arrangement does not qualify for a ``safe harbor'' or a favorable
advisory opinion, it is subject to scrutiny and potential
investigation. Otherwise, we believe unscrupulous parties could use the
advisory opinion process to immunize themselves from prosecution. In
most instances, however, we believe the risk to be minimal. First, most
requests will be about arrangements that are not yet operative. Second,
in seeking an advisory opinion, most requesting parties presumably will
have reviewed the arrangement and determined that it poses little risk
of fraud and abuse to Federal health care programs. Third, the failure
to obtain a favorable advisory opinion does not mean that an
arrangement is illegal; it means only that the arrangement may pose
some risk of fraud and abuse.
As we have observed in the past, the fact that an arrangement does
not qualify for a safe harbor or for a favorable advisory opinion does
not mean that the anti-kickback statute has been violated or that an
enforcement action is appropriate. For example, in an enforcement
proceeding, whether an arrangement in fact constitutes a violation of
the anti-kickback statute would depend on a showing of requisite intent
to solicit, receive, offer, or pay remuneration to induce referrals or
business covered by a Federal health care program.
Comment: We indicated in the preamble to the interim final rule
that because of the wide diversity of arrangements about which the OIG
might be asked to opine, we could not detail in the regulations all of
the information a particular requestor would need to submit. Instead,
we provided for the use of suggested preliminary questions, which we
would provide, and permitted potential requestors to contact us for
further guidance about what information to submit. We specifically
solicited comments regarding this approach. One commenter agreed that
the information necessary to issue an advisory opinion depends on the
nature of the request, and that it is not feasible to set hard and fast
rules regarding the specific types of information required to issue an
advisory opinion.
Response: We are leaving in place the provision regarding the use
of the preliminary questions. Moreover, we will continue to permit
potential requestors to contact us in writing for guidance on the
specific types of information that might be needed for their particular
requests.
Section 1008.37, Disclosure of Ownership and Related Information
Comment: One commenter opposed the requirement that requesting
parties disclose ownership and related information on the ground that
such requirement is burdensome.
Response: We are not persuaded that this requirement is burdensome.
The majority of requestors will likely already be providing this
information to HCFA through required filings of HCFA form 1513. A copy
of a requestor's current HCFA form 1513 will satisfy this requirement.
Section 1008.38, Signed Certifications by the Requestor
Comment: We solicited comments regarding the certification process
outlined in the interim final rule. This process requires requesting
parties to certify to the truthfulness of their submissions, including
their good faith intent to enter into proposed arrangements. Several
commenters viewed the certification requirement as an unnecessary and
burdensome requirement not contemplated by section 205 of HIPAA. These
commenters stated that the certification requirement is unnecessary
because the OIG is not bound by an advisory opinion if it later
discovers that a requestor did not fully and accurately disclose
information. One commenter suggested that we replace the certification
requirement with a provision stating that the protection afforded by an
advisory opinion would be applicable only to the arrangement as
described in the request and only to the extent implemented by the
requestor in accordance with the facts represented in the request.
Another commenter believed that certifications were unnecessary,
because the advisory opinion process itself is a complicated and costly
procedure adequate to deter providers from seeking advisory opinions on
arrangements that are hypothetical or not under serious consideration.
Response: The required certifications help ensure that the OIG's
time and resources are spent addressing real concerns of legitimate
requestors. In particular, the requirement that requestors seeking
advisory opinions about proposed arrangements certify to a good faith
intent to enter into the proposed arrangement safeguards against abuse
of the advisory opinion process by requestors seeking opinions about
competitor's practices or hypothetical questions. We are not persuaded
that our ability to invalidate an opinion upon later discovery of
discrepancies in the facts or implementation is a sufficient or
efficient means of protecting against improper or inappropriate
requests. In addition, we are not convinced that the advisory opinion
process is so costly or complex as to thwart misuse of the process.
As a practical matter, our experience suggests that the
certification requirement benefits requesting parties as well. The
requirement serves as an incentive to requestors to focus on the
completeness and accuracy of their presentations and to research
[[Page 38318]]
thoroughly and document their arrangements before submitting their
requests or submitting additional information. We believe that this
keeps costs down and expedites issuance of opinions by reducing our
need to request clarifications and additional information.
Additionally, enhanced diligence should reduce the need for ancillary
opinions after issuance of the original advisory opinion when new facts
or understandings surface that were not fully investigated or
considered by the requestor at the time of the initial request.
Consequently, we believe that certifications will help ensure more
meaningful and informed opinions.
We are clarifying the certification requirements in Sec. 1008.38 in
two ways. First, we are adding a provision, inadvertently omitted from
the interim final rule, designating the appropriate signatory on behalf
of requestors that are limited liability companies. Second, we are
clarifying that each requesting party must provide the required
certification. These certifications must be signed by the requesting
party, not by its attorney.
Comment: Several commenters objected to the requirement for
certification of a good faith intent to enter into an arrangement upon
receipt of a favorably advisory opinion. These commenters argue that
there may be legitimate business reasons, unrelated to the fraud and
abuse determination, that an arrangement is not consummated. For
example, seeking an advisory opinion may be part of the parties'
initial feasibility determinations. Commenters explained that in the
fluid and changing health care marketplace, many legitimate business
factors may arise between the time a request is filed and the advisory
opinion is issued would cause the parties to abandon their proposed
arrangements. One commenter questioned what action the OIG would or
could take if an arrangement described in a favorable advisory opinion
is not implemented. Several commenters urged that failure to implement
an approved arrangement should not subject a requestor to any adverse
action or inference.
Response: We continue to believe that requiring a good faith intent
to enter into a transaction is a reasonable safeguard against misuse of
an advisory opinion process. The certification requirement as set forth
in these regulations does not preclude abandonment of a proposed
arrangement for legitimate business reasons (i.e., an investor
withdraws, financing becomes unavailable) that were not reasonably
foreseeable at the time the certification was signed.
Comment: One commentor requested that we revise Sec. 1008.38 to
accommodate a change in the individual signing additional
certifications if, for example, the requestor hires a new chief
executive officer while the advisory opinion is pending.
Response: The person signing certifications on behalf of a
requestor should be the person occupying the position listed in
Sec. 1008.38(c). We are clarifying this section to make clear that
changes of the type described by this commentor are allowed.
Section 1008.40, Withdrawal
Comment: Three commenters suggested that all documents submitted in
support of a withdrawal request should be returned to the requestor.
Response: We do not believe that requesting parties have a right to
the return of documents voluntarily submitted to the Government. In
particular, there is no right to the return of potential evidence of a
violation of law, and the Government would be remiss in returning such
information. In addition, it may be necessary to retain submitted
materials to document the workings of the advisory opinion process.
Nevertheless, although the OIG reserves the right to retain documents
submitted by requestors, nothing in these regulations precludes the OIG
from returning documents in its discretion to the extent allowed by
law. Parties should note that as part of OIG's required consultation
with DoJ, copies of requests and related documents may be sent to DoJ.
The OIG can make no representation as to return of such documents to
DoJ.
Section 1008.41, Oig Acceptance of the Request
Comment: We requested comments on the process for screening
requests for advisory opinions. One commenter suggested that instead of
screening and rejecting incomplete requests, such requests should be
accepted contingent on receipt of the missing information, and the
processing time should be tolled until the missing information is
submitted. This commenter explained that in the dynamic health care
marketplace, all information may not be available at the time of the
request. Another commenter maintained that Sec. 1008.41(b)(3), which
provides for formally declining a request, is unnecessary and should be
deleted.
Response: We disagree that Sec. 1008.41(b)(3) is unnecessary. There
may be circumstances in which a request must be declined in accordance
with section 205 of HIPAA, for example, where it seeks a determination
of fair market value or asks whether a physician is an employee of a
hospital for purposes of qualifying for the employee safe harbor to the
anti-kickback statute. However, nothing in these regulations precludes
the OIG, in appropriate circumstances, from accepting incomplete
requests conditionally, and we have done so in practice.
Comment: One commenter suggested that the OIG should provide a
written statement of reasons for declining a request.
Response: In order to make the advisory opinion program meaningful,
it has generally been our practice to inform requestors of the bases
for declining to issue a requested advisory opinion, particularly in
situations where the requestor may be able to correct or modify a
request so as to make it acceptable. Section 1008.15 sets forth certain
circumstances under which advisory opinions will not be issued. We are
taking this opportunity to clarify in the rule that the circumstances
set forth in Sec. 1008.15 preclude both acceptance and issuance of
advisory opinions. In addition, requests will not be accepted if they
fall outside the scope of the advisory opinion process, as set forth in
Sec. 1008.5, or otherwise fail to satisfy the technical requirements of
these regulations.
Section 1008.43, Issuance of a Formal Advisory Opinion
Comment: Several commenters suggested that requestors be given an
opportunity to meet with the OIG during processing of requests to
answer questions and address any concerns the OIG might have about
their arrangements. Commenters proposed that the OIG provide prior
notice to requestors if the OIG determines that it is going to issue an
unfavorable opinion, thus permitting requestors to withdraw their
requests or make changes to their proposed arrangements to address OIG
objections.
Response: Our experience with advisory opinions has demonstrated
that informal oral consultation with requestors often aids our
understanding of the arrangements at issue and better enables us to
render meaningful and informed opinions. However, requiring
consultation for every request would impose an unwarranted burden on
the OIG and, in many cases, serve only to increase costs to requesting
parties with no significant benefit to the process. Nothing in these
regulations precludes informal consultation, and we intend to continue
working with requestors in appropriate circumstances to facilitate the
advisory opinion process. During
[[Page 38319]]
these informal consultations, we may identify concerns that, if not
adequately addressed by the requestor before the advisory opinion is
issued, may lead us to render an unfavorable opinion. However, it is
not our role to structure business arrangements. We believe that
parties needing such assistance should seek private business and legal
guidance.
We are aware that some requestors may want an opportunity to
address the OIG's concerns about their arrangements in a manner that
would enable them to structure acceptable arrangements and avoid, where
possible, an unfavorable outcome. A formal notification requirement,
however, could permit unscrupulous parties to misuse the advisory
opinion process to ``test'' hypothetical arrangements, as well as lead
to inefficient use of the OIG's resources. We believe that the informal
consultation process described above is a better approach and will more
effectively address the concerns of requestors who may want an
opportunity to modify their arrangements in response to the OIG's
concerns.
While requestors may request informal consultations, we anticipate
that we will initiate most consultations when we determine that the
requestor's input would be helpful. If there are facts or issues that a
requestor wants us to consider, the requestor should bring those facts
or issues to our attention (and provide any desired explanation) either
in its request for an advisory opinion or, if the facts or issues arise
after the initial request, in a supplemental submission of additional
information.
Additional material information provided in the course of oral
consultations will need to be submitted in writing and certified in
accordance with Secs. 1008.38 and 1008.39. For purposes of calculating
the time for issuing the opinion, if the additional information
substantially changes the arrangement under consideration, the original
request will be treated as having been withdrawn and a new request as
having been resubmitted as of the date the OIG receives the additional
information in writing.
Comment: Several commenters proposed that the OIG be required to
explain its analysis and bases for decision in the written advisory
opinion, since the analysis and reasoning will serve as useful guidance
to the requestors, the Department and the health care industry.
Response: As indicated in the preamble to the interim final rule,
advisory opinions will restate the material facts known to the OIG and
will discuss the OIG's analysis and conclusions regarding the legal
questions to be applied to the facts presented. We believe that
Sec. 1008.43, as written, reflects this intent. We iterate that
opinions are only binding upon the specific parties to whom they are
issued.
Comment: One commenter suggested that changes made to an
arrangement to correct aspects deemed objectionable by the OIG in an
unfavorable advisory opinion should not require an additional advisory
opinion in order to be protected.
Response: We are not persuaded that this suggestion is workable in
practice. We are unwilling to rely on a determination by the parties
that modifications or changes they have made to their arrangements
correct in all respects those aspects to which we objected. Moreover,
we could not be certain, without further review, that modifications or
changes made to one aspect of an arrangement would not adversely impact
some other aspect of the arrangement. We are mindful, however, that
requestors want to minimize costs associated with requesting a second
opinion. We will make a good faith effort to control costs of a
subsequent advisory opinion by avoiding duplication of effort expended
on the first advisory opinion to the extent possible.
Section 1008.45, Rescission
Comment: The OIG received many responses to its solicitation of
comments regarding whether Sec. 1008.45 reasonably balances the
Government's need to ensure that advisory opinions are legally correct
and the requestor's interest in finality of advisory opinions. Most
commenters were concerned that the OIG's authority to rescind advisory
opinions defeats the main purpose of obtaining an opinion, which is to
ensure that an arrangement will not be subject to sanction under the
fraud and abuse statutes. Several commenters urged the OIG to identify
a narrower standard to be applied in deciding to rescind an advisory
opinion than ``in the public interest''. These commenters indicated
that rescission should be limited to changes in law or material facts.
Some commenters objected to using good faith reliance on the request as
the standard for enforcement proceedings, suggesting instead that the
OIG not proceed against a requestor unless the requestor failed to
disclose materially adverse facts. One commenter thought that the OIG
should not require parties to unwind transactions unless the OIG had
not been provided with all relevant information or the information
provided was misleading or inaccurate. If unwinding were to be
required, several commenters urged the OIG to permit a reasonable
unwinding period during which a requestor would not be subject to
sanction. Further, several commenters noted the significant investment
of time and money involved in arrangements operating under the
protection of advisory opinions. It was suggested that the OIG limit
the use of rescinded opinions to putting parties on notice that the OIG
has changed its analysis for the future. Another commenter recommended
that the OIG's right to rescind an advisory opinion should be limited
to one year from the date of the opinion.
Response: In crafting these regulations, we have been mindful of a
requestor's significant interest in the finality of an advisory opinion
and have endeavored to balance that interest against the government's
compelling interest in protecting the integrity of the Federal
agencies, including the Federal Trade Commission, the International
Trade Commission, the Food and Drug Administration, and the Internal
Revenue Service (See, for example, 16 CFR 1.1.3, 19 CFR 211.54(b), 21
CFR 108.5, and 26 CFR 601.201(1).)
Our use of the words ``rescind'' and ``revoke'' in Sec. 1008.45 may
have led some members of the public to misconstrue the intent of this
section. If a requestor has fully and accurately provided all material
information regarding an arrangement in its submission to the OIG, its
advisory opinion will bind the Department and the parties during the
period it is in effect, that is, until it is terminated, if ever. If,
on the other hand, the OIG determines that a requestor's submissions
did not fully and accurately provide all material information regarding
an arrangement, the OIG may rescind the advisory opinion retroactively
to the date of issuance. For purposes of clarity, we are substituting
the word ``terminate'' for ``revoke'' where appropriate in this
section, to more clearly distinguish these two concepts. In addition,
as discussed below, we are amending Sec. 1008.45 to make clear that in
appropriate cases there is a third, intermediate possibility which is
modification of an advisory opinion.
Accordingly, for the purposes of part 1008 we are adding
definitions in Sec. 1008.45 for the terms ``rescind,'' ``terminate,''
and ``modify.'' To ``rescind'' an advisory opinion will mean that the
advisory opinion is revoked retroactively to the original date of
issuance with the result that the
[[Page 38320]]
advisory opinion will be deemed to have been without force and effect
from the original date of issuance. Rescission will be reserved for
those situations where a requestor has not fully, completely and
accurately disclosed facts to the OIG that it knew, or should have
known, were relevant and material to the subject matter of the advisory
opinion. (The OIG will make the determination of whether the requestor
had this state of mind following an opportunity for the requestor to
comment on this issue.)
To ``terminate'' an advisory opinion will mean that the advisory
opinion is revoked as of the termination date and is no longer in force
and effect after the termination date. However, the opinion will have
been in effect as originally issued from the date of issuance until the
date of termination.
To ``modify'' an advisory opinion will mean that the advisory
opinion is amended, altered or limited, and that the advisory opinion
continues in full force and effect in modified form thereafter.
However, the opinion will have been in effect as originally issued from
the date of issuance until the date of modification.
The regulations reserve the right of the OIG to rescind, terminate,
or modify an advisory opinion after its issuance solely in
circumstances ``where the public interest requires.'' We expect that
rescissions, terminations, and modifications of advisory opinions will
be rare, occurring only in limited circumstances, such as when the OIG
learns after the issuance of the opinion that the arrangement in
question may lead to fraud or abuse, and the potential for such fraud
or abuse was not foreseeable at the time the advisory opinion was
issued. Situations that might lead to termination or modification of an
advisory opinion may include the following circumstances--
changes in the law or the business operations of the
health care industry that make it possible for an arrangement that
previously carried little risk of fraud or abuse to result in fraud or
abuse in the future;
changes in medical science or technology that render an
arrangement subject to the risk of fraud or abuse;
material changes in the arrangement during the course of
its implementation; or,
the operation of the arrangement in practice differs from
what the OIG anticipated based on the advisory opinion request.
The latter two examples reflect the fact that proposed business
arrangements sometimes change in unexpected ways during and after their
implementation.
Prior to any rescission, termination or modification, the OIG will
notify the requesting party that it intends to rescind, terminate, or
modify the advisory opinion and afford the requesting party a
reasonable opportunity to comment in response. An advisory opinion will
only be rescinded, terminated, or modified after appropriate
consultation with the requesting party. With respect to modifications,
if the party does not agree to modifications proposed by the OIG, or
does not itself suggest modifications that satisfy the OIG's concerns,
the OIG may instead terminate the advisory opinion under this section.
In the event of a determination to rescind, terminate, or modify an
advisory opinion under Sec. 1008.45, the OIG will notify the requestor
and make such final notice available to the same extent as an advisory
opinion.
Except as discussed below, the requestor will not be subject to OIG
sanction for actions it took prior to the final notice of termination
or modification if the requestor (1) acted in good faith reliance on
the advisory opinion, and (2) promptly discontinues such actions upon
notification of a termination or promptly modifies such actions upon
notification of a modification, as the case may be. We recognize that
it may be impracticable to discontinue immediately certain complex
business arrangements. Accordingly, except in exceptional circumstances
or as otherwise described below, a requestor will be afforded a
reasonable opportunity to unwind or otherwise disengage from
arrangements subject to terminated advisory opinions, provided that the
requestor pursues such unwinding or disengagement promptly, diligently
and in good faith. A requestor will be afforded a similar reasonable
opportunity to implement modifications to an arrangement that is
subject to a modified advisory opinion. During any unwinding period,
the protection afforded by the advisory opinion will continue in
effect.
We are revising Sec. 1008.45 to provide for a reasonable unwinding
period set at the discretion of OIG, after consultation with the
requestor, based on the facts and circumstances of the arrangement. For
example, the unwinding period for a complex business structure may be a
period of years, whereas it may be a much shorter period for a simple
compensation arrangement. In determining the duration of the reasonable
unwinding or modification period, the OIG will take into account the
complexity of the arrangements involved and the impact of unwinding or
modification of Federal program beneficiaries. If the OIG determines,
however, that the requestor failed to provide material information or
provided untruthful information in its submissions to the OIG, the
advisory opinion will be deemed to have been without effect from the
time is was issued and no unwinding period will be recognized.
Comment: One commenter requested that the OIG return documents
submitted in connection with rescinded opinions. This commenter argued
that such documents should be exempted from FOIA as pre-decisional
documents.
Response: As indicated in our discussion of Sec. 1008.40, we do not
believe that requesting parties have a right to the return of documents
voluntarily submitted to the Government, especially where those
documents are potential evidence of a violation of law. In addition,
retention of submitted materials may be necessary to document the
workings of the advisory opinion process. However, the OIG may return
such documents at its discretion to the extent allowed by law. While
certain documents may have been provided to DoJ in the course of our
consultations, the OIG has no authority over the return of such
documents by DoJ. The OIG is subject to FOIA and intends to release
documents if required by FOIA, in accordance with procedures set forth
in 45 CFR part 5.
Section 1008.47, Disclosure
Comment: Several commenters stated that the disclosure provisions
of Sec. 1008.47 do not comport with congressional intent in enacting
the advisory opinion program. Several commenters expressed concern
about our statement that we could use information submitted by
requestors for ``any governmental purpose.'' One commenter specifically
stated that if ``any governmental purpose'' means that the OIG can use
information submitted with requests as a basis for investigation, the
OIG should expressly say so and put parties on notice to that effect.
These commenters indicated that the risk of information being used for
any governmental purpose would inhibit the industry from seeking
guidance, and considered the risk of public disclosure of a requestor's
identity and of the result of its advisory opinion as a further
deterrent. One commenter believed that such disclosure could adversely
impact a requestor's stock prices or general competitiveness.
[[Page 38321]]
Response: Our primary purpose under these regulations is to gather
and assess information in order to render informed advisory opinions.
However, the anti-kickback statute is a criminal statute, and therefore
review of arrangements that potentially implicate the statute requires
heightened scrutiny. As a law enforcement agency, the OIG cannot ignore
information lawfully obtained to further legitimate governmental
purposes.
Comment: Several commenters recommended that the OIG redact names
and identifying information from published advisory opinions, as the
IRS does with its private letter rulings.
Response: Our current practice is to limit public disclosure of
names and identifying information, subject to the requirements of FOIA.
Unlike the OIG, the IRS has a specific statutory exception (26 U.S.C.
6110) to FOIA that affords it greater latitude in protecting
information from disclosure.
Comment: One commenter requested that the OIG not disclose
information without first notifying the requestor and obtaining its
consent.
Response: The OIG is subject to FOIA and the Department's FOIA
regulations set forth at 45 CFR part 5. These regulations provide that
the Department will make reasonable efforts to notify submitters--in
this case, the requestors--if the Department determines that material
that submitters have designated as exempt from disclosure under
exemption 4 to FOIA (trade secrets and confidential commercial or
financial information) may have to be disclosed in response to a FOIA
request. The regulations at 45 CFR 5.65 provide that submitters of
records may designate in writing that all or part of the information
contained in such records is exempt from disclosure under exemption 4
at the time they submit such records or within a reasonable time
thereafter. Under the Department's FOIA regulations, requestors have an
opportunity to respond and, if desired, file a court action to prevent
disclosure of exempt records. Requesting parties must specifically
identify in their requests for advisory opinions any information they
reasonably believe is exempt from disclosure under exemption 4.
These advisory opinion regulations have been amended to incorporate
more clearly the requirement for designating trade secrets and
confidential commercial or financial information with specificity.
Information should be designated in the manner described in 45 CFR
5.65(c) and (d). Parties are encouraged to refrain from designating
more information than arguably may be classified as trade secrets or
confidential commercial or financial information. Wholesale
designations of entire request letters are counterproductive and may
make it more difficult for legitimately exempt information to be
protected under FOIA. The requestor's assertions about the nature of
the information it has submitted are not controlling. Consistent with
the OIG's law enforcement responsibilities, we reserve the right to
make disclosures other than in response to FOIA requests where the
public interest requires, to the extent authorized by law. Unauthorized
releases of confidential information would be a criminal violation of
18 U.S.C. 1905 (the Trade Secrets Act).
In addition, although a document may be exempt from disclosure
under FOIA, facts reflected in that document may become part of the
advisory opinion that the OIG will provide to the public. We will
describe the material facts of the arrangement in question in the body
of each advisory opinion, which will be made available to the public.
To the extent that it may be necessary to reveal specific facts that
could be regarded as confidential information, we believe we have the
authority to do so under sections 1106(a) and 1128D(b) of the Act.
Nevertheless, we do not intend to incorporate any such facts into the
body of an advisory opinion unless we believe incorporating such
information is necessary in order to render an informed opinion.
Moreover, where we intend to incorporate into an advisory opinion
information designated by the requesting party as confidential
proprietary information, we will endeavor to provide the requesting
party with reasonable notice and a reasonable opportunity to respond or
withdraw its request.
Section 1008.53, Affected Parties
Comment: One commenter suggested that all parties should be
required to consent to a request for an advisory opinion and that the
requestor should be required to certify that such consent has been
obtained.
Response: The crux of this comment appears to center around a
concern that one party to an arrangement may submit information to the
OIG without the knowledge or consent of another party who may not want
such information disclosed. We believe that this is a matter best
handled and resolved between the parties. In addition, for reasons set
forth above, we believe that it may be impractical, if not impossible,
to obtain consent from all potential parties to certain types of
arrangements.
Section 1008.55, Admissibility of Evidence
Comment: While several commenters commended the OIG for prohibiting
adverse inferences to be drawn from a party's failure to obtain an
advisory opinion, other commenters suggested that we delete or clarify
Sec. 1008.55(b), which they found confusing with regard to the
prohibition on the use of advisory opinions by third parties. One
commenter objected to paragraph (b) of this section because an advisory
opinion may be probative evidence as to why someone structured an
arrangement in a particular way. The commenter questioned whether the
OIG has the power to create evidentiary rules that would be binding on
courts or administrative law judges.
Response: We agree that Sec. 1008.55(b) was confusing as originally
written. Consistent with our original intent to preclude legal reliance
by non-requestors, this section is being revised to read as follows:
``An advisory opinion may not be introduced into evidence by a person
or entity that was not the requester of the advisory opinion to prove
that the person or entity did not violate the provisions of sections
1128, 1128A, or 1128B of the Act or any other law.'' The Department has
the authority to create procedural rules applicable in its tribunals
(42 CFR 1005, for example). With respect to other tribunals, the OIG
believes it is proper to limit the use of documents created by the OIG
for a specific purpose. Consistent with HIPAACs statutory directive
that advisory opinions bind only requesting parties and the Department,
it is our intention to preclude legal reliance by non-requestors; it
follows necessarily that an advisory opinion may not be introduced into
evidence by such non-requestors in any tribunal.
Section 1008.59, Range of Advisory Opinion
Comment: One commenter stated that advisory opinions should be
binding on DoJ as well. The commenter believed that it would be unfair
if DoJ, which must be consulted during the advisory opinion process,
could still instigate enforcement proceedings against a requestor that
has a favorable advisory opinion from the Department.
Response: Section 205 of HIPAA requires only that advisory opinions
be binding on this Department. The Department lacks the authority to
bind DoJ through the Department's rulemaking.
III. Additional Technical Changes
In Sec. 1008.5(b)(1), the phrase ``what the'' is being
changed to ``whether'' to
[[Page 38322]]
correct a technical error, and the word ``and'' is being changed to
``or'' to be consistent with the statutory directive and our intent
that we will not opine on questions of fair market value or bona fide
employee status.
In Sec. 1008.31(c), the phrase ``to be'' in the first
sentence is being deleted to be consistent with the intent of the
regulation that the OIG will calculate the actual costs incurred by the
Department in responding to an advisory opinion request.
The phrase ``from the time the OIG notifies the
requestor'' is being added in Sec. 1008.31(d)(4) to be consistent with
our original intention that the time period in question commences upon
the OIG's notice.
In Sec. 1008.37, the phrase ``will'' in the first sentence
is being replaced by ``must'' to be consistent with the mandatory
nature of the requirement, and the phrase ``or entity'' is being
inserted to be consistent with the usage of the same term at the
beginning of the sentence.
In Sec. 1008.38(c), the phrase ``will'' is being replaced
by ``must'' to be consistent with the mandatory nature of the
requirement.
In Sec. 1008.43(a), the word ``when'' is being replaced by
``and'' to clarify, consistent with our original intent and practice,
that an advisory opinion is issued when payment is received and the
opinion is dated, numbered, and signed.
In Sec. 1008.43(b) is being revised to provide internal
consistency within the section and to be consistent with our intent
that advisory opinions will be based on the information provided by
requestors.
The word ``next'' appearing in Sec. 1008.43(c)(2) has been
repositioned to correct a technical error. In Sec. 1008.47(c), the word
``in'' is being replaced by the word ``by'' to correct a technical
error.
Section 1008.59 has been revised to reflect more clearly
our intent that the OIG will not provide legal opinions on questions or
issues regarding authorities vested in other Federal, State, or local
government agencies.
IV. Regulatory Impact Analysis
Executive Order 12866
The Office of Management and Budget (OMB) has reviewed this final
rule in accordance with the provisions of Executive Order 12866.
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, when rulemaking is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health, safety, distributive,
and equity effects).
As indicated in our preamble discussions, this rule addresses
procedural issues involved in processing requests for advisory opinions
submitted to the OIG. It sets up the procedures, as required by Public
Law 104-191, for obtaining an advisory opinion on whether or not
certain activities violate designated fraud and abuse authorities. This
rule does not address the substance of the anti-kickback or other
sanction statutes. Nor does it address the substance or content of
advisory opinions which may be issued in the future. To the extent that
advisory opinions affect the behavior of health care providers, that
effect is the product of the substantive content of the sanction
statutes themselves and the substantive content of the advisory
opinions which will be issued on a case-by-case basis in the future.
The effect of advisory opinions on health care providers is not a
function of the process for requesting an advisory opinion.
In addition, the extent to which advisory opinions will result in
alteration of future business practices, if any, is impossible to
analyze without experience. It would be completely speculative to try
to divine to what degree business deals may or may not occur as a
result of the substance of advisory opinions issued in the future.
Moreover, we have no way of knowing in advance what the volume of
requests for advisory opinions will be. However, we estimate that we
will receive approximately 100 requests per year that will generally
require between 3 and 60 hours each to process. Accordingly, it would
likely cost in the range of $30,000 to $600,000 per year to issue
advisory opinions.
Regulatory Flexibility Act
Under the Regulatory Flexibility Act (5 U.S.C. 601-612), if a rule
has a significant economic effect on a substantial number of small
businesses the Secretary must specifically consider the effects of the
rule on small business entities and analyze regulatory options that
could lessen the impact of the rule. As stated above, this rule does
not address the substance of the fraud and abuse statutes or the
substance of advisory opinions which may be issued in the future. It
describes the process by which an individual or entity may receive an
opinion about the application of these statutes to particular business
practices. The aggregate economic impact of this rulemaking on small
business entities should, therefore, be minimal. There will, however,
be costs involved in filing requests for opinions by OIG. Those costs
will vary depending on the complexity of the request. Compared to the
costs of seeking private legal advice, it would appear that fees
charged for the OIG's review will not be substantial. Furthermore, the
requirement that applicants pay cost-based fees for advisory opinions
is not a product of this rulemaking; it is prescribed by statute. This
rule merely lays out the procedures for such costs to be paid. Thus, we
have concluded, and the Secretary certifies, that this final rule will
not have a significant economic impact on a substantial number of small
business entities, and that a regulatory flexibility analysis is not
required for this rulemaking.
V. Paperwork Reduction Act
A. Introduction
In order to provide appropriate advisory opinions, the OIG has
specified certain information from the parties who request advisory
opinions. Under section 3506(c)(2)(A) of the Paperwork Reduction Act of
1995, we are required to solicit public comments and secure final
approval from OMB on these information collection requirements. In the
interim final regulations published on February 19, 1997, we indicated
that Secs. 1008.18, 1008.36(b) and 1008.37 through 1008.40, along with
a listing of voluntary preliminary questions, specifically contained
information collection requirements that required approval by OMB. As a
result, the OIG published a Federal Register notice on March 21, 1997
(62 FR 13621) specifically requesting comments on these information
collection activities. The information collection requirements set
forth in the interim final rule were subsequently approved by OMB in
September, 1997 under control number 0990-0213. OMB also approved a set
of preliminary questions which provide guidance as toe what should be
included in a request for an advisory opinion.
B. Discussion of Revised Information Collection Requirements
This final rulemaking is now easing or streamlining a number of
these information collection activities in response to public comments
received on the interim final regulations. Specifically, as indicated
in this preamble, we are revising Sec. 1008.36(b), with respect to the
submission of a request, to permit parties to submit only those
portions of documents relevant to the arrangement at issue, and
describe in general terms those portions of the documents that have
been withheld. In
[[Page 38323]]
addition, to avoid a blanket designation when a party seeks an advisory
opinion, we have revised Sec. 1008.36(b)(3) to indicate that requestors
must give explicit designation of the specific sanction authorities
about which an advisory opinion has been requested. Also in
Sec. 1008.36, we are eliminating the requirement that requesting
parties submit their Medicare and Medicaid provider numbers. We are,
however, adding a new paragraph (b)(8) to this section to require, in
accordance with the Debt Collection Improvement Act of 1996, that
requesting parties include their Taxpayer Identification Number when
requesting an advisory opinion.
Further, new Secs. 1008.36(b)(7) and 1008.39(e) are also being
added to require requesting parties to notify the OIG if they apply to
HCFA for an advisory opinion in accordance with 42 CFR part 411 on the
same arrangement for which they are seeking an OIG advisory opinion. We
believe that this change will better aid efforts to address and
coordinate both the OIG and the HCFA advisory opinion processes.
Finally, we are revising or clarifying certain requirements in
Sec. 1008.38(c) concerning who may sign original (and additional)
certifications submitted by requestors. Specifically, this revised
section now clearly designates the appropriate signatory on behalf of
requestors that are limited liability companies, and clarifies that
each requesting party, and not its attorney, must provide the required
certifications.
C. Proposed Information Collection Activities
The proposed information collection requirement described below
will be submitted to the OMB for review and approval, as required by
the Paperwork Reduction Act. In accordance with the Paperwork Reduction
Act, we are soliciting public comment on the collection of the
information in conjunction with section 205 of HIPAA that are contained
in this revised final. Interested persons are invited to send comments
regarding burden estimates or any aspect of the collection of
information, including (1) whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (2) the accuracy of the agency's estimate of the burden of the
proposed collection of information; (3) ways to enhance the quality,
utility and clarity of the information to be collected; and (4) ways to
minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology.
Type of information collection request: OIG Advisory Opinion
Procedures in 42 CFR Part 1008. Section 205 of HIPAA, Public Law 104-
191, requires the Department to provide advisory opinions to the public
regarding several categories of subject matter, including the
requestor's potential liability under sections 1128, 1128A and 1128B of
the Social Security Act (the Act). The OIG published interim final
regulations in the Federal Register on February 19, 1997 (62 FR 7350),
setting forth the procedures under which members of the public may
request advisory opinions from the OIG, and a Federal Register notice
on March 21, 1997 (62 FR 13621) that contained a more thorough
discussion of the information collection activities associated with the
advisory opinion process. In order to aid potential requestors and the
OIG in providing opinions under this process, a series of preliminary
questions that may be answered in an advisory opinion request was
developed by the OIG. These preliminary questions remain voluntary. The
information collection requirements in the interim final rule and the
preliminary questions were approved by OMB under control number 0990-
0213.
The aggregate information burden for the information collection
requirements contained in these revised final regulations is set forth
below.
Respondents: The ``respondents'' for the collection of information
described in the OIG rulemaking will be self-selected individuals and
entities that choose to submit request for advisory opinions to the
OIG. We anticipate that the respondents will include many types of
health care providers, from sole practitioner physicians to large
diversified publicly-traded corporations.
Estimated number of respondents: 500. Most individuals and entities
that provide medical services that may be paid for by Medicare,
Medicaid or Federal health care programs could potentially have
questions regarding one of the subject matters about which the OIG will
issue advisory opinions. In reality, we believe that the number of
requestors will be a small fraction of such providers.
Over the past several years, the Office of the General Counsel,
Inspector General Division has answered telephone inquires from
individuals and entities seeking informal guidance with respect to the
Medicare and State health care programs' anti-kickback statute and
other sanction authorities. Many of the inquires related to authorities
outside the scope of the advisory opinion process, such as the self-
referral provisions of section 1877 of the Act. In addition, we believe
that most of the inquiries received have been of a nature that the
caller or requestor would be unlikely to request a formal written
advisory opinion on the subject matter. Many inquiries related to
rather simple and straight-forward matters that could have been
researched by private counsel at relatively minor expense.
Nevertheless, the rate of telephone inquiries form a starting point for
estimating point for estimating the potential number of advisory
opinion requests.
We estimate that the OIG received an average of six related
telephone inquiries per day over the past several years. Using that
history as a general guide and benchmark, we estimate an annual number
of 500 respondents. Obviously, the actual number of requests could be
larger since, for the first time, formal written opinions are
available. Conversely, the number of inquiries could be less based on
combination of several unquantifiable reasons, including the desire not
to have one's arrangement be subject to scrutiny by the OIG (following
issuance of the opinion) and the general public.
Estimated number of responses per respondent: One.
Estimated total annual (hour) burden on respondents: 5,000 hours.
We believe that the burden of preparing requests for advisory opinions
will vary widely depending upon the differences in the size of the
entity making the request and the complexity of the advice sought. We
estimate that the average burden for each submitted request for an
advisory opinion will be in the range of 2 to 40 hours. We further
believe that the burden for most request will be closer to the lower
end of this range, with an average burden of approximately 10 hours per
respondent.
The OIG is requiring requests for advisory opinions to involve
actual or intended fact scenarios. We anticipate that most requests
will involve business arrangements into which the requesting party
intends to enter. Because the facts will relate to business plans, the
requesting party will have collected and analyzed all, or almost all,
of the information we will need to collect to review the request.
Therefore, in order to request an advisory opinion, in many instances
the requestor will simply have need to compile already collected
information for our examination. In some cases, the requestor may need
to expend a more significant amount of time and cost in preparing a
submission related to more complex arrangements
[[Page 38324]]
that involve a large number of parties or participants.
Estimated annual cost burden on respondents (in addition to the
hour burden): $1,000,000. In addition to the hour burden on respondents
discussed above, some respondents may incur additional information
collection costs related to the purchase of outside professional
services, such as attorneys or consultants. We believe that the cost
burden related to such outside assistance will vary from zero to 40
hours per request, with an average of 10 hours. At the rate of $200 per
hour, this total burden would amount to $1,000,000.
Authority: Section 3506 of the Paperwork Reduction Act of 1995, 44
U.S.C. Chapter 35, as amended.
Interested persons are invited to submit comments regarding this
collection of information. Comments on this information collection
should refer to the document identifier code OIG-10-F, and should be
sent both to: Cynthia Agens Bauer, OS Reports Clearance Officer, Room
503H, Humphrey Building, 200 Independence Avenue, S.W., Washington,
D.C. 20201, FAX: (202) 690-6352; and Allison Herron Eydt, OIG Desk
Officer, Office of Management and Budget, Room 10235, New Executive
Office Building, 725 17th Street, N.W., Washington, D.C. 20053, FAX:
(202) 395-6974.
To request more information on the project or to obtain a copy of
the information collection plans, please contact the OS Reports
Clearance Officer, (202) 690-6207. Written comments should be received
by [60 days from date of publication in the Federal Register], but in
order to expedite full consideration of any concerns we recommend that
comments be submitted as soon as possible within the first 30 days.
After due consideration of all timely-filed public comments on these
revised information collection activities, we will re-submit these
sections to OMB for their approval under the Paperwork Reduction Act.
These sections will not become effective until cleared by OMB. In the
interim, requestors should rely on the preliminary questions issued by
the OIG on which OMB has already granted approval.
List of Subjects in 42 CFR Part 1008
Administrative practice and procedures, Fraud, Grant programs--
health, Health facilities, Health professions, Medicaid, Medicare,
Penalties.
Accordingly, the interim final rule adding 42 CFR part 1008, which
was published at 62 FR 7350 on February 19, 1997, is adopted as a final
rule with the following changes:
PART 1008--[AMENDED]
1. The authority citation for part 1008 continues to read as
follows:
Authority: 42 U.S.C. 1320a-7d(b).
2. Section 1008.1 is amended by revising paragraphs (a) and (b) to
read as follows:
Sec. 1008.1 Basis and purpose.
(a) This part contains the specific procedures for the submission
of requests by an individual or entity for advisory opinions to, and
the issuance of advisory opinions by, the OIG, in consultation with the
Department of Justice (DoJ), in accordance with section 1128D(b) of the
Social Security Act (Act), 42 U.S.C. 1320a-7d(b). The OIG will issue
such advisory opinions based on actual or proposed factual
circumstances submitted by the requesting individual or entity, or by
counsel on behalf of the requesting individual or entity, provided all
other requirements of this part are satisfied (including the
requirement that the requesting individual or entity provide the
certifications required in accordance with Sec. 1008.38 of this part).
(b) An individual or entity may request an advisory opinion from
the OIG regarding any of five specific subject matters described in
Sec. 1008.5 of this part.
* * * * *
3. Section 1008.5 is amended by republishing introductory paragraph
(b) and by revising paragraph (b)(1) to read as follows:
Sec. 1008.5 Matters subject to advisory opinions.
* * * * *
(b) Exceptions. The OIG will not address through the advisory
opinion process--
(1) What the fair market value will be, or whether fair market
value was paid or received, for any goods, services or property; or
* * * * *
4. Section 1008.15 is amended by revising introductory paragraph
(c) and paragraph (c)(3) to read as follows:
Sec. 1008.15 Facts subject to advisory opinions.
* * * * *
(c) Advisory opinion request will not be accepted, and/or opinions
will not be issued when--
* * * * *
(3) An informed opinion cannot be made, or could be made only after
extensive investigation, clinical study, testing, or collateral
inquiry.
5. Section 1008.18 is amended by revising paragraph (b) to read as
follows:
Sec. 1008.18 Preliminary questions suggested for the requesting party.
* * * * *
(b) Questions the OIG suggests that the requestor address may be
obtained from the OIG. Requests should be made in writing, specify the
subject matter, and be sent to the headquarter offices of the OIG.
* * * * *
6. Section 1008.31 is amended by revising paragraphs (c), (d)(1),
(d)(2), (d)(3), and (e)(2); by redesignating paragraphs (d)(2) through
(d)(5) as paragraphs (d)(3) through (d)(6) respectively; and by adding
a new paragraph (d)(2) to read as follows:
Sec. 1008.31 OIG fees for the cost of advisory opinions.
* * * * *
(c) Calculation of costs: Prior to the issuance of the advisory
opinion, the OIG will calculate the costs incurred by the Department in
responding to the request. The calculation will include the costs of
salaries and benefits payable to attorneys and others who have worked
on the request in question, as well as administrative and supervisory
support for such person. The OIG has the exclusive authority to
determine the cost of responding to a request for an advisory opinion
and such determination is not reviewable or waiveable.
(d) Agreement to pay all costs. (1) By submitting the request for
an advisory opinion, the requestor agrees, except as indicated in
paragraph (d)(4) of this section, to pay all costs incurred by the OIG
in responding to the request for an advisory opinion.
(2) In its request for an advisory opinion, the requestor may
request a written estimate of the cost involved in processing the
advisory opinion. Within 10 business days of receipt of the request,
the OIG will notify in writing of such estimate. Such estimate will not
be binding on the Department, and the actual cost to be paid may be
higher or lower than estimated. The time period for issuing the
advisory opinion will be tolled from the time the OIG notifies the
requestor of the estimate until the OIG receives written confirmation
from the requestor that the requestor wants the OIG to continue
processing the request. Such notice may include a new or revised
triggering dollar amount, as set forth in paragraph (d)(3) of this
section.
(3) In its request for an advisory opinion, the requestor may
designate a
[[Page 38325]]
triggering dollar amount. If the OIG estimates that the costs of
processing the advisory opinion request have reached, or are likely to
exceed, the designated triggering dollar amount, the OIG will notify
the requestor. The requestor may revise its designated triggering
dollar amount in writing in its response to notification of a cost
estimate in accordance with paragraph (d)(2) of this section.
* * * * *
(e) Fees for outside experts. * * *
(2) If the OIG determines that it is necessary to obtain expert
advice to issue a requested advisory opinion, the OIG will notify the
requestor of that fact and provide the identity of the appropriate
expert and an estimate of the costs of the expert advice.
7. Section 1008.33 is amended by revising paragraphs (b) and (c) to
read as follows:
Sec. 1008.33 Expert opinions from outside sources.
* * * * *
(b) The time period for issuing an advisory opinion will be tolled
from the time that the OIG notifies the requestor of the need for an
outside expert opinion until the time the OIG receives the necessary
expert opinion.
(c) Once payment is made for the cost of the expert opinion, as set
forth in Sec. 1008.31(e) of this part, either directly to the expert or
otherwise, the OIG will arrange for a prompt expert review of the issue
or issues in question. Regardless of the manner of payment, the
expert's work and opinion will be subject to the sole direction of the
OIG.
8. Section 1008.36 is amended by republishing introductory
paragraph (b); by revising paragraphs (b)(1), (b)(3), and (b)(4); by
deleting existing paragraph (b)(5); by redesignating (b)(6) and (b)(7)
as (b)(5) and (b)(6) respectively and revising them; and by adding new
paragraphs (b)(7) and (b)(8) to read as follows:
Sec. 1008.36 Submission of a request.
* * * * *
(b) Each request for an advisory opinion must include--
(1) To the extent known to the requestor, the identities, including
the names and addresses, of the requestor and of all other actual and
potential parties to the arrangement, that are the subject of the
request for an advisory opinion;
* * * * *
(3) A declaration of the subject category or categories as
described in Sec. 1008.5 of this part for which the advisory opinion is
requested. To the extent an individual or entity requests an advisory
opinion in accordance with Secs. 1008.5(a)(3) or (a)(5) of this part,
the requesting individual or entity should identify the specific
subsections of sections 1128, 1128A or 1128B of the Act or the specific
provision of Sec. 1001.952 of this chapter about which an advisory
opinion is sought:
(4) A complete and specific description of all relevant information
bearing on the arrangement for which an advisory opinion is requested
and on the circumstances of the conduct,\1\ including--
---------------------------------------------------------------------------
\1\ The requestor is under an affirmative obligation to make
full and true disclosure with respect to the facts regarding the
advisory opinion being requested.
---------------------------------------------------------------------------
(i) Background information,
(ii) For existing arrangements, complete copies of all operative
documents,
(iii) For proposed arrangements, complete copies of all operative
documents, if possible, and otherwise descriptions of proposed terms,
drafts, or models of documents sufficient to permit the OIG to render
an informed opinion,
(iv) Detailed statements of all collateral or oral understandings,
if any, and
(v) If applicable, a designation of trade secrets or confidential
commercial or financial information in the manner described in 45 CFR
5.65;
(5) Signed certifications by the requestor(s), as described in
Sec. 1008.37 of this part;
(6) A check or money order payable to the Treasury of the United
States in the amount of $250, as discussed in Sec. 1008.31(b) of this
part;
(7) A declaration regarding whether an advisory opinion in
accordance with part 411 of this title has been or will be requested
from HCFA about the arrangement that is the subject of the advisory
opinion request; and
(8) Each requesting party's Taxpayer Identification Number.
(Approved by the Office of Management and Budget under control number
0990-0213)
9. Section 1008.37 is revised to read as follows:
Sec. 1008.37 Disclosure of ownership and related information.
Each individual or entity requesting an advisory opinion must
supply full and complete information as to the identity of each entity
owned or controlled by the individual or entity, and of each person
with an ownership or control interest in the entity, as defined in
section 1124(a)(1) of the Social Security Act (42 U.S.C. 1302a-3(a)(1))
and part 420 of this chapter. (Approved by the Office of Management and
Budget under control #0990-0213)
10. Section 1008.38 is amended by revising paragraphs (a) and (b),
introductory paragraph (c), paragraphs (c)(2) and (c)(3); and by adding
a new paragraph (c)(4) to read as follows:
Sec. 1008.38 Signed certifications by the requestor.
(a) Every request must include the following signed certification
from all requestors: ``With knowledge of the penalties for false
statements provided by 18 U.S.C. 1001 and with knowledge that this
request for an advisory opinion is being submitted to the Department of
Health and Human Services, I certify that all of the information
provided is true and correct, and constitutes a complete description of
the facts regarding which an advisory opinion is sought, to the best of
my knowledge and belief.''
(b) If the advisory opinion relates to a proposed arrangement, the
request must also include the following signed certification from all
requestors: ``The arrangement described in this request for an advisory
opinion is one that [the requestor(s)] in good faith plan(s) to
undertake.'' This statement may be made contingent on a favorable OIG
advisory opinion, in which case, the phrase ``if the OIG issues a
favorable advisory opinion'' should be added to the certification.
(c) The certification(s) must be signed by--
* * * * *
(2) The chief executive officer, or comparable officer, of the
requestor, if the requestor is a corporation;
(3) The managing partner of the requestor, if the requestor is a
partnership; or
(4) The managing member, or comparable person, if the requestor is
a limited liability company.
11. Section 1008.39 is amended by revising paragraph (c) and by
adding new paragraphs (e) and (f) to read as follows:
Sec. 1008.38 Additional information.
* * * * *
(c) Additional information should be provided in writing and
certified to be a true, correct and complete disclosure of the
requested information in a manner equivalent to that described in
Sec. 1008.38 of this part.
* * * * *
(e) Requesting parties are required to notify the OIG if they
request an advisory opinion in accordance with part 411 of this title
from HCFA about the arrangement that is the subject of their advisory
opinion request.
[[Page 38326]]
(f) Where appropriate, after receipt of an advisory opinion
request, the OIG may consult with the requesting parties to the extent
the OIG deems necessary.
12. Section 1008.41 is amended by revising paragraph (a); and by
republishing introductory paragraph (b) and revising paragraph (b)(3)
to read as follows:
Sec. 1008.41 OIG acceptance of the request.
(a) Upon receipt of a request for an advisory opinion, the OIG will
promptly make an initial determination whether the submission includes
all of the information the OIG will require to process the request.
(b) Within 10 working days of receipt of the request, the OIG
will--
* * * * *
(3) Formally decline to accept the request.
* * * * *
13. Section 1008.43 is amended by revising paragraphs (a), (b) and
(c)(2); and by republishing introductory paragraph (c)(3) and revising
paragraph (c)(3)(i) to read as follows:
Sec. 1008.43 Issuance of a formal advisory opinion.
(a) An advisory opinion will be considered issued once payment is
received and it is dated, numbered, and signed by an authorized
official of the OIG.
(b) An advisory opinion will contain a description of the material
facts provided to the OIG with regard to the arrangement for which an
advisory opinion has been requested. The advisory opinion will state
the OIG's opinion regarding the subject matter of the request based on
the facts provided to the OIG. If necessary, to fully describe the
arrangement, the OIG is authorized to include in the advisory opinion
the material facts of the arrangement, notwithstanding that some of
these facts could be considered confidential information or trade
secrets within the meaning of 18 U.S.C. 1905.
(c) * * * * *
(2) If the 60th day falls on a Saturday, Sunday, or Federal
holiday, the time period will end at the close of the next business day
following the weekend or holiday;
(3) The 60 day period will be tolled from the time the OIG--
(i) Notifies the requestor that the costs have reached, or are
likely to exceed, the triggering amount until the time when the OIG
receives written notice from the requestor to continue processing the
request;
* * * * *
14. Section 1008.45 is revised to read as follows:
Sec. 1008.45 Rescission, termination or modification.
(a) Any advisory opinion given by the OIG is without prejudice to
the right of the OIG to reconsider the questions involved and, where
the public interest requires, to rescind, terminate or modify the
advisory opinion. Requestors will be given a preliminary notice of the
OIG's intent to rescind, terminate or modify the opinion, and will be
provided a reasonable opportunity to respond. A final notice of
rescission, termination or modification will be given to the requestor
so that the individual or entity may discontinue or modify, as the case
may be, the course of action taken in accordance with the OIG advisory
opinion.
(b) For purposes of this part--
(1) To rescind an advisory opinion means that the advisory opinion
is revoked retroactively to the original date of issuance with the
result that the advisory opinion will be deemed to have been without
force and effect from the original date of issuance. Recission may
occur only where relevant and material facts were not fully, completely
and accurately disclosed to the OIG.
(2) To terminate an advisory opinion means that the advisory
opinion is revoked as of the termination date and is no longer in force
and effect after the termination date. The OIG will not proceed against
the requestor under this part if such action was promptly, diligently,
and in good faith discontinued in accordance with reasonable time
frames established by the OIG after consultation with the requestor.
(3) To modify an advisory opinion means that the advisory opinion
is amended, altered, or limited, and that the advisory opinion
continues in full force and effect in modified form thereafter. The OIG
will not proceed against the requestor under this part if such action
was promptly, diligently, and in good faith modified in accordance with
reasonable time frames established by the OIG after consultation with
the requestor.
15. Section 1008.47 is amended by revising paragraphs (c) and (d)
to read as follows:
Sec. 1008.47 Disclosure.
* * * * *
(c) Any pre-decisional document, or part of such pre-decisional
document, that is prepared by the OIG, DoJ, or any other Department or
agency of the United States in connection with an advisory opinion
request under the procedures set forth in this part generally will be
exempt from disclosure under 5 U.S.C. 552, and will not be made
publicly available.
(d) Documents submitted by the requestor to the OIG in connection
with a request for an advisory opinion may be available to the public
in accordance with 5 U.S.C. 552 through procedures set forth in 45 CFR
part 5.
* * * * *
16. Section 1008.55 is amended by revising paragraph (b) to read as
follows:
Sec. 1008.55 Admissibility of evidence.
* * * * *
(b) An advisory opinion may not be introduced into evidence by a
person or entity that was not the requestor of the advisory opinion to
prove that the person or entity did not violate the provisions of
sections 1128, 1128A or 1128B of the Act or any other law.
17. Section 1008.59 is amended by revising paragraph (a) to read as
follows:
Sec. 1008.59 Range of the advisory opinion.
(a) An advisory opinion will state only the OIG's opinion regarding
the subject matter of the request. If the arrangement for which an
advisory opinion is requested is subject to approval or regulation by
any other Federal, State or local government agency, such advisory
opinion may not be taken to indicate the OIG's views on the legal or
factual issues that may be raised before that agency. The OIG will not
provide any legal opinion on questions or issues regarding an authority
which is vested in other Federal, State or local government agencies.
* * * * *
Dated: February 6, 1998.
June Gibbs Brown,
Inspector General, Department of Health and Human Services.
Approved: March 24, 1998.
Donna E. Shalala,
Secretary.
[FR Doc. 98-18874 Filed 7-15-98; 8:45 am]
BILLING CODE 4150-04-M