0990-0322_Attachment B

56632

Federal Register / Vol. 7Z, No. 19Z / Thursday, October 4, Z007 / Rules and Regulations
REFRIGERATION AND AIR CONDITIONING-Continued
Further
information

Decision

Substitute

End-use

R-428A as a substitute for R-502, HCFC-22 and Acceptable.
refrigerant blends containing HCFC-22, including
R-402A, R-403B, R-408A, and R-411 B.

RS-45 as a substitute for HCFC-22 ........................ Acceptable.
KDD5 as a substitute for HCFC-22 .......................... Acceptable.

Ice skating rinks (retrofit and new) .......

R-428A as a substitute for R-502 and HCFC-22... Acceptable.
Household refrigerators and freezers (retrofit and
new).

RS-45 as a substitute for HCFC-22 ........................ Acceptable.

KDD5 as a substitute for HCFC-22 .......................... Acceptable.

R-428A as a substitute for R-502, HCFC-22 and Acceptable.
refrigerant blends containing HCFC-22, including
R-402A, R-403B, R-408A, and R-411 B.

Water coolers (retrofit and new) ................................

KDD5 as a substitute for HCFC-22 .. ........................ Acceptable.
RS-45 as a substitute for HCFC-22 ........................ Acceptable.

Residential dehumidifiers (retrofit and new) ..............

RS-45 as a substitute for HCFC-22 ........................ Acceptable.

Household and light commercial air conditioning and
heat pumps (retrofit and new).

RS-45 as a substitute for HCFC-22 ........................ Acceptable.

Vending machines (retrofit and new) ........................

KDD5 as a substitute for HCFC-22 .......................... Acceptable.
KDD5 as a substitute for HCFC-22 .......................... Acceptable.
KDD5 as a substitute for HCFC-22 .......................... Acceptable.

Motor vehicle air conditioning for buses and pas- KDD5 as a substitute for HCFC-22 .......................... Acceptable.
senger trains.

Non-mechanical heat transfer ............................. ...... KDD5 as a substitute for HCFC-22 .......................... Acceptable.

(FR Doc. E7-19545 Filed 10-3-07; 8:45 am)
BILLING CODE 6560-50-P

DEPARTMENT OF HEALTH AND
HUMAN SERVICES

FOR FURTHER INFORMATION CONTACT:

may also result in the imposition of civil

SUPPLEMENTARY INFORMATION:

1128A(a)(7) of

1. Background
Overview-Establishing New Safe

Office of the Secretary

Harbor for Arrangements Involving

Office of Inspector General

Federally Qualified Health Centers
This final regulation establishes safe

42 CFR Part 1001

harbor protection under the anti-

Medicare and State Health Care

Programs: Fraud and Abuse; Safe
Harbor for Federally Qualified Health
Centers Arrangements Under the AntiKickback Statute
AGENCY: Office of Inspector General

(OIG), HHS.

Violations of the anti-kickback statute

Spencer Turnbull, Office of Counsel to
the Inspector General, (202) 619-0335.

kickback statute for certain
arrangements involving Federally
qualified health centers. Section I of this

money penalties (CMPs) under section

the Act (42 U.S.C. 1320a-

7a(a)(7)), program exclusion under
section 1128(b)(7) of

the Act (42 U.S.c.

1320a-7(b)(7)), and liability under the
False Claims Act, (31 U.S.C. 3729-33).

The types of remuneration prohibited
specifically include, without limitation,
kickbacks, bribes, and rebates, whether
made directly or indirectly, overtly or
covertly, in cash or in kind. Prohibited
conduct includes not only the payment
of remuneration intended to induce or

preamble contains a brief background

reward referrals of patients, but also the

discussion addressing the anti-kickback

payment of remuneration intended to

statute and safe harbors; a discussion of
section 330-funded health centers; a

induce or reward the purchasing,

summary of the relevant MMA

the proposed
ACTION: Final rule.
safe harbor; and a summary of the final
safe harbor. Section II of this preamble
SUMMARY: In accordance with section
sets forth a summary of the public
431 of the Medicare Prescription Drug,
Improvement, and Modernization Act of comments and our responses to those
comments.
2003 (MMA), this final rule sets forth a
safe harbor under the anti-kickback
A. The Anti-Kickback Statute and Safe
statute to protect certain arrangements
Harbors
involving goods, items, services,
The anti-kickback statute provides
donations, and loans provided by
criminal penalties for individuals or
individuals and entities to certain
health centers funded under section 330 entities that knowingly and willfully
offer, pay, solicit, or receive
of the Public Health Service Act. The
remuneration in order to induce or
goods, items, services, donations, or
reward the referral of business
loans must contribute to the health
reimbursable under any of the Federal
center's ability to maintain or increase
health care programs, as defined in
the availability, or enhance the quality,
the Act. The offense
section 1128B(f) of
of services available to a medically
is classified as a felony and is
underserved population.
punishable by fines of up to $25,000
DATES: Effective Date: These regulations
and imprisonment for up to five years.
are effective on December 3,2007.
provisions; a summary of

leasing, or ordering of, or arranging for

or recommending the purchasing,
leasing, or ordering of, any good,

facility, service, or item reimbursable by
any Federal health care program.

Because of the broad reach of the

statute, concern was expressed that
some relatively innocuous commercial
arrangements were covered by the

statute and, therefore, potentially
subject to criminal prosecution. In
response, Congress enacted section 14 of

the Medicare and Medicaid Patient and
Program Protection Act of 1987, Public
Law 100-93 (section 1128B(b)(3)(E) of

the Act), which specifically required the
development and promulgation of
regulations, the so-called "safe harbor"
provisions, which would specify

various payment and business practices
that would not be treated as criminal
offenses under the anti-kickback statute,
even though they may potentially be

Federal Register/Vol. 7Z, No. 19Z/Thursday, October 4, Z007/Rules and Regulations

business
capable of inducing referrals of
under the Federal health care programs.
Since July 29,1991, OIG has published
in the Federal Register a series of final

regulations establishing "safe harbors"
in various areas,l These OIG safe harbor
provisions have been developed "to
limit the reach of the statute somewhat
by permitting certain non-abusive
arrangements, while encouraging
beneficial or innocuous arrangements."
(56 FR 35952,35958; July 21,1991).
Health care providers and others may

voluntarily seek to comply with safe
harbors so that they have the assurance
that their business practices will not be
subject to liability under the antikickback statute, the CMP provision for

anti-kickback violations, or the program
exclusion authority related to kickbacks.
In giving the Department the authority

to protect certain arrangements and
payment practices from penalties under

the anti-kickback statute, Congress
intended the safe harbor regulations to
be evolving rules that would be updated

periodically to reflect changing business
practices and technologies in the health
care industry.

B. Section 330-Funded Health Centers
Beginning in the 1960s, Congress
enacted various health center programs
to assist the large number of individuals
living in medically underserved areas,
as well as the growing number of special
populations with limited access to
preventive and primary health care
services. In the Health Centers
Consolidation Act of 1996, Public Law

Section 330 grant recipients playa
vital role in the health care safety net,
providing cost effective care for
communities with limited access to
health care resources. All recipients of
grants under section 330 are public,
nonprofit, or tax-exempt entities, The
health centers must serve "a population
that is medically underserved, or a
special medically underserved
population comprised of migratory and

seasonal agricultural workers, the
homeless, and residents of public
housing." 42 U.S.c. 254b(a)(1). Health

centers must be community based; to
this end, a majority of a health center's

governing board must be users of the
center and must, as a group, represent

(December 15, 1995). In the Health Care
Safety Net Amendments of 2002, Public
Law 107-251, Congress reauthorized
and strengthened the health centers
program. In 2005, the Federal health
center programs supported 954

organizations that provided care to over
14 million patients at 3,745 health care
service delivery sites.2
(January 25,1996): 64 FR 63518 (November 19,
1999): 64 FR 63504 (November 19, 1999); 66 FR
62979 (December 4,2001); and 71 FR 45110

(August 8, 2006).
2 HRSA Bureau of Primary Health Care, Uniform
Data System: Calendar Year 2005 Data (available

upon request at littp:l/www.bplic.lirsa.gov/uds/
default.litm).

another public insurance program.4

Section 330 grant recipients also treat a
substantial and growing number of

uninsured patients. In 1996, section 330
grant recipients provided services to 3.2
million uninsured patients, and by
2005, this number had increased to 5.6

million, representing nearly 40 percent
of patients treated at those centers
during that year.5

Section 330 grant recipients must
serve all residents of their "catchment"
area regardless of the patient's ability to
pay and must establish a fee schedule
with discounts to adjust fees on the
basis of ability to pay. 42 U.S.c.

254b(a)(1)(B) and 254b(k)(3)(G)(i).

center.3 42 U.S.c. 254b(k)(3)(H)(i).

Section 330 grant recipients must also
make and continue "every reasonable

Health centers receiving section 330
grant funding must provide, either

effort to establish and maintain

collaborative relationships with other
cooperative arrangements, a broad range health care providers in the catchment
of required primary health care services, area of the center" (42 U.S.C.
254b(k)(3)(B)), and must "develop an
including clinical services by
ongoing referral relationship" with at
physicians, and, where appropriate,
physician assistants, nurse practitioners, least one hospital in the area. 42 U.S.C.
directly or through contracts or

and nurse midwives; diagnostic

laboratory and radiological services;
preventive health services; emergency
medical services; certain
pharmaceutical services; referrals to
other providers (including substance
abuse and mental health services);

254b(k)(3)(L).

Section 330 grant funds are intended
to defray the costs of serving uninsured
patients. Grant recipients are required to

seek reimbursement from those patients
who are able to pay all or a portion of
the charges for their care (applying a

patient case management; services that
enable individuals to use the services of

schedule of fees and a corresponding

the health center (e.g" outreach,

basis of the patient's ability to pay) or

transportation, and translation services);

and patient and community education
services. 42 U.S.c. 254b(b)(1). They may

health services for migratory and

seasonal agricultural workers; programs
to control infectious disease; and injury
prevention programs.

Consistent with their mission and the
terms of their PHS grants, section 330
grant recipients serve predominantly
low-income individuals, including some
beneficiaries of the Medicare and
Medicaid programs. In 2005, 36 percent
of patients treated by section 330 grant

'56 FR 35952 (July 29, 1991); 61 FR 2122

beneficiaries of the Medicare program,
and 2.3 percent were beneficiaries of

the individuals being served by the

104-299, Congress consolidated the four
also provide certain additional health
then-existing Federal health center grant services that are appropriate to serve the
programs (the Migrant Health Center
health needs of the population served
Program, the Community Health Center by the health center. 42 U.S.C.
Program, the Health Care for the
254b(b)(2). These additional health
Homeless Program, and the Health
services may include mental health and
Services for Residents of Public Housing substance abuse services; recuperative
Program) into a single program under
care services; environmental health
section 330 of the Public Health Service services; special occupation-related

(PHS) Act. See S. Rep. 104-186

56633

recipients were beneficiaries of a
Medicaid program, 7.5 percent were
"Health centers receiving grant funding to serve
migratory and seasonal agricultural workers,
homeless people, or residents of public housing
iiiay, upon a showing of good cause, obtain a waiver
of this requirement. 42 U.S.C. 254b(k)(3)(H).

schedule of discounts adjusted on the
who have private insurance or public

coverage, such as Medicare or Medicaid.
The amount of a section 330 grant may

not exceed the amount by which the
costs of operation ofthe health center in
such fiscal year exceed the total of: (i)

State, local, and other operational
funding provided to the health center;
and (ii) the fees, premiums, and thirdparty reimbursements that the center
may reasonably be expected to receive
for its operations in such fiscal year, By

statute, nongrant funds must be used to
further the objectives ofthe recipient's
section 330 grant.

Section 330 grant funding accounts
for approximately 20 percent of revenue
for health centers receiving such grants.
The majority of health center funding
derives from charges for patient
services. On average, the largest source
4 HRSA Bureau of Primary Health Care, Uniform
Data System: Calendar Year 2005 Data-Table 4:

Users by Socioeconomic Characteristics (available

upon request at littp:!/www.bplic.lirsa.gov/uds/
default.litm).
'HRSA Bureau of Primary Health Care, Uniform
Data System: Calendar Year 2005 Data-UDS Trend
Data for Years 1996 through 2005 (available upon
request at littp://www.bplic.lirsa.gov/uds/
default.litm).

56634

Federal Register/Vol. 72, No. 19Z/Thursday, October 4, Z007/Rules and Regulations

of revenue, 37 percent comes from

Medicaid payments, 6.5 percent of

center described under section
1905(l)(Z)(B)(i) or 1905(l)(Z)(B)(ii) of the

Frequently, health centers are
provided with, or seek out,
opportunities to enter into arrangements
with hospitals or other providers or

Act; and (ii) an individual or entity
providing goods, items, services,
donations, loans, or a combination of
these to the health center pursuant to a
contract, lease, grant, loan, or other
agreement, provided that such
agreement contributes to the health
center's ability to maintain or increase
the availability, or enhance the quality,
of services provided to a medically
underserved population served by the

suppliers to further the health centers'

health center.

patient care mission.7 For example,
providers or suppliers may agree to
provide health centers with capital

In other words, Congress intended to
permit health centers to accept certain
remuneration that would otherwise
implicate the anti-kickback statute when
the remuneration furthers a core
purpose of the Federal health centers
program: ensuring the availability and
quality of safety net health care services
to otherwise underserved populations.

health center revenues come from

private third-party reimbursement, 6
percent from Medicare payments, and
6.5 percent from self-payments from

patients. Remaining revenue comes
from a mix of other Federal, State, locaL,

and philanthropic sources.6

development grants, low cost (or no

cost) loans, reduced price services, or
in-kind donations of supplies,
equipment, or space.
Some providers and suppliers
expressed concern that remuneration
offered to health centers might be
viewed as suspect under the antikickback statute, because the health
centers are frequently in a position to
refer Federal health care program

As discussed in greater detail below,

Accordingly, Congress enacted section

Congress limited the scope of the safe
harbor to certain health centers engaged
in arrangements involving specific types
of identifiable remuneration.
In establishing regulatory standards
relating to the safe harbor, Congress

431 of MMA to enable some health

directed the Department to consider the

beneficiaries to the provider or supplier.

centers to conserve section 330 and

other monies by accepting needed
goods, items, services, donations, or

loans for free or at reduced rates from

willing providers and suppliers.
C. Section 431 ofMMA
Section 431 of MMA amended the

anti-kickback statute to create a new
safe harbor for certain agreements
involving health centers. Specifically,
section 431(a) of MMAexcludes from
the reach ofthe anti-kickback statute
any remuneration between: (i) A health
"HRSA Bureau of Primary Health Care, Uniform
Data System: Calendar Year 2005 Data-Exhibit A:

Total Revenue Received by BPHC Grantees
(available upon request at littp:!/
www.bplic.lirsa.gov/uds/default.litm).
7 Congress has previously recognized the
importance of health center affiliations with
hospitals and other health care service providers in
promoting efficiency and quality of care. The
Health Centers Consolidation Act expressly requires
health centers to maintain collaborative
relationships with other providers. With respect to
integrated delivery systems, the Report state",

"The committee believes. based on expert
testimony given at the May 14, 1995, hearing, that
the development of integrated health care provider
networks is key to preserving and strengthening
access to community-based health care services in
rural areas. Provider networks offer a number of
advantages: They can work to ensure that a
health care services is available,
continuum of
reduce the duplication of services, produce savings
in administrative and other costs through shared
services and an enhanced ability to negotiate in the
health care market place, and recruit and utilize
health professionals more effectively and

efficiently."
S. Rep. 104-186 at p. 11.

following factors:

. Whether the arrangement results in

savings of Federal grant funds or
increased revenues to the health center.

We believe this factor evidences
Congress' intent that a protected

arrangement directly benefit the health
center economically and that the
benefits of the arrangement primarily
inure to the health center, rather than
the individual or entity providing the
remuneration.
. Whether the arrangement restricts
or limits patient freedom of choice. We
believe this factor evidences Congress'
intent that protected arrangements not
result in inappropriate steering of
patients. Under the safe harbor, patients
remain free to obtain services from any
provider or supplier willing to furnish
them.
. Whether the arrangement protects

the independent medical judgment of

health care professionals regarding
medically appropriate treatment for
patients. We believe this factor

The statute authorizes the Department

to include "other standards and criteria
that are consistent with the intent of
Congress in enacting" the health center
safe harbor. Accordingly, we interpret
the statute to permit us to consider other
relevant factors and to establish other
relevant safe harbor standards
consistent with the anti-kickback statute
and the health center safe harbor.

Among the factors we have considered
is whether arrangements would pose a
risk of fraud or abuse to any Federal
health care programs or their

beneficiaries, We believe Congress
intended to protect arrangements that
foster an important goal of the section
330 grant program-assuring the

availability and quality of needed health
care services for medically underserved
populations-without adversely
impacting other Federal programs or

their beneficiaries.
D. Summary of Proposed Safe Harbor
On July 1, Z005, we issued a notice of
proposed rulemaking (70 FR 38081) to

set forth standards related to the safe
harbor described in section 431 of

MMA, in which we proposed: (1) To
protect remuneration in the form of

goods, items, services, donations, loans,
or a combination thereof provided by an
individual or entity (hereinafter in this
preamble "Donor") to a qualifying
health center; (z) that remuneration

must be medical or clinical in nature or
relate directly to patient services

provided by the health center as part of
the scope of the health center's section

330 grant; and (3) importantly, that a
protected arrangement must contribute

to the ability of the health center to
maintain or increase the availability, or
enhance the quality, of services

provided to a medically underserved
population.
The proposed regulation proposed
that protected arrangements must be
pursuant to a comprehensive contract,
lease, grant, loan, or other agreement
that is written and signed by the parties,
and the amount of the protected
remuneration must not be conditioned

on the volume or value of Federal health
care program business generated
between the parties. As we said in the

evidences Congress' intent to safeguard
notice of proposed rulemaking:
the integrity of medical decision-making
and ensure it is untainted by direct or

indirect financial interests. In all cases,
the best interests of the patient should
guide the medical decision-making of

health centers and their affiliated health
care professionals.
Section 431(b)(1)(B) of MMA provides

that these three factors are "among" the
factors the Department may consider in
establishing the safe harbor standards.

"In the unique and limited context of
arrangements described in the proposed safe
harbor, we would extend safe harbor
protection to arrangements where only the
methodology, and not the absolute value of
the remuneration, is predetermined. For
example, a health center might agree to pay
a supplier a set hourly or per visit fee that
is below fair market value for services
furnished by the supplier to the health
center, provided that the formula for

Federal Register/Vol. 72, No. 19Z /Thursday, October 4, Z007/Rules and Regulations

calculating the compensation (e.g., $ x per
hour or $ x per service) is fixed in advance
and not conditioned on referrals to the
supplier." 70 FR 38084.

We proposed that health centers must
reasonably determine before entering

into an agreement that the arrangement
is likely to contribute to the health
center's ability to maintain or increase
the availability, or enhance the quality,
of services provided to a medically
underserved population. We also
proposed that health centers would
have to periodically re-evaluate
agreements to ensure ongoing
compliance with this benefit standard
and terminate as expeditiously as
possible any arrangements that are not
reasonably expected to continue to meet
the standard. We proposed that the

initial determination and any reevaluations should be
contemporaneously documented.
Our proposed rule stated that health
centers must not be required to refer
patients to a particular provider or
supplier. In addition, we proposed that
Donors that offer to provide goods,
items, or services must accept all

referrals of patients from the health

center who clinically qualify for the
goods, items, or services, regardless of
payor status or ability to pay. We

. Eliminating the requirement that

arrangements that do not comply with
the safe harbor be terminated;
. Eliminating the requirement that
arrangements must comply with all

relevant requirements of the health
center's section 330 grant funding;
. Consolidating and clarifying the

documentation requirements;
. Clarifying that health centers do not

need to develop set standards for
determining whether an arrangement is
expected to contribute meaningfully to
services for underserved patients;
. Simplifying the safe harbor

requirement pertaining to disclosures to
patients;
. Clarifying health centers' freedom
to refer patients; and
. Clarifying the conditions under

which individuals and entities furnish
separately billable goods, items, or

56635

evaluate agreements to ensure ongoing

compliance with the benefit standard.
These determinations must be

contemporaneously documented.

Health centers must not be required to
refer patients to a particular provider or
supplier under the arrangement, and

must be free to refer patients to any

provider or supplier. In addition,
Donors that offer to furnish goods,
items, or services for health center
patients must furnish those goods,

items, or services to all health center
patients who clinically qualify for them,
regardless of payor status or ability to
pay.

Health centers are required to provide
effective notification to patients of their
freedom to choose any willing provider
or supplier and to disclose to patients,
upon request, the existence and nature
of the arrangement with the Donor.

services to health centers,
The safe harbor makes clear that a
health center may, at its option, require
2. Final Safe Harbor Conditions
a Donor that enters into a protected
As discussed more fully in this
arrangement to charge a referred health
preamble and regulations, the health
center patient the same rate it charges
center safe harbor protects remuneration other similarly situated persons not
in the form of goods, items, services,
referred by the health center or furnish
donations or loans (whether the
items or services to health center
donation or loan is in cash or in-kind),

or a combination thereof provided by a
Donor to a qualifying health center.
Qualifying health centers are health

patients at a reduced rate (where the

discount applies to the total charge and
not just the cost-sharing portion owed
by an insured patient).

proposed that protected arrangements
could not be exclusive. The proposed
rule also required health centers to
provide effective notification to patients
of their freedom to choose any willing
provider or supplier and to disclose the

centers described under section
1905(l)(2)(B)(i) or 1905(l)(2)(B)(ii) of the

Act. Remuneration must be medical or
clinical in nature or relate directly to
services provided by the health center
as part of the scope of the health

II. Summary of Public Comments and
OIG Responses
In response to our proposed
rulemaking, OIG received a total of nine
timely filed comments from trade

existence and nature of protected

center's section 330 grant. A protected

associations, hospitals, health centers,

arrangements,
We proposed to give health centers

arrangement must contribute to the
ability of the health center to maintain
or increase the availability of, or

and other interested parties. We have

enhance the quality of, services

parts: general comments; comments on

the option of requiring that a Donor that

enters into a protected arrangement
charge a referred health center patient
the same rate it charges other similarly
situated persons not referred by the
health center or that the items or

services be furnished to health center
patients at a reduced rate or free of

charge.

Finally, we proposed that an
arrangement could not be protected
under the safe harbor unless it complied
with the requirements of the health
center's section 330 grant funding.
E. Summary of Final Safe Harbor
1. Major Changes

We have modified the proposed rule
in a number of areas in response to
public comments. The substantial
changes and clarifications being made
in the final regulations include:
. Clarifying the definition of the term

"remuneration" for purposes of the safe
harbor;

provided to a medically underserved
population.
Protected arrangements must be
pursuant to a contract, lease, grant, loan,
or other agreement that is written,
signed by the parties, and covers all of
the remuneration to be provided. The

amount of the remuneration must be
specified and not be conditioned on the
volume or value of Federal health care
program business generated between the
parties.
Health centers must reasonably expect
before entering into an agreement that
the arrangement is likely to contribute
to the health center's ability to maintain
or increase the availability, or enhance
the quality, of services provided to a
medically underserved population as
defined at 42 U.S.c. 254b(b)(3). Health
centers must document the basis for

their determination that the

divided the summaries of the public
comments and our responses into three
statutory elements; and comments

on

additional regulatory standards.

A. General Comments
All the commenters supported the
establishment of a safe harbor for

arrangements involving Federally
Qualified Health Centers. While some
commenters expressed their support for

all of the regulatory standards in the
proposed rule, other commenters took

issue with one or more specific aspects
of the proposaL.

Comment: A trade association
objected to the number of standards in
the proposed regulation. The

commenter suggested that the number of
standards is too high and might

dissuade parties from participating in
safe harbored arrangements.
Response: As discussed in detail
elsewhere in this preamble, we have

arrangement will yield such a benefit.

reduced the number of standards from

Health centers must periodically re-

eleven in the proposed rule to nine in

56636

Federal Register/Vol. 7Z, No. 19Z/Thursday, October 4, Z007/Rules and Regulations

the final rule. We do not believe that the
regulatory standards should create an
undue burden or otherwise chill

participation in arrangements under the
safe harbor.

Comment: Several commenters

responded to the statement in the
preamble to the proposed rule that OIG

intended to monitor participants in safe
harbored arrangements for compliance
with billing rules, in order to guard
against improper billing of Federal
health care programs or inappropriate
transfers of governmental funds. See 70
FR 38086. Two trade associations

requested that we remove any mention
of such monitoring, lest it discourage
parties from participating in
arrangements under this safe harbor.

Another trade association suggested
that, in return for safe harbor protection,
it would be appropriate that health
centers be monitored closely for

compliance with the requirements of
section 330 funding to determine
whether the funding is used for its

intended purpose. In particular, the
commenter stated that it is important to
ensure that any government benefits

provided to health centers to serve
uninsured patients are used to provide
services to those patients and not
diverted to subsidizing unrelated
service lines.
Response: Our use ofthe term

"monitor" may have inadvertently
created the misimpression that parties
to arrangements under this safe harbor
would be subject to a higher level of
scrutiny than parties to other
arrangements. We clarify that we were
referring simply to our usual and
customary oversight authorities and
practices. Participation in a safe

harbored arrangement would not
necessarily make parties a target of OIG

attention or subject parties to
heightened scrutiny; however, as

section 330 grant funding. The
commenter suggested that the
requirement is unnecessary, because
health centers already operate under an
obligation to comply with all

requirements oftheir section 330 grant
funding. Moreover, the commenter
observed that including this provision
in the safe harbor regulations might
chill a Donor's willingness to participate
in safe harbored arrangements, if that
Donor also becomes obligated to ensure
that the arrangements comply with the
terms of a health center's section 330
grant funding.
Response: We agree with this
commenter and are eliminating the
standard in the final rule. The

remaining safe harbor conditions, in
combination with health centers'
existing obligations to comply with the
requirements of their section 330 grant
funding, should be sufficient to

minimize any risk of fraud and abuse.
Comment: We received a comment

from a health center network noting that
the safe harbor only offers protection
under the anti-kickback statute and does
not offer protection under the physician

law, section 1877 ofthe Act
(commonly known as the "physician
law" or "Stark" law). The
self-referral
commenter expressed concern that the
need to comply with both statutes may
prove burdensome for health centers,
self-referral

and suggested

that the requirements of

the two laws be consolidated.
Response: The commenter correctly
notes that the safe harbor only protects
arrangements under the anti-kickback
statute, and, where applicable, parties
would also need to comply with the
law. An
exception under the physician self-

physician self-referral

law is beyond the scope of this
rulemaking. The anti-kickback statute
referral

and the physician self-referral

law,

while similar in that they both address
providers who receive funding from
abuses of the Medicare and Medicaid
Federal health care programs, health
programs, are different in scope and
centers remain subject to our general
application. Congress has made clear
oversight tools, including monitoring for that the physician self-referral
law and
proper billing and appropriate transfers the anti-kickback statute are separate
of governmental funds, With that
legal authorities, and compliance with
clarification, we do not believe that
one does not necessarily ensure
referencing our longstanding oversight
compliance with the other. See, e.g.,
authority should discourage
H,R, Conf. Rep. No, 386, 101st Cong., 1st
participation in safe harbored
session 856 (1989).
arrangements. We agree with the last
B. Comments on Statutory Elements
commenter and affirm our continued
commitment to ensuring that
1. Protected Health Centers
Government funding is used for its
intended purposes.

Comment: A trade association

suggested we broaden the scope of the
requested that we remove the proposed safe harbor to apply to arrangements
requirement at § 1001.95Z(w)(11), which involving other types of health centers
that are similar to the health centers
would have required any safe harbored
described in sections 1905(l)(Z)(B)(i)
agreement to comply with all relevant
Comment: A trade association

requirements of the health center's

and 1905(l)(Z)(B)(ii) of the Act, except

for the fact that they lack section 330
funding. These other facilities are often
called "look-alike" facilities.
Response: We decline to adopt this
suggestion. Congress specifically
provided that the safe harbor should
apply to the facilities described in
sections 1905(l)(Z)(B)(i) and
1905(l)(2)(B)(ii) ofthe Act and not to
other types of facilities. Moreover, we
believe the lack of section 330 funding,

which entails a higher level of
Government oversight, constitutes a
significant distinction between section
330-funded health centers and look-

alike facilities. Extending safe harbor
protection to entities without such
Government funding and such a level of
oversight would pose a greater risk of
fraud and abuse. We recognize that
many look-alike facilities play
important roles in the health care safety
net, and we note that just because
arrangements with look-alike facilities
do not fall within the safe harbor does
not mean they are necessarily illegaL.

The fact that the safe harbor does not
apply simply means that such
arrangements must be analyzed on a
case-by-case basis to determine whether
they violate the anti-kickback statute.
Comment: A trade association asked
us to commit to considering the
issuance of a regulatory safe harbor

protecting arrangements involving lookalike facilities.
Response: We may consider this
option in the future, depending on our

experience with this safe harbor in
practice.
Z. Protected Remuneration

Comment: Several commenters sought
clarification as to whether community
benefit grants and other types of cash
donations qualify as protected
remuneration under this safe harbor. A

trade association asked that we add
language in § 1001.95Z(w)(Z) that

clarifies that donations and loans could
include cash donations, such as

community benefit grants, and are not
limited to in-kind donations and loans.
One commenter noted that some
community benefit grants entail

reconciliation provisions, which allow
the donor (i) to augment the grant if

grant funds fall short of actual health
center expenditures or (ii) to determine

the use of excess funds where grant
funds exceed actual health center
spending. Two trade associations
requested clarification of the definition
of "remuneration" and assurance that
the definition includes community
benefit grants or similar payments to
health centers by public hospitals and
health systems, even if the amount of

Federal Register/Vol. 72, No. 19Z /Thursday, October 4, Z007/Rules and Regulations

the payments are subject to

Comment: A trade association noted

"remuneration" at § 1001.95Z(w) would

that our proposed rule stated that
section 431 "only protects remuneration
provided to a health center and does not

generally extend to community benefit
grants or similar payments, even where

protect remuneration provided to

individuals affiliated with a health

such grants or payments are subject to

center * * *." 70 FR 38084. The

reconciliation.
Response: The definition of

a reconciliation provision. So long as

the reconciliation methodology is fixed

in advance and does not hinge on the

commenter asked whether, for purposes
of this safe harbor, remuneration to the
health center could include funds

volume or value of referrals from the
health center to the Donor, funding

provided by a hospital, if such funds
were used to help recruit a physician to

subject to reconciliation could comply

the health center.

56637

or typically borne by the health center,
such that the arrangement results in

measurable savings that will benefit a
medically underserved population, or
would be used to recruit a health care
professional needed by the health center
to serve a medically underserved
population. If a recruited physician
were to join the health center's medical
staff, it would be some evidence that the
benefit primarily runs to medically
underserved populations served by the
health center as opposed to the Donor.

Comment: We received several
Response: The donation described by comments regarding the proposed
and be protected remuneration under
the commenter raises the possibility of
regulatory text for § 1001.95Z(w)(Z),
two scenarios: one in which the
this safe harbor (provided all other safe
which provides examples of "patient
donation could be used to recruit a
harbor conditions are satisfied).
services furnished by the health center
Donations and loans need not be limited physician to the health center primarily as part of its section 330 grant" in the
to in-kind goods or services, and indeed for the benefit of health center patients, parenthetical portion of the text, but
and one where it could be used to
may be in monetary form. We have
does not similarly list examples of
recruit a physician primarily for the
clarified the scope of § 1001.95Z(w) to
"goods, items, donations, or loans." The
make this point more explicit: "As used benefit of the donor hospitaL. If the
commenters expressed concern that this
hospital made the donation of funds to
in section llZ8B of the Act,
suggested that only services could
the health center primarily for the
'remuneration' does not include the
constitute protected remuneration.
benefit of health center patients, then its These commenters requested that the
transfer of any goods, items, services,
donation of funds for the purpose of
donations or loans (whether the
regulatory text also supply examples of
supporting general physician
donation or loan is in cash or in-kind),
protected goods, items, donations, and
or combination thereof from an
recruitment by the health center could
loans.
qualify for protection under this safe
individual or entity to a health center
Response: The commenters misread
harbor, if all safe harbor conditions are
* * *" (emphasis added).
proposed § 1001.95Z(w)(Z). Goods,
with the condition at § 1001.95Z(w)(1)

Comment: A trade association

satisfied. Conversely, we believe

items, donations, and loans-and
services-can indeed constitute

suggested we expand the scope of the
safe harbor to cover arrangements
whereby the remuneration is provided

Congress did not intend the safe harbor
to protect arrangements where the
donation primarily creates a benefit to

not to the health center, but from the

the Donor instead of to the health

health center to an individual or entity
related to the health center. The
commenter said there are arrangements
not covered by other safe harbors where
a health center could provide payments
or other forms of support to a provider

center. Likewise, this safe harbor would
not protect an arrangement where a
Donor used the health center as a
conduit to transfer remuneration to a

and Donors do not interpret the scope
of protected remuneration to be
narrower than it actually is, we have

particular recruited physician; to

furnished" and replaced it with the term
"services provided." Section

that would result in improving the

overall health outcomes of patients.
Response: Section 431 of MMA does
not protect remuneration from a health
center to an individual or entity. We
believe it is clear that Congress intended
the safe harbor to enhance the resources
available to health centers in order to
help them achieve their community
benefit mission, and we decline to adopt
the commenter's recommendation. We

recognize that there may be beneficial
arrangements where remuneration flows

away from the health center that may

not fit within a safe harbor; such
arrangements would be evaluated on a
case-by-case basis to ensure compliance
with the anti-kickback statute. We note
that some arrangements pursuant to
which a health center provides
remuneration to an individual or entity
may qualify for other safe harbors,
including, for example, the safe harbors
for personal services, employees,
practitioner recruitment, and electronic
health records items a nd services. See
§§ 1001.95Z(d), (il, (n), and (y).

transfer remuneration specifically for
the purpose of recruiting a physician to

join the Donor's medical staff, or to

protected remuneration under this safe
harbor. In the interest of clarifying
§ 1001.95Z(w)(Z) so that health centers

deleted the term "patient services

1001.95Z(w)(Z) now requires that goods,
items, services, donations, or loans (or

to transfer remuneration to existing

combination thereof) must either (i) Be
medical or clinical in nature or (ii)

group practices. The safe harbor does

relate directly to services provided by

not protect remuneration provided by

the health center in furtherance of its

practice in the Donor's service area; or

Donors to individuals affiliated with the
health center. Section 431 evidences
Congress' intent to protect the provision
of certain remuneration "to" a health
center. It does not protect remuneration
transferred to an individual affiliated
with a health center, nor does it protect
remuneration transferred from a.health
center to an individual or entity. We
note that, depending on the
circumstances, such a recruitment
arrangement between a health center
and a physician may be eligible for

protection under another safe harbor,
such as the safe harbor for practitioner
recruitment at § 1001.95Z(n). When

evaluating arrangements with potential
Donors for funds to support physician

recruitment, health centers should
consider whether the remuneration

would be used for expenses commonly

list
offers illustrative examples of the kind
of services that meet the latter test and
makes clear that such services need not
be medical or clinical in nature. For
example, goods, items, services,
donations, or loans directly related to a
health center's billing, administrative,
section 330 grant. The parenthetical

social services, and health information

functions can qualify. We note that the
term "medical or clinical in nature"
broadly covers all medical or clinical

services (e.g., physician services, nurse
practitioner and physician assistant
services, diagnostic services, therapeutic
services, etc.); medical or clinical goods
and items (e.g., pharmaceuticals, knee
braces, stethoscopes, x-ray machines,
etc.); donations of money or other forms

of remuneration that the health center
can use to furnish medical or clinical

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Federal Register/Vol. 72, No. 19Z/Thursday, October 4, Z007/Rules and Regulations

services or to acquire goods, items, or

services that are medical or clinical in
nature; and loans of money or other
forms of remuneration that the health

center can use to furnish medical or
clinical services or to acquire goods,
items, or services that are medical or
clinical in nature.
Comment: A non-profit organization
and several health centers submitted
comments seeking clarification that the
definition of remuneration at

3. Documentation Requirements
Comment: Several commenters
supported our documentation

requirements at proposed
§§ 1001,95Z(w)(1) and (3) (consolidated

the final rule). A
trade association commented that the
at § 1001.95Z(w)(1) of

documentation requirements at
proposed §§ 1001.952(w)(1) and (3) are

§ 1001.95Z(w) would include
pharmaceutical manufacturers'

inconsistent with statements in the
preamble. According to the commenter,
the use ofthe term "written agreement"
in the proposed regulatory language
implies that all arrangements between a

"require safe harbor protection" should
require documentation.
Response: The safe harbor does not
require that all arrangements between a
health center and a Donor be included

in a single arrangement that would
qualify under the safe harbor. The
documentation standards at
§ 1001.95Z(w)(1) (§§ 1001.95Z(w)(1) and
(3) in our proposed rule) require that the

written documentation "cover all goods,

items, services, donations, or loans to be

provided to the health center." In the
interest of providing bright-line

guidance with respect to what must be

donations of pharmaceutical products to

health center and a Donor must be

documented under § 1001.95Z(w)(1), we

health centers with the intent that these

included in a single writing, while the

products be used to treat patients of the

preamble says that all such
arrangements should be memorialized
"by one comprehensive writing or by
means of multiple writings that crossreference and otherwise incorporate the
agreements between the parties."
Response: For clarity and ease of
application, we have combined the
documentation requirements at

clarify that this paragraph requires the
documentation of all arrangements for

health center. They requested that we
amend § 1001.95Z(w) specifically to
include donations of pharmaceutical
products from pharmaceutical

manufacturers, citing concerns that
absent such an explicit
acknowledgement, pharmaceutical

manufacturers would refuse to donate to
health centers.

Response: Nothing in § 1001.95Z(w)

excludes donations of pharmaceuticals
by pharmaceutical companies from

protection by the safe harbor. To the
contrary, as discussed in the preceding
response, such donations are clearly
within the meaning of the language
"goods * * * (that) are medical or

clinical in nature" in § 1001.95Z(w)(Z).

Pharmaceutical donations can play an
important role in ensuring a health
center safety net for vulnerable patients,
and many arrangements between health
centers and pharmaceutical companies
may be eligible for protection. That said,
we are not enumerating in the
regulatory text any particular types of
Donors. Whether something fits in the
definition of protected "remuneration"
at § 1001.95Z(w) turns on the nature of
the remuneration, not on its source. By

listing some Donors and not others, we
might create a misimpression regarding
the scope of the safe harbor.

Comment: A non-profit organization
sought clarification that a health
center's practice of purchasing

discounted drugs by means of
participation in the 340B Drug Pricing

Program would not preclude that health
center from receiving free drugs
pursuant to a donation protected under

this safe harbor.
Response: We confirm that this safe
harbor could protect arrangements
involving the donation of
pharmaceuticals to health centers,
including to health centers that
participate in the 340B Drug Pricing
Program.

the transfer of goods, items, services,

donations, or loans from a Donor to a

health center. With respect to the
commenter's assertion that certain
arrangements "require safe harbor

protection," we note that, like all safe
harbors, compliance with this safe
harbor is voluntary and no arrangement

proposed §§ 1001.95Z(w)(1) and (3) of

requires safe harbor protection. Rather,

the proposed rule into one requirement
at § 1001.95Z(w)(1) in the final rule. We
confirm that it may be satisfied by one
comprehensive writing or by multiple
writings that cross-reference and
otherwise incorporate the agreements

compliance with the anti-kickback

between the parties. We have revised

the safe harbor to reflect this. We have
also revised the safe harbor to provide
the option of using a centralized master
list in lieu of cross-referencing and
incorporation of multiple agreements.
The master list must be maintained
centrally and in a manner that preserves
the historical record of arrangements,
kept up to date, and made available for

arrangements must comply with the
anti-kickback statute. Compliance with
a safe harbor is one option for ensuring
statute.
4. Benefit to a Medically Underserved
Population
Comment: A trade association asked
the
us to clarify § 1001.95Z(w)(4) of
proposed rule (§ 1001.95Z(w)(3) of the

final rule), which requires that
arrangements protected under the safe
harbor be reasonably expected to
contribute meaningfully to the health
center's ability to maintain or increase
the availability, or enhance the quality
of, services provided to a medically

review by the Secretary upon request.
This flexibility should enhance the
underserved population. Specifically,
ability of Donors and health centers to
the commenter sought confirmation
use the safe harbor. The safe harbor does that, in order to contribute
not require that all arrangements
meaningfully, the arrangement need not
between a health center and a Donor be
result in a financial gain for the health
included in a single agreement that
center. The commenter asked us to
would qualify under the safe harbor.
consider the case of a health center that
Comment: A trade association sought

clarification that the documentation
requirements at proposed

does not offer a particular service for its

§§ 1001.95Z(w)(1) and (3)

patients, but enters into an arrangement
with a Donor for that service for free.
The commenter observed that since the

(§ 1001.95Z(w)(1) ofthe final rule) apply

health center had not previously

only to arrangements related to a safe
harbored arrangement, and not to other
interactions between the health center
and the Donor that truly are unrelated
to a safe harbored arrangement. The
commenter believed that the
documentation requirements imply that
all arrangements between a health
center and a Donor must be included in
a single arrangement that would qualify

incurred expenses for the service, the

under the safe harbor. The commenter

§ 1001.95Z(w)(4) (§ 1001.95Z(w)(3) of

suggested that only arrangements that

the final rule) does not require a

new arrangement would not offer a
financial gain to the health center.

Another trade association requested
confirmation that proposed
§ 1001.95Z(w)(4) would not necessarily
require direct savings of section 330

funding and could be satisfied without
a monetary benefit to the health center.

Response: We confirm that proposed

Federal Register/Vol. 7Z, No. 19Z/Thursday, October 4, Z007/Rules and Regulations

financial gain to the health center and
does not require the direct savings of
section 330 funding. Whether the
condition is satisfied will depend on the
specific facts and circumstances. As
noted in the preamble to the proposed
rule at 70 FR 38085, we believe health
centers are well-situated in the first
instance to make a reasonable
determination whether an arrangement
contributes meaningfully to the health

center's ability to maintain or increase
the availability, or enhance the quality
of, services provided to a medically
underserved population, and we believe

health centers should have flexibility in
making these determinations. In the
preamble to the proposed rule at 70 FR

38085, we listed factors that are
exemplars of the type that should be
considered in making these
determinations:
. Does the arrangement directly

benefit a medically underserved
population?
. Does the arrangement involve

goods, items, or services of a type that
are commonly or typically purchased by
the health center, such that the
arrangement results in measurable
savings that will benefit a medically

direct monetary gain to the health

56639

reasonable expectation of benefits to a

medically underserved population prior
to entering the arrangement. Parties
concern regarding the significance of the may, as a matter of prudent business
practice, develop standards that are
list of factors in the preamble that we
reasonable, uniform, and consistently
wrote "should be considered" in
applied as part of the methodology they
determining whether an arrangement
use in assessing the expected benefit to
would result in a meaningful benefit to
a medically underserved population.
a medically underserved population.
See 70 FR 38085. The commenter asked We have similarly changed the
corresponding language in
for confirmation that the factors in the
list are only examples, and that it is not § 1001.952(w)(4) ofthe final rule, which
concerns the reevaluation of
necessary to satisfy all of the factors to
demonstrate a meaningful benefit under arrangements. With respect to the
commenter's concern that proposed
proposed § 1001.952(w)(4)
center.

Comment: A trade association had a

(§ 1001.952(w)(3) of

the final rule).

Response: The factors listed in the
proposed rule and noted in the
preceding response are examples of
ways to analyze the existence of a

meaningful benefit, and the commenter
correctly understood that it is not
necessary to satisfy each exemplary
factor to establish the existence of a

meaningful benefit to a medically
underserved population under
the final rule.
Comment: A trade association

§ 1001.952(w)(3) of

commented that our requirement at
proposed § 1001.952(w)(4) that health

centers apply "reasonable, consistent,
and uniform standards" when
underserved population?
determining whether an arrangement
. If the arrangement involves a
bestows a meaningful benefit for
donation to the health center, would the services provided to a medically
donation result in the increased
underserved population provides
availability of an item, good, device,
insufficient guidance to health centers
service, technology, or treatment needed for structuring arrangements. The
by a medically underserved population commenter also objected to the
but not previously available in sufficient proposed requirement that health
limitations?
quantities due to financial
centers document evaluation of such
. Does the health center need the
standards. It expressed concern that
donated items, goods, or services, or the these requirements would have a
loaned funds to satisfy the scope of its
chilling effect on parties' participation
section 330 grant?
in safe harbored arrangements, as
The arrangement described in the first parties would be unsure whether their
commenter's example could contribute
standards would satisfy the
requirements of the safe harbor. The
meaningfully, if it increased the
commenter requested that we provide
availability of the service for the health
examples of acceptable standards and
center's medically underserved
how to document them, or eliminate the
population. With respect to the second
requirement all together.
commenter, we observe that while an
Response: We intended the language
arrangement that conserves a health
"reasonable, consistent and uniform
center's section 330 funding means the
standards" to give health centers
health center has more money available
flexibility in assessing benefits to a
to provide or enhance services for a
medically underserved population,
medically underserved population,
while at the same time requiring
there are many other ways that
remuneration could maintain, increase, accountability and providing safeguards
against abuse. Upon further
or enhance services for a medically
consideration and consistent with our
underserved population without the
original intent, we have determined that
direct savings of section 330 funding.
For example, if an arrangement allowed proposed § 1001.952(w)(4) (now
§ 1001,952(w)(3)) can be simplified.
a health center to begin delivering an
the final rule,
Under § 1001.952(w)(3) of
important new clinical service, which
parties need not develop or apply any
the health center was not previously
separate "standards," nor document that
able to provide, a meaningful benefit to
they have applied them. They must,
a medically underserved population
however, document the basis for the
would likely be achieved without a

§ 1001.952(w)(4) (§ 1001.952(w)(3) in

the final rule) will chill participation in
the safe harbor, we note that our

approach here is consistent with several
existing safe harbors that provide parties
with flexibility to determine how to
satisfy key conditions (e.g., how to
determine fair market value). A health

center can document its determination
of a meaningful benefit to a medically
underserved population, for example,

by maintaining written or electronic
records of the data and methodology

used to assess the expected maintenance
of, increase in, or enhanced quality of
services to a medically underserved
population and the outcome of such
assessment. We believe that the
documentation necessary to satisfy this
requirement is consistent with that
generally kept in the usual and
customary course of a health center's

business. For example, in many cases a
health center's section 330 grant

documents, in combination with the
agreement required under
§ 1001.952(w)(1), may serve as the
documentation of a sufficient benefit to

a medically underserved population, to
the extent they transparently document
that a volume of items or services
specified by the section 330 grant

requirements will be provided under the
agreement. Parties with concerns about
their specific practices can avail

themselves of OIG's advisory opinion

process.
5. Periodic Re-Evaluation of

Arrangements
Comment: A health network
supported the requirement at proposed
§ 1001.952(w)(5) (§ 1001.952(w)(4) of

the final rule) that parties periodically
re-evaluate arrangements. The
commenter stated that it seems
reasonable and useful for health centers
participating in these arrangements to
re-evaluate agreements periodically and
document such factors as fair market
value of equipment or costs of providing

services. A trade association requested
that we eliminate the requirement that
an arrangement that, upon reevaluation,

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Federal Register/Vol. 7Z, No. 19Z/Thursday, October 4, Z007/Rules and Regulations

fails to meet the benefit standard be
terminated. This commenter also asked
us to clarify that continuation of such an
arrangement would not automatically
constitute a violation of the antikickback statute,
Response: We agree with these
commenters. We have adopted the trade

association's recommendation to
eliminate the language in
§ 1001.952(w)(5) ofthe proposed rule

that required noncompliant
arrangements to be promptly
terminated. We also confirm that a
decision by a health center to continue
participating in an arrangement that no
longer satisfies the requirements of
§ 1001.952(w)(3) of

the final rule will

not necessarily give rise to a violation of
the anti-kickback statute. Rather, the
continuation of such an arrangement
would fall outside ofthe safe harbor,
and its legality under the anti-kickback

statute would be determined on a caseby-case basis, based on all the facts and
circumstances, including the intent of
the parties. Finally, we agree with the
commenter that, depending on the

definition, all the arrangements
described in the safe harbor pose a risk
of fraud and abuse, which is why they
require safe harbor protection in the first
place.
Response: We agree with the
commenter's view that the regulatory
standards we create in accordance with
section 431 must be consistent with the
language of section 431, and we believe
that our regulations meet that test.
Section 431 explicitly requires us to
consider health center resources, patient
freedom of choice, and independent

medical judgment; however, it further
states that these factors are "among"
those to be considered and that "the
Secretary may also include other
standards and criteria that are consistent
with the intent of Congress in enacting
the exception established under this
section." Every safe harbor is
established to protect arrangements that
otherwise implicate the anti-kickback

statute. Therefore, we believe Congress
charged the Secretary with
promulgating regulations implementing
the health center safe harbor in a

arrangement, it would be reasonable and manner that furthers beneficial health
useful for health centers participating in center arrangements without posing an
these arrangements to re-evaluate
undue risk of fraud and abuse under the
agreements periodically and document
anti-kickback statute, This approach is
such factors as fair market value of
consistent with our longstanding
equipment or costs of providing
approach to safe harbor rulemaking. For
services.
instance, in our preamble to the
C. Comments on Additional Regulatory proposed rule for the first ten safe
harbors we stated that: "(wJe have
Standards
attempted in these proposed regulations
1. General Comments
to permit physicians to freely engage in
business practices and arrangements
Comment: A trade association
that encourage competition, innovation
asserted that the regulatory standards
and economy. However, we have added
OIG proposed in accordance with
criteria to each 'safe harbor' in order to
section 431 of MMA should be limited
reduce the potential for abuse." (50 FR
to the factors set forth in section 431
3088; January 23, 1989) Congress
and should not include additional
enacted section 431 in the context of
requirements. As discussed in our
this regulatory history. Moreover, we do
preamble to the proposed rule at 70 FR
not believe Congress intended to protect
38083, in addition to the standards
arrangements that pose significant risk
established by Congress, section 431 of
to Federal health care programs or their
MMA authorizes OIG to add other
beneficiaries. We believe our regulations
standards or criteria consistent with
directly and reasonably derive from the
Congress' intent in creating this safe
guidelines specifically enacted in
harbor. The commenter stated that
section 431 and Congress' invitation to
establishing additional safe harbor
include other standards consistent with
standards consistent with the antithe establishment of the safe harbor.
kickback statute contravenes the plain
With respect to the commenter's final
language of the statute and Congress'
comment, historically, regulatory safe
intent. The commenter asked that the
harbors were initiated in response to
regulatory standards created in
accordance with section 431 not include concerns that the anti-kickback statute
covered some relatively innocuous
additional requirements that health
centers and their partners would have to commercial arrangements. (See 50 FR
3088; January 23,1989 and 56 FR
meet to be consistent with the antikickback statute, Finally, the commenter 35952; July 29, 1991) These safe harbors
contended that these standards wrongly are meant to protect arrangements that
"reconsider" whether the arrangements do not pose undue risk for Federal
health care programs or beneficiaries;
pose a risk of fraud and abuse.
they are not meant to protect
According to the commenter, by

arrangements that pose high risks to
Federal health care programs.

2, Patient Freedom of Choice and
Independent Medical Judgment

Comment: A trade association sought
clarification that proposed
§§ 1001.952(w)(6) and (8)

the final
(§§ 1001.952(w)(5) and (7) of
rule) would permit a health center to
select a single supplier of particular
goods or services if the health center
followed the procurement rules
applicable to health centers set forth at
45 CFR 74.40 through 74.48. The
commenter presented the scenario of a
health center purchasing laboratory

services where the health center has a
choice of suppliers, which are equal in
all respects except that one prospective
supplier will offer free laboratory

services for uninsured patients while
the other will not. The commenter
suggested that it may be appropriate for
the health center to enter into an

exclusive contract with the supplier that
offers free services.
Response: Where a health center
purchases or receives a particular good

or service from a supplier, the health
center may limit the number of
suppliers with which it contracts, in
keeping with health center procurement
rules. Nothing in this safe harbor is to
the contrary. We agree that in some
circumstances it would be appropriate
for a health center to contract with one
supplier (e.g., a single supplier of
laboratory services), and that such an
arrangement would not be likely to
impinge unduly or significantly on the

freedom of choice of patients seeking
care at a section 330 health center. We

have made clarifying revisions to
the final rule to
§ 1001.952(w)(5) of
reflect that a Donor may not require a
health center to refer patients to a
particular individual or entity. Nothing
in this provision limits a health center's

ability to contract with one supplier
consistent with the procurement rules.
Similarly, proposed § 1001.952(w)(8)

(§ 1001.952(w)(7) ofthe final rule)
prohibits a Donor from requiring the
health center to forego arrangements
with other prospective Donors, but does

not prohibit the health center from
entering into an exclusive arrangement
with a provider or supplier when the
health center so chooses, and when it
can do so in compliance with relevant
procurement rules, In the commenter's

example, a health center can accept the
offer of free laboratory services for
uninsured patients under the safe
harbor, provided all other safe harbor
conditions are met. We emphasize that
this safe harbor is unique to Federally
Qualified Health Centers. In general,

Federal Register/Vol. 72, No. 19Z/Thursday, October 4, Z007/Rules and Regulations

arrangements where a provider or
supplier offers free or discounted items
or services to a potential referral source
that would otherwise incur out-of-

pocket costs for such items or services
pose a substantial risk of fraud under
the anti-kickback statute. Nevertheless,
Congress enacted a law that protects
such arrangements in the health center
context, where the remuneration inures

to the benefit of a section 330 health
center and its medically underserved
patients, and where other appropriate
safeguards are in place. Other similar
arrangements outside the health center
context are fundamentally different and
pose substantial risk under the antikickback statute.
Comment: A trade association offered

mixed reactions to proposed
§ 1001.952(w)(7) (§ 1001.952(w)(6) in

the final rule), which provides that
Donors who offer to provide goods,
items, or services to health center

patients cannot limit their acceptance of
health center patient referrals based on
a patient's insurance status, The
commenter stated that asking Donors to

accept all health center patients without
regard to insurance status is a laudable
goal, but expressed concern that this
requirement would put prospective
Donors at significant financial risk and
could have a chilling effect on parties'
willingness to participate in safe
harbored arrangements. The commenter
also stated that allowing Donors to
"impose reasonable limits on the
aggregate volume or value of referrals it
will accept" might cause risk averse
Donors to commit to serving a smaller
number of health center patients than
they otherwise would.
Response: We are mindful of

the

commenter's concerns and we believe

that the regulations strike an
appropriate balance between preserving
health center patients' access to care,
allowing prospective Donors to limit

their risk, and reducing the risk of
parties abusing the safe harbor by

"cherry picking" lucrative patients from
the health centers, We believe a
requirement that Donors that offer to

furnish goods, items, or services to
health center patients should do so for

all health center patients without regard
to insurance status is essential to
effectuating Congress' intent that the

safe harbor promote arrangements that
provide a benefit to the health centers
and the medically underserved
populations they serve. We are mindful
that this requirement could discourage
prospective Donors from participating
in safe harbored arrangements absent a
way for them to limit their risk, which
is why we have provided a mechanism
for Donors to set a reasonable cap on the

volume or value of items or services
they will provide. Furthermore, nothing
the final rule
precludes Donors from billing for such
goods, items, or services in accordance
with the Donor's usual billing practice
(absent an agreement between the
parties as provided for in
in § 1001.952(w)(6) of

§ 1001.952(w)(9)). The safe harbor does

not protect arrangements through which
Donors limit their financial risk by
cherry picking which health center

56641

with donations or loans. We note that
safe harbored donations or loans may
not take into account the volume or
value of Federal health care program
referrals, in accordance with
§ 1001.952(w)(1).

3. Patient Notification
Comment: Two trade associations
asked that we eliminate the patient
notification requirement at proposed
§ 1001.952(w)(9) (§ 1001.952(w)(8) of

services based on the patient's

the final rule), One commenter
suggested that, if the requirement is

insurance status. For example, if a
physician were to offer physician

health care services from suppliers of

patients will receive their goods or

retained, we distinguish providers of

services to a health center, he or she
could not condition the offer on treating
only patients who are Federal
care program beneficiaries.
health
However, the physician could cap the
number of hours he or she would work
at the health center. Similarly, an end
stage renal disease facility cannot offer
to provide free dialysis for one

goods and services since, in the

§ 1001.952(w)(6) concerns goods, items,

the notification requirement. We will

commenter's opinion, it is less
important to preserve patients' freedom
of choice to select suppliers of health
care goods and services. This

commenter also questioned why this
safe harbor requires patient notification
when other safe harbors do not. Another
trade association asserted that any
patient notification requirement would
uninsured health center patient for
be unworkable and would not
every four insured patients the health
significantly enhance patient freedom of
center refers to the facility. However,
the facility could offer to provide a fixed choice.
Response: We disagree with the
number of dialysis treatments to the
commenters and decline to eliminate
health center. Finally, we clarified that
or services furnished by Donors to the
health center, and not donations or

loans.
Comment: A health system
commenter asked if the requirements of
proposed § 1001.952(w)(7)
(§ 1001.952(w)(6) of

the final rule)

would apply to Donors providing
remuneration in the form of loans or

donations, since a patient cannot
"clinically qualify" for a loan or

donation.
Response: Proposed § 1001.952(w)(7)

the final rule) does
not apply to Donors providing
(§ 1001.952(w)(6) of

donations or loans to a health center.

For clarity and consistency of meaning,
we have replaced the term "provide"
with the term "furnish" in
§ 1001.952(w)(6) of

the final rule. As

defined at 42 CFR 1000.10, "(flurnished
refers to items or services provided or
supplied, directly or indirectly, by any
individual or entity." We have further
clarified the subsequent language in this
paragraph by conforming it to reflect
that the term "furnish" refers to items
or services provided or supplied, not
referrals accepted. We believe these
changes better distinguish between (i)
Donors who furnish items or services for
health centers patients (and may bill

insurers separately for some of these
items or services), who must comply
the final rule if
with § 1001.952(w)(6) of
they want safe harbor protection, and
(ii) Donors who provide health centers

not draw a distinction between
providers and suppliers for purposes of

this subparagraph because preserving
patient freedom of choice is important
for both providers and suppliers of
health care items and services (we note

that physicians are "suppliers" for
Medicare Part B purposes. 42 CFR
400.202. We believe a patient

notification requirement is consistent
with our specific charge from Congress
to protect patient freedom of choice.

Moreover, this is not the only safe
harbor that requires patient notification.
See, e.g., 42 U.S.c. 1001.952(v). As we
noted in the preamble to the proposed
rule, transparency will help protect the
informed decision-making of patients,
enhancing their ability to act as prudent
consumers of health care services and
preserving freedom of choice. (70 FR
38086; July 1, 2005) That said, we have

simplified the requirements. Under the
final rule, health centers must notify
patients of their freedom of choice and
provide information regarding the
existence and nature of arrangements

under this safe harbor to patients upon
request.

Comment: A trade association asked
that we specify how to satisfy the
patient notification requirement at
proposed § 1001.952(w)(9)

the final rule). The
(§ 1001.952(w)(8) of
commenter asked us to confirm that
health centers would be allowed to

notify patients strictly through broad

56642

Federal Register/Vol. 72, No. 19Z /Thursday, October 4, Z007/Rules and Regulations

disclosures and that an acceptable
notification method would be to direct
patients to a posted written disclosure
notice.
Response: We confirm that health
centers can satisfy the notification
requirement through broad disclosures.
For example, directing patients to a
written disclosure notice posted in a
conspicuous place in the health center
would be an acceptable disclosure
method, provided that the written
notice is reasonably calculated to
provide effective notice and to be

the absence of the health center's

overall economic effect of the rule is

participation in the safe harbored
arrangement. We are concerned, for

less than $100 million annually. This
safe harbor is designed to allow health

example, that Donors might otherwise

centers to enter into certain beneficial

seek to recoup part of the cost of
remuneration offered to a health center
by charging health center patients
inflated rates. We confirm that nothing
in the provision would preclude

arrangements with individuals or
entities providing goods, items, services,

hospitals and health centers from
offering health center patients waivers
or reductions of cost sharing obligations,
as permitted in the safe harbor for

requirements on any party. Health

understood by the parties. However,

deductible amounts at § 1001.952(k).
Moreover, health centers and other

donations, loans, or a combination
thereof to the health center. In doing so,

this regulation would impose no

the particular facts and circumstances,
we believe it would be inappropriate for

reduce patients' cost sharing amounts
based on individualized, good faith
assessments of financial need. Section

centers may voluntarily seek to comply
with this provision so that they have
assurance that participating in covered
agreements will not subject them to
liability under the anti-kickback statute.
The safe harbor facilitates health
centers' ability to provide important
health care services to communities in
need and helps these centers fulfill their
mission as integral components of the

us to dictate a one-size-fits-all

1128A(i)(6)(A)(iii) of the Act.

health care safety net. We believe that

notification method to be used by all

Comment: A health system asked
whether the regulatory language "the
same rate it charges other patients" at

the aggregate economic impact of this
rule will be minimal and will have no
effect on the economy or on Federal or

proposed § 1001.952(w)(10)

State expenditures, To the extent that
there is any economic impact, that

since the most appropriate notification
method is likely to vary from health
center to health center, depending on

health centers. Accordingly, we further
note that broad disclosures are not
required. To further improve clarity, we
replaced the general reference to

arrangements under "this paragraph"
with a specific cite to § 1001.952(w)(1).

4, Rates Charged to Health Center
Referrals
Comment: We received several

comments concerning proposed
§ 1001.952(w)(10) (§ 1001.952(w)(9) of

the final rule), which gives health
centers the option of requiring a Donor

to charge a patient referred from the
health center the same rate it charges
other patients or a reduced rate. A trade

association requested that the entire
proposed provision be deleted from the

safe harbor or, if retained, clarified as
optionaL. The same trade association

sought clarification that the provision
would not preclude providers or

suppliers from waiving or reducing cost
sharing obligations for health center
patients under the safe harbor at 42 CFR
1001.952(k).

Response: We emphasize that
proposed § 1001.952(w)(10)

(§ 1001.952(w)(9) ofthe final rule)

describes an optional standard. We have

revised § 1001.952(w)(9) ofthe final rule
to make this elective clear. Health
centers are not required to exercise this
option, but they may choose to do so to
ensure that Donors giving remuneration
to a health center do not simply recoup
the remuneration by overcharging
health center patients. Our intent is to

allow health centers to protect their
patients from price gouging. (We note
that a similar provision is included in
the safe harbor for referral services at
§ 1001.952(f).) We added this provision
to ensure that health centers can protect

their patients from being charged prices
higher than they would be charged in

waiver of beneficiary coinsurance and
providers and suppliers can waive or

(§ 1001.952(w)(9) of the final rule)
means the entity's customary charges (as
defined at 42 CFR 413.13(a)) or the

discounted rate the provider or supplier
actually charges similarly situated
patients.
Response: We clarify that "the same

impact will

likely result in savings of

Federal grant dollars.

Unfunded Mandates Reform Act
Section 202 of the Unfunded
Mandates Reform Act of 1995, Public

rate it charges other patients" refers to

Law 104-4, requires that agencies assess
the rate the provider or supplier actually anticipated costs and benefits before
charges a patient similarly situated to a
issuing any rule that may result in
patient referred from a health center. We expenditures in anyone year by State,
have changed the regulatory text at
local, or tribal governments, in the
§ 1001.952(w)(9) to reflect this
aggregate, or by the private sector, of
clarification by inserting the words
$110 million. Since compliance with
"similarly situated" after the word
safe harbor requirements is voluntary,
"other."
we believe that there are no significant
costs associated with this safe harbor
III. Regulatory Impact Statement
that will impose any mandates on State,
A. Regulatory Analysis
local, or tribal governments or the
private sector that would result in an
We have examined the impact of this
expenditure of $110 million or more
rule as required by Executive Order
(adjusted for inflation) in any given
12866, the Unfunded Mandates Reform
year, and that a full analysis under the
Act of 1995, the Regulatory Flexibility
Act (RF A) of 1980, and Executive Order
13132.

Unfunded Mandates Reform Act is not

Executive Order 12866
Executive Order 12866 directs
agencies to assess all costs and benefits
of available regulatory alternatives and,
if regulations are necessary, to select

Regulatory Flexibility Act

necessary.
The Regulatory Flexibility Act (RFA)
and the Small Business Regulatory

Enforcement and Fairness Act of 1996,
which amended the RF A, require

agencies to analyze options for
regulatory relief of small entities. For
net benefits (including potential
economic, environmental, public health, purposes of the RF A, small entities
include small businesses, certain
and safety effects; distributive impacts;
nonprofit organizations, and small
and equity). A regulatory impact
governmental jurisdictions. Individuals
analysis must be prepared for major
and States are not included in the
rules with economically significant
effects (i.e., $100 million or more in any definition of a small entity. In
accordance with the RFA, some ofthe
given year).
This is not a major rule, as defined at health centers that may avail themselves
of the protections of the safe harbor are
5 U.S.C. 804(2), and it is not
considered to be small entities,
economically significant since the
regulatory approaches that maximize

Federal Register/Vol. 7Z, No. 19Z/Thursday, October 4, Z007/Rules and Regulations

In addition, section 1102(b) of the Act
requires us to prepare a regulatory
impact analysis if a rule may have a
significant impact on the operations of
a substantial number of small rural

In order to fairly evaluate whether an
information collection should be
approved by OMB, section 3506(c)(2)(A)

the provisions of section 604 of the

of the PRA requires that we solicit
comment on the following issues:
. Whether the information collection
is necessary and useful to carry out the

RF A. While this safe harbor may have
an impact on small rural hospitals, we

proper functions of the agency;
. The accuracy of the agency's

hospitals. This analysis must conform to

believe that the aggregate economic
impact of this rule will be minimal,
since it is the nature of the violation and
not the size or type of the entity that
would result in a violation of the antikickback statute. Moreover, the safe
harbor should benefit small rural
hospitals (and their patients) that have
relationships with health centers by
increasing their flexibility to engage in

estimate of the information collection
burden;
. The quality, utility, and clarity of
the information to be collected;

transactions involving goods, items,

proposed rulemaking (70 FR 38081). We

services, donations, and loans that
result in conservation of Federal grant
dollars and other funding without any
risk under the anti-kickback statute. The
safe harbor should effectively expand
opportunities for health centers to
engage in arrangements beneficial for
fulfilling their mission. For these
reasons, and because the vast majority
of entities potentially affected by this
rule do not engage in prohibited
arrangements, schemes, or practices in
violation ofthe law, we have concluded
that this rule should not have a
significant impact on a substantial
number of small rural hospitals, and
that a regulatory flexibility analysis is
not required for this rulemaking.
Executive Order 13132
Executive Order 13132, Federalism,

establishes certain requirements that an
agency must meet when it promulgates
a rule that imposes substantial direct
requirements or costs on State and local
governments, preempts State law, or
otherwise has Federalism implications.
In reviewing this rule under the
threshold criteria of Executive Order

13132, we have determined that this
rule would not significantly limit the
rights, roles, and responsibilities of
State or local governments. We have
determined, therefore, that a full

analysis under Executive Order 13132 is
not necessary.

. Recommendations to minimize the

information collection burden on the
affected public, including automated
collection techniques.
On July 1, 2005, we solicited
comment under this section upon
publication of the 60-day notice of

will publish the 30-day Federal Register
notice soliciting public comment on
each of these issues for the following
sections of this document that contain
information collection requirements
following publication of this final rule.
For an arrangement to fall within the
safe harbor it will have to fulfill the
following documentation requirements:
(1) It must be set out in writing
(§ 1001.952(w)(1)(i)(A)); (2) the written

agreement must be signed by the parties
(§ 1001.952(w)(1)(i)(B)); (3) the written

agreement must cover, and specify the
amount of, all goods, items, services,
donations, or loans provided by the

individual or entity to the health center
§ 1001.952(w)(1)(i)(C)); (4) the health
center must document its basis for its

reasonable expectation that the
arrangement will benefit a medically
underserved population
(§ 1001,952(w)(3)); and (5) the health

center, at reasonable intervals, must reevaluate the arrangement to ensure that
it is expected to continue to benefit a
medically underserved population, and

leases, grants, loans, and other similar
agreements in writing. Ensuring that
such writings are comprehensive and
that the actual business activities are
accurately reflected by documentation
are standard prudent business practices.
The only documentation requirement of
the safe harbor that potentially imposes
an additional recordkeeping burden is
the requirement that health centers
document the statutorily mandated
expected benefit to a medically
underserved population. Since serving a
medically underserved population is
central to the underlying mission of the
health centers and the section 330 grant

program (and all health centers serve at
least one such population),
documentation of such benefit would

seem to be a prudent business practice
to ensure continued compliance, not

only with the safe harbor, but also with
the section 330 grant program.
We note that although we require
health centers to provide effective

notification to patients reminding
patients of their freedom to choose any
willing provider or supplier and to
provide information about safe harbored
arrangements to patients who inquire,
these disclosures need not be in writing.
Instead, we require that health centers
provide patient disclosures in a manner
reasonably calculated to provide

effective notice and to be understood by
the patient. The type of notice provided

may vary depending on the health
center and its patients. We believe the

notification requirement will achieve
the goal of protecting patients without
imposing an added paperwork burden
because the notice need not be written.
Moreover, we believe the notification
requirement will be consistent with
health centers' existing interest in

Paperwork Reduction Act of 1995, we
will submit a copy of this document to
OMB for its review and approval of

merely offer an optional framework

these information collection
requirements.

regarding how to structure business
arrangements to ensure compliance with
the anti-kickback statute. All parties
remain free to enter into arrangements
without regard to a safe harbor, so long
as the arrangements do not involve
unlawful payments for referrals under
the anti-kickback statute.
List of Subjects in 42 CFR Part 1001
Administrative practice and
procedure, Fraud, Grant programs-

must document the re-evaluation
contemporaneously (§ 1001.952(w)(4)).
As required by section 3504(h) of the

We believe that the documentation

3506(c)(2)(A) of the Paperwork

course of business. The statute applies

Reduction Act of 1995 (PRA), we are
required to solicit public comments, and

goods, items, services, donations, or

information collection requirements set
forth in rulemaking.

health centers to memorialize contracts,

protecting their vulnerable patient
populations.
It should be noted that compliance
with a safe harbor under the Federal
anti-kickback statute is voluntary, and
no party is ever required to comply with
a safe harbor. Instead, safe harbors

The Office of Management and Budget requirements necessary to enjoy safe
harbor protection do not qualify as an
(OMB) has reviewed this rule in
accordance with Executive Order 12866.
added paperwork burden, because the
requirements deviate minimally, if at
B. Paperwork Reduction Act
all, from the information these entities
would routinely collect in their normal
In accordance with section

receive final OMB approval, on any

56643

only to the health centers' receipt of

loans pursuant to a contract, lease,
grant, loan, or other agreement. We

health, Health facilities, Health

believe it is usual and customary for

Medicaid, Medicare.

professions, Maternal and child health,

56644

Federal Register/Vol. 72, No. 19Z/Thursday, October 4, 2007/Rules and Regulations

III Accordingly, 42 CFR part 1001 would

be amended as set forth below:
PART 1001-(AMENDED)
III 1. The authority citation for part 1001
continues to read as follows:
Authority: 42 U.S.C. 1302, 1320a-7,
1320a-7b, 1395u(j), 1395u(k), 1395y(d),

1395y(e), 1395cc(b)(21(D), (EI and (F), and

1395hh; and sec. 2455, Pub.L. 103-355, 108
Stat. 3327 (31 U.S,C. 6101 note).

III 2. Section 1001.952 is amended by

republishing the introductory paragraph
for this section and by adding a new
paragraph (w) to read as follows:
§ 1001.952 Exceptions.
The following payment practices shall

not be treated as a criminal offense
under section 1128B of the Act and

shall not serve as the basis for an
exclusion:
*

*

*

*

*

(w) Health centers. As used in section
1128B of
the Act, "remuneration" does
not include the transfer of any goods,
items, services, donations or loans
(whether the donation or loan is in cash
or in-kind), or combination thereof from
an individual or entity to a health center
(as defined in this paragraph), as long as

the following nine standards are met(1) (i) The transfer is made pursuant

to a contract, lease, grant, loan, or other

clinical in nature or relate directly to
services provided by the health center
as part of the scope of the health
center's section 330 grant (including, by
way of example, billing services,
administrative support services,
technology support, and enabling
services, such as case management,
transportation, and translation services,
that are within the scope of the grant).
(3) The health center reasonably

expects the arrangement to contribute
meaningfully to the health center's
ability to maintain or increase the
availability, or enhance the quality, of
services provided to a medically
underserved population served by the
health center, and the health center
documents the basis for the reasonable
expectation prior to entering the
arrangement. The documentation must
be made available to the Secretary upon

(A) Is set out in writing;
(B) Is signed by the parties; and
(C) Covers, and specifies the amount

evaluate the arrangement to ensure that

the arrangement is expected to continue
to satisfy the standard set forth in

Federal health care

program business generated between the

parties. The written agreement will be
deemed to cover all goods, items,
services, donations, or loans provided
by the individual or entity to the health
center as required by paragraph
(w)(l)(i)(C) of this section if all separate
agreements between the individual or
entity and the health center incorporate
each other by reference or if they crossreference a master list of agreements
that is maintained centrally, is kept up
to date, and is available for review by
the Secretary upon request. The master
list should be maintained in a manner
that preserves the historical record of
arrangements.
(2) The goods, items, services,

donations, or loans are medical or

determination. In making these
determinations, health centers should
look to the procurement standards for
recipients of Federal grants set forth in
45 CFR 74.40 through 74.48.
(8) The health center must provide

reasonably calculated to be effective and
understood by the patient.

(9) The health center may, at its

option, elect to require that an
individual or entity charge a referred
contemporaneously. The documentation health center patient the same rate it
must be made available to the Secretary charges other similarly situated patients
upon request. Arrangements must not be not referred by the health center or that
renewed or renegotiated unless the
the individual or entity charge a referred
health center reasonably expects the
health center patient a reduced rate
paragraph (w)(3) of this section, and
must document the re-evaluation

this section to be satisfied in the next
agreement term. Renewed or
renegotiated agreements must comply
with the requirements of paragraph

of, all goods, items, services, donations,
or loans to be provided by the
(w)(3) ofthis section.
individual or entity to the health center.
(5) The individual or entity does not
(ii) The amount of goods, items,
(i) Require the health center (or its
services, donations, or loans specified in affiliated health care professionals) to
the agreement in accordance with
refer patients to a particular individual
paragraph (w)(l)(i)(C) of this section
or entity, or (ii) restrict the health center
may be a fixed sum, fixed percentage, or (or its affiliated health care
set forth by a fixed methodology. The
professionals) from referring patients to
amount may not be conditioned on the
any individual or entity.
volume or value of

to select and must document its

effective notification to patients of their
freedom to choose any willing provider
or supplier. In addition, the health
center must disclose the existence and
nature of an agreement under paragraph
(w)(l) of this section to any patient who
inquires. The health center must
request.
provide such notification or disclosure
(4) At reasonable intervals, but at least in a timely fashion and in a manner
annually, the health center must re-

standard set forth in paragraph (w)(3) of

agreement that-

goods, items, or services, or with other
lenders or donors. Where a health center
has multiple individuals or entities
willing to offer comparable
remuneration, the health center must
employ a reasonable methodology to
determine which individuals or entities

(6) Individuals and entities that offer

to furnish goods, items, or services
without charge or at a reduced charge to
the health center must furnish such
goods, items, or services to all patients
from the health center who clinically
qualify for the goods, items, or services,
regardless of the patient's payor status
or ability to pay. The individual or

entity may impose reasonable limits on
the aggregate volume or value of the
goods, items, or services furnished
under the arrangement with the health
center, provided such limits do not take
into account a patient's payor status or

ability to pay.
(7) The agreement must not restrict
the health center's ability, if it chooses,
to enter into agreements with other
providers or suppliers of comparable

(where the discount applies to the total
charge and not just to the cost-sharing

portion owed by an insured patient).
For purposes of this paragraph, the
term "health center" means a Federally
Qualified Health Center under section
1905(l)(2)(B)(i) or 1905(l)(2)(B)(ii) of the

Act, and "medically underserved
population" means a medically
underserved population as defined in
regulations at 42 CFR 51c.l02(e).
*

*

*

*

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Dated: May 8,2007.
Daniel R. Levinson,
Inspector General.

Approved; June 27, 2007.
Michael O. Leavitt,
Secretary.

(FR Doc. E7-19636 Filed 10-3-07; 8:45 am)
BILLING CODE 4152-o1-P