0990-0322_Attachment C

Federal Register / Vol. 70, No. 126/ Friday, July 1, 2005/ Proposed Rules

38081

extensive study and revision of the rule.

ADDRESSES: You may submit comments

kickbacks, bribes, and rebates, whether
made directly or indirectly, overtly or
covertly, in cash or in kind. In addition,
prohibited conduct includes not only

By withdrawing the proposed rule, the
Committee will have the flexibility to
make use of valuable insights it has
received from reviewing the comments

by any of the methods set forth below.

the payment of remuneration intended

In all cases, when commenting, please
refer to file code OIG-67-P.

but also the payment of remuneration

However, the Committee believes that
the number and nature of the other

issues raised in the comments justify

to craft a new rule or rules which will

address its concerns without
unintended consequences and excessive
burdens on program participants. The
Committee intends to propose a new
rule or rules in this area by the end of
the year.

Accordingly, the proposed rule of
November 12, 2004 (69 FR 65395) is
hereby withdrawn.
Dated: June 28, 2005.

Sheryl D. Kennerly,

Director, Information Management,
Committee for Purchase From People Who

Are Blind or Severely Disabled.
(FR Doc. 05-13118 Filed 6-30-05; 8:45 am)
BILLING CODE 6353-01-P

DEPARTMENT OF HEALTH AND
HUMAN SERVICES

address, as provided in the address
section below by no later than 5 p.m. on
August 1,2005.

. Mail-Office of Inspector General,

purchasing, leasing, or ordering of, or

Independence Avenue, SW.,

good, facility, service, or item

Washington, DC 20201.

reimbursable by any Federal health

Please allow sufficient time for us to
receive mailed comments by the due
date in the event of delivery delays.

. Hand delivery/courier-Cohen

Building, 330 Independence Avenue,
SW., Washington, DC 20201.

Because access to the Cohen Building
is not readily available to persons
without Federal Government
identification, commenters are
encouraged to leave their comments in
OIG's drop box located in the main

lobby of the building.
. Federal eRulemaking Portal: http://
www.regulations.gov. Include agency
name and identifier RIN 0991-AB37.
Because of staff and resource

limitations, we cannot accept comments
by facsimile (FAX) transmission. For

Office of Inspector General

information on viewing public
comments, see section IV in the

42 CFR Part 1001

SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Julie

RIN 0991-AB38

Taitsman, Office of Counsel to the

Programs: Fraud and Abuse; Safe
Harbor for Federally Qualified Health
Centers Under the Anti-Kickback

Statute
AGENCY: Office of Inspector General

Inspector General, (202) 619-0335.
SUPPLEMENTARY INFORMATION:

i. Background
A. The Anti-Kickback Statute and Safe
Harbors
Section 1128B(b) of the Social

(OIG), HHS.

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

ACTION: Notice of proposed rulemaking.

7b(b), the anti-kickback statute)
provides criminal penalties for

SUMMARY: In accordance with section

individuals or entities that knowingly
431 ofthe Medicare Prescription Drug,
and willfully offer, pay, solicit, or
Improvement, and Modernization Act of receive remuneration in order to induce
2003 (MMA), Public Law 108-173, this
or reward the referral of business
proposed rule would establish
reimbursable under any of the Federal
regulatory standards for the new safe
health care programs, as defined in
harbor under the Federal anti-kickback
section 1128B(f) ofthe Act. The offense
statute for certain goods, items, services, is classified as a felony and is
donations, and loans provided by
punishable by fines of up to $25,000
individuals and entities to certain
and imprisonment for up to 5 years.
health centers funded under section 330 Violations of the anti-kickback statute
of the Public Health Service Act. Under
may also result in the imposition of a
this proposed safe harbor, the goods,
civil money penalty (CMP) under
items, services, donations, or loans must section 1128A(a)(7) of
the Act (42 U.S.C.
contribute to the health center's ability
1320a-7a(a)(7)) or program exclusion
to maintain or increase the availability,
under section 1128(b)(7) ofthe Act (42
or enhance the quality, of services
U.S.C. 1320a-7(b)(7)) and liability under
available to a medically underserved
the False Claims Act (31 U.S.c. 3729population.
33).
DATES: We will consider comments if

we receive them at the appropriate

intended to induce or reward the

Department of Health and Human
Services, Attention; OIG-67-P, Room
5246, Cohen Building, 330

Office of the Secretary

Medicare and State Health Care

to induce or reward referrals of patients,

The types of

remuneration covered

specifically include, without limitation,

arranging for or recommending the
purchasing, leasing, or ordering of, any

care
program.
Section 14 ofthe Medicare and
Medicaid Patient and Program
Protection Act of 1987, Public Law 10093, specifically required the
development and promulgation of
regulations, the so-called "safe harbor"

provisions, that 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
capable of inducing referrals of business
under the Federal health care programs.

Since July 29,1991, we have published
in the Federal Register a series of final

regulations establishing "safe harbors"
in various areas.1 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 any enforcement action under
the anti-kickback statute, the CMP
provision for anti-kickback violations,
or the program exclusion authority
related to kickbacks. In giving the

Department of Health and Human
Services the authority to protect certain
arrangements and payment practices

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 33G-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
'56 FR 35952 (July 29, 1991); 61 FR 2122
(January 25,1996); 64 FR 63518 (November 19,
1999): 64 FR 63504 (November 19,1999); and 66

FR 62979 (December 4.2001).

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Federal Register / Vol. 70, No. 126/ Friday, July 1, 2005/ Proposed Rules

services. In the Health Centers
Consolidation Act of 1996, Public Law
104-299, Congress consolidated the four

They may also provide certain
additional health services that are
appropriate to serve the health needs of

schedule of discounts adjusted on the
basis of the patient's ability to pay) or
who have private insurance or public

then-existing Federal health center grant the population served by the health
center. 42 U.S.c. 254b(b)(2). These
programs (the Migrant Health Center
Program, the Community Health Center additional health services may include

coverage, such as Medicare or Medicaid.

Program, the Health Care for the

mental health and substance abuse

revenues. Thus, the amount of a section

Homeless Program, and the Health
Services for Residents of Public Housing

services; recuperative care services;
environmental health services; special

Program) into a single program under

occupation-related health services for

330 grant may not exceed the amount by
which the costs of operation of the
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 third-party

section 330 of the Public Health Service
(PHS) Act. See S. Rep. 104-186
(December 15,1995). In 2003, the

Federal health center programs
supported 890 organizations that

provided care to over 12 million
patients at 3,600 health care service
delivery sites.2
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 (Internal
Revenue Code section 501(c)(3)

corporations) 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)(l). 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 the
individuals being served by the center.3
42 U.S.C. 254b(k)(3)(H)(i). Health
centers receiving section 330 grant

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 2003,36 percent
of patients treated by section 330 grant
recipients were beneficiaries of a

Medicaid program, 7 percent were
beneficiaries of the Medicare program,
and 3 percent were beneficiaries of
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
2003, this number had increased to 4.9
million, representing 39 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.

In general, section 330 grant funds help

make up for shortfalls in health center

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 of the recipient's
section 330 grant.

Section 330 grant funding accounts
for approximately 25 to 30 percent of
revenue for health centers receiving
such grants. The majority of health
center funding derives from charges for

patient services. On average,
approximately 6.2 percent of health
center revenues come from private

third-party reimbursement, 35.5 percent
from Medicaid payments, 5.5 percent
from Medicare payments, and 5.9
percent from self-payments from

patients.6
Frequently, health centers are
provided with, or seek out,
opportunities to enter into arrangements
with hospitals or other providers or
suppliers to further the health centers'

patient care mission.? For example,
providers or suppliers may agree to

funding must provide, either directly or 254b(a)(l)(B) and 254b(k)(3)(G)(i).
provide health centers with capital
through contracts or cooperative
Section 330 grant recipients must also
development grants, low cost (or no
arrangements, a broad range of required make and continue "every reasonable
cost) loans, reduced price services, or
primary health care services, including
effort to establish and maintain
clinical services by physicians, and,
collaborative relationships with other
6 Bureau of Primary Health Care, "Section 330
where appropriate, physician assistants, health care providers in the catchment
Grantees Uniform Data System: Calendar Year Z003
Data"-Exhibit A: Total Revenue Received by BPHC
nurse practitioners, and nurse
area of the center" (42 U.S.C.
Grantees (available at littp:!/www.bplic.lirsa.gov/
midwives; diagnostic laboratory and
254b(k)(3)(B)), and must "develop an
iids/data.htm).
radiological services; preventive health
ongoing referral relationship" with at
7 Congress has previously recognized the
services; emergency medical services;
least one hospital in the area. 42 U.S.C.
importance of health center affïliations with
certain pharmaceutical services;
hospitals and other health care service providers in
254b(k)(3)(L).
promoting efficiency and quality of care. The
referrals to other providers (including
Section 330 grant funds are intended
Health Centers Consolidation Act expressly requires
substance abuse and mental health
to defray the costs of serving uninsured
health centers to maintain collaborative
services); patient case management;
patients. Grant recipients are required to relationships with other providers. With respect to
services that enable individuals to use
seek reimbursement from those patients integrated delivery systems, the Report states:
The committee believes, based on expert
the services ofthe health center (e.g.,
who are able to pay all or a portion of
testimony given at the May 14, 1995, hearing, that
outreach, transportation, and translation the charges for their care (applying a
the development of integrated health care provider
services); and patient and community
schedule of fees and a corresponding
networks is key to preserving and strengthening
education services. 42 U.S.C. 254b(b)(l).

4 Bureau of Primary Health Care, "Section 330
2 Bureau of Primary Health Care, "Section 330
Grantees Uniform Data System: Calendar Year Z003

Data" (available at http://www.bphc.hrsa.gov/iids/
data.htm).

access to community-based health care services in
rural areas. Provider networks offer a number of

Grantees Uniform Data System: Calendar Year 2003
Data"-Table 4: Users by Socioeconomic

advantages: they can work to ensure that a
continuum of health care services is available,

Characteristics (available at l¡ttp:! /

reduce the duplication of services, produce savings
in administrative and other costs through shared

www.bplic.hrsa.gov/iids/dato.litm).

:i Health centers receiving grant funding to serve

r, Bureau of Primary Health Care, "Section 330

migratory and seasonal agricultural workers,
homeless people, or residents of public housing
may, upon a showing of good cause, obtain a waiver

Grantees Uniform Data System: Calendar Year Z003

health care market place, and recruit and utilize

Data"-UDS Trend Data for Years 1996 through
Z003 (available at http://www.bplic.hrsa.gav/iids/
data.litm).

efficiently.

of the requirement. 42 U.S.c. Z54b(k)(3)(H).

services and an enhanced ability to negotiate in the

health professionals more effectively and
S. Rep. 104-186 at p. 11.

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Federal Register/Vol. 70, No. 126/Friday, July 1, 200S/Proposed Rules
in-kind donations of supplies,
equipment, or space.
Some providers and suppliers have
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
beneficiaries to the provider or supplier.
Accordingly, Congress enacted section

431 of MMA to enable some health
centers to conserve section 330 and

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's
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 Act. These
sections describe health centers that
satisfy all requirements for a section 330
grant and: (i) Directly receive such a
grant; or (ii) receive such grant funding
1905(l)(2)(B)(ii) of

under contract with a grant recipient.

For the purposes of these regulations,

the facilities described in sections
1905(l)(2)(B)(i) and 1905(1)(2)(B)(ii) of

the Act are referred to as "health
centers." These health centers are two of
the four types of Federally qualified
health centers (FQHCs) described in

the independent medical judgment of

section 1905(l)(2)(B) of

goods, items, services, donations, or

health care professionals regarding

Congress excluded from safe harbor

loans for free or at reduced rates from

medically appropriate treatment for

protection the two other types of FQHCs

willing providers and suppliers.

patients. We believe this factor

described in sections 1905(l)(2)(B)(iii)

other monies by accepting needed

C. Section 431 of MMA
Section 431 of MMA amends the anti-

kickback statute to create a new safe
harbor for certain agreements involving
health centers. Specifically, section
431(a) of MMA excludes from the reach

of the anti-kickback statute any
remuneration between: (i) A health

center described under section
1905(l)(2)(B)(i) or 1905(1)(2)(B)(ii) of the

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
health center.

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, i.e., ensuring the availability
and quality of safety net health care
services to otherwise underserved
populations. As discussed in greater
detail below, Congress limited the scope
of the exception to certain health

centers engaged in arrangements
involving specific types of identifiable
remuneration.
Section 431 (b) of MMA requires the
Department to promulgate regulatory
standards relating to the new safe
harbor. In establishing the standards,
Congress directed the Department to
consider the 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's intent that a protected
arrangement directly benefit the health
center economically and that the
benefits of the arrangement primarily

evidences Congress's intent to safeguard
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.
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. Section 431(b)(1) of MMA.

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 statue and the health
center exception. 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 programassuring the availability and quality of

the Act.

and 1905(l)(2)(B)(iv) of the Act.

Although these or other "look-alike"
facilities might qualify for section 330
grant funding, they do not actually
receive section 330 grant funding and

are not similarly subject to Government
oversight inherent in the grant approval
and administration processes. We note
that arrangements involving these other
types of facilities that do not qualify for

safe harbor protection are not
necessarily unlawful under the antikickback statute; rather, such
arrangements must be evaluated on a
case-by-case basis for compliance with
the anti-kickback statute.
2. Protected Remuneration

Section 431(a)(3) of MMA defines the
scope of protected remuneration as
"goods, items, services, donations,
loans, or a combination thereof'
provided by an individual or entity to
a qualifying health center.S Other forms

of remuneration fall outside the scope of
the safe harbor. To ensure that protected
arrangements further the purposes of the

safe harbor, we would require that the
remuneration must be medical or

clinical in nature or relate directly to
patient services furnished by the health

needed health care services for

center as part of the scope of the health

medically underserved populations-

center's section 330 grant (including, for

without adversely impacting other

example, billing services, administrative

Federal programs or their beneficiaries.
II. Provisions of the Proposed Rule
This proposed rule would establish
standards for a safe harbor under the
anti-kickback statute that would protect
certain remuneration provided by an
individual or entity to certain health
centers funded under section 330 ofthe
PHS Act when all safe harbor conditions
are satisfied.

A. Statutory Elements
1. Protected Health Centers
The health center safe harbor would
be limited to health centers described
under section 1905(l)(2)(B)(i) or

support services, technology support,

and enabling services, such as case
management, transportation, and
translation services).

We interpret section 431 ofMMA as
applying to remuneration provided by
an individual or entity to the health
center. Section 431 of MMA does not

protect remuneration from a health
ß We note that the "Stark law" (section 1877 of

the Act, 42 U.S.C. 1395nn) will apply to financial
relationships between a health center and a
physician who refers Medicare or Medicaid patients
to the health center for "designated health services"

(defined in the statute at 42 U.S.C. 1395nn(h)(6) and
in the regulations at 42 CFR 411.351). All such

arrangements must fit in a Stark law exception. See
generally

42 U.S.C. 1395nn and 42 CFR part 411.

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Federal Register / Vol. 70, No. 126/ Friday, July 1, 200S / Proposed Rules

center to an individual or entity. Any

is a potential source of referrals of

such arrangements must be evaluated on

Federal health care program business

a case-by-case basis to ensure
compliance with the anti-kickback
statute.9 This interpretation is

(for example, the patient is an
uninsured referring physician or an
uninsured spouse or child of a referring
physician).12
. Providers and suppliers may waive
the cost-sharing amounts for Federal

consistent with: (i) The statutory

requirement that the remuneration
contribute to the health center's ability
health care program patients who have
to maintain or increase the availability
financial need, provided the provider or
or quality of services provided to
medically underserved populations; and supplier does not routinely waive

fixed in advance and not conditioned on
referrals would help protect the
independent medical judgment of
health care professionals.

3. Documentation Requirements
Section 431(a)(3) ofMMA specifies
that protected arrangements be
"pursuant to a contract, lease, grant,
loan, or other agreement." To enable the
parties and the government to verify

compliance with the safe harbor, we
would require that the agreement: (il Be
in writing; (ii) be signed by the parties;
section 431(b)(i) related to the economic
and (iii) cover all the goods, items,
benefit to the health center.
services, donations, and loans provided
individualized determination of
Moreover, section 431(a)(3) ofMMA
by the individual or entity to the health
financial need or the failure of
makes clear that the health center
center. These requirements would be
reasonable collection efforts.13
exception only protects remuneration
satisfied by one comprehensive writing
To further ensure transparency and
provided to a health center and does not
or by means of multiple writings that
untainted
medical
decision-making,
we
protect remuneration provided to
cross-reference or otherwise incorporate
would require that the goods, items,
individuals affiliated with a health
other agreements between the parties.
services,
donations,
or
loans
to
be
center, such as board members,
provided under a protected arrangement These proposed documentation
physicians or other health care
conditions are consistent with other safe
professionals, administrators, or others. must be specified and fixed in advance
harbors at 42 CFR 1001.952. Moreover,
in
the
agreement
between
the
parties
in
Where remuneration results in personal
the form of a fixed amount or sum, fixed we believe these proposed
gain for an individual in a position to
documentation practices are consistent
percentage, or other fixed
influence the referral or award of
with existing prudent business practices
methodology.14 The fixed amount or
business, there is an elevated risk of
of health centers. Importantly, the
sum, fixed percentage, or other
fraud or abuse.
conduct of the arrangement must
methodology
must
not
be
conditioned
Similarly, the exception, by its terms,
on the volume or value of Federal health comport with the terms of the written
does not protect remuneration offered
agreement.
by providers and suppliers to patients of care program business generated
between the parties. Requiring that the
the health center. Where the
4. Benefit to a Medically Underserved
remuneration (or methodology for
remuneration inures to the financial
Population
(ii) the factors set out in section 431(b),

copayments; the waivers are not offered

including, specifically, the factor at

as part of an advertisement or
solicitation; and the copayments are
waived only after a good faith

benefit of the patient, rather than the

determining the remuneration) be fixed

in advance would prevent the parties
nature
from subsequently adjusting the
or quantity of the remuneration based
offering inducements to Federal health
on the volume or value of Federal health
care program beneficiaries apply.lO
These existing prohibitions are intended care program referrals generated by the
health center. In addition, the
to prevent unscrupulous providers and
requirement that the remuneration be
suppliers from luring vulnerable
patients to receive unnecessary,
1 i In February 2004, we issued a guidance

Section 431(a)(3) of MMA requires
that a protected arrangement contribute

substandard, or overpriced services.ll

distinguishing the safe harbored
conduct from many otherwise
potentially abusive arrangements.
Under existing program rules, health
centers serve: (i) Populations that are

economic benefit of the health center,
we believe the existing prohibitions on

Notwithstanding, we make the
following observations:
. Remuneration, such as reduced

charges or free services, offered by
providers and suppliers to uninsured

patients is not prohibited by the Federal
fraud and abuse laws, except in the
unusual circumstances where a patient
9 We note that some such arrangements ll1ay fit in
other available safe harbors, such as the safe harbors
for personal services and iiianagement contracts,
employees, or practitioner recruitment, 42 CFR

document on discounts for patients who cannot
afford to pay their hospital bills (available on our

web site at littp://www.oig.lilis.gov/fraiid/does/
01 ertsan db ii11 etins/ 2004/
FA021904liospita1disco1l11ts).The analytical

framework contained in this guidance would apply
similarly to discounts offered to uninsured patients
by other types of providers or suppliers.
1:l See, e.g., section 1128A(i)(6) of the Act; Special
Fraud Alert, "Routine Waiver of Part B Copayments/Deductibles" (available on our Web site
at littp://www.oig.lilis.gov/fraiid/does/
a1ertsandbii11etins/121994.litm1); Special Advisory
Bulletin. "Offering Gifts and Other Inducements to
Benel1ciaries" lid. at fn. 9). We also note that the
anti-kickback statute allows health centers to waive

1001.952(d), (i), and (n).
1U These prohibitions are the CMP law against

copayments under a special exception at 42 U.S.C.

offering inducements to Medicare or Medicaid
beneficiaries, section 1128A(a)(5) ofthe Act, and
the anti-kickback statute. Exceptions to section

14In the unique and limited context of
arrangements described in this proposed safe
harbor, we would extend safe harbor protection to
arrangements where only the methodology, and not

1128A(a)(5) of the Act are set forth at section
1128A(i)(6) of the Act.

11 In August 2002, we issued a Special Advisory
Bulletin on "Offering Gifts and Other Inducements
to Beneficiaries" (available on our web site at
li ttp:! /www.oig.lilis.gov/fmiid/does/

1320a-7b(b)(3)(D); 42 CFR 1001.952(k)(2).

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
a1 ertsan db ii11 etins/ SABGiftsan dIn d iicemen ts. pdf)

that explains our concerns regarding improper
beneficiary inducements and our interpretation of
the existing prohibitions.

that the formula for calculating the
compensation (e.g.. $ x per hour or $ x per service)
is I1xed in advance and not conditioned on referrals

to the supplier.

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 served by the health center."
This benefit to a medically underserved
population is a critical factor

medically underserved; or (ii) special
medically underserved populations

comprised of migratory and seasonal
agricultural workers, homeless people,
and residents of public housing. 42

U.S.C. 254b(a)(1). The term "medically
underserved population" means "the

population of an urban or rural area
designated by the Secretary as an area
with a shortage of personal health
services or a population group
designated by the Secretary as having a
shortage of such services." 42 U.S.C.

254b(b)(3)(A). The Secretary bases such
determinations on the health status of
the population, as well as its ability to
access and pay for needed services.

Accordingly, for purposes of this safe
harbor, we would define "medically
underserved population" with reference

Federal Register/Vol. 70, No. 126/Friday, July 1, 2005/Proposed Rules
to the existing definition at 42 U.S.c.

savings that will benefit a medically

254b(b)(3)(A) and the corresponding

underserved population?

regulations at 42 CFR 51c.102(e). All

health centers that qualify for section
330 funding serve at least one medically
underserved population.
While the statute requires that a
protected arrangement benefit a
medically underserved population
served by the health center by
maintaining or increasing the
availability or quality of services
provided to the medically underserved
population, Congress established no

specific methodology for determining

whether this benefit standard is
satisfied. Having considered various

options, we have concluded that
Congressional intent would best be
served by assessing whether an
arrangement would result in the
required benefit based upon the
particular facts and circumstances. We
believe health centers are well situated
in the first instance to make a
reasonable determination whether an
arrangement will increase the
availability, or enhance the quality, of
services provided to a medically
underserved population.
We do not interpret the statute as
protecting arrangements in which the
benefit to the health center and the
medically underserved population it
serves is merely incidental or where the
arrangement primarily benefits the
donor (e.g., through referrals of
Federally billable business) rather than
the health center. An incidental benefit
to a medically underserved population
tangentially related to an arrangement
would not suffice to protect an
arrangement under this proposed safe
harbor. Accordingly, the proposed
regulations would require that the
arrangement must 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.
In determining whether an
arrangement would result in a
meaningful benefit to a medically
underserved population, the following
factors, among others, should be
considered:
. Does the arrangement directly

benefit a medically underserved
population (e.g., additional services of
physicians or allied health professionals
at the health center)?
. 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

38085

arrangements that are not reasonably

expected to continue to meet the
standard. Re-evaluation would need to
. If the arrangement involves a
donation to the health center, would the be conducted at reasonable intervals not
donation result in the increased
to exceed one year, applying reasonable,
availability of an item, good, device,
consistent, and uniform standards.
service, technology, or treatment needed Terminated agreements would not be
by a medically underserved population, able to be renegotiated in a manner that
but not previously available in sufficient is conditioned on the volume or value
limitations?
of Federal health care program referrals.
quantities due to financial
. Does the health center need the
Similarly, arrangements would not be
donated items, goods, or services, or the
loaned funds to satisfy the scope of its

section 330 grant? It is important to note
that this safe harbor only protects
arrangements involving remuneration
that helps the health center fulfill its
section 330-grant mission (including, for
example, transportation and other
enabling services that help patients
access the services available from the
health center), but does not protect
remuneration that does not further the
health center's mission (e.g.,
unnecessary office space, superfluous
supplies, or expired medications).

These factors are illustrative, not
exhaustive, of relevant considerations.

No one factor would be dispositive in
determining whether an arrangement
confers the benefit required for safe
harbor protection. We are soliciting
public comments on methods for
establishing that an arrangement will

confer the requisite benefit to a
medically underserved population.
Health centers would be required to
take reasonable and verifiable steps to
ensure that all arrangements
meaningfully contribute to the quality
or availability of services the center
provides to a medically underserved
population. Specifically, to qualify for

safe harbor protection, the health center
would have to:
. Reasonably determine before

entering into the 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 to a medically
underserved population. Health centers
would have to apply reasonable,
consistent, and uniform standards for
determining this benefit to all proposed
arrangements involving similar items,
goods, services, loans, or donations.
Assuming there is a reasonable and
documented expectation of sufficient
benefit at the onset of an agreement, the
arrangement would not lose its safe
harbor protection retroactively if the
expected benefit were not, in fact,

able to be renewed unless the health

center reasonably expected the benefit
to a medically underserved population
standard to be satisfied in the next

agreement term.
. Document the initial determination
and any re-evaluations
contemporaneously. The nature of the

documentation would need to be
reasonable under the circumstances.
Acceptable documentation might

include, for example, an estimate of the
value of the remuneration exchanged in
the particular arrangement and its
usefulness to the health center. For

example, for an arrangement involving
donated equipment, the health center
might document the fair market value of

the donated equipment or the expenses
the health center would have otherwise
incurred to purchase or lease similar
equipment, as well as the extent to
which accepting the donated equipment
would increase the quantity or quality
of services provided to health center
patients. Similarly, for an arrangement
involving a monetary donation, the
health center might document the
amount of the donation and the
estimated health care services to be
purchased or furnished with the funds.
The health center would need to make
this documentation available to the
Secretary upon request.

We think it likely that many of these
steps are those that a prudent health
center would otherwise take when
evaluating an offer from an individual
or entity.

B. Additional Regulatory Standards
Section 431(b) ofMMA authorizes us
to add additional standards or criteria
consistent with Congress's intent in
creating an exception under the anti-

kickback statute for certain
arrangements involving health centers.
As discussed above, Congress set forth

specific factors that we must consider
when establishing safe harbor standards.
1. Freedom of Choice and Independent

of the parties.

Medical Judgment
Section 431(b) ofMMA directs us to

. Periodically re-evaluate agreements
to ensure ongoing compliance with the
benefit standard and terminate as
expeditiously as possible any

judgment of health care professionals.

realized for reasons beyond the control

consider the impact of a health center's
arrangement on patient freedom of
choice and the independent medical

38086

Federal Register/Vol. 70, No. 126/Friday, July 1, 2005/Proposed Rules

As these two factors are related, we will

. Fourth, health centers must provide

. First, the health center may elect to

effective notification to patients of their
freedom to choose any willing provider
or supplier. Moreover, a health center
must disclose the existence and nature

require that an individual or entity that
enters into a protected arrangement
charge a referred health center patient
the same rate it charges other similarly

of a protected arrangement: (i) To any
patient who inquires; and (ii) to any

situated persons not referred by the
health center or that the items or

services be furnished to health center

patient freedom of choice or the
independent medical judgment of

patient referred to an individual or
entity that is a party to the protected
arrangement for the furnishing of
separately billable items or services (i.e.,
an item or service for which the patient
or a third-party payor, rather than the

health care professionals:

health center, may be obligated to pay).

. First, under the arrangement, health
centers must not be required to refer
patients to a particular provider or
supplier, and there must be no
restrictions on the health center's or its

Such disclosure need only be made to
a patient the first time the patient is

address them together. In identifying
these two factors, Congress emphasized

an important patient protection function
of the anti-kickback statute: Preventing
both the corruption of medical judgment

by financial incentives and improper
steering of patients. We are proposing in
the safe harbor regulation the following
standards intended to ensure that
protected arrangements do not impair

health care professionals' freedom to

refer patients to any provider or
supplier. For example, a protected
arrangement could not require a health
center to refer a certain number or
proportion of its patients, or a particular
category of patients, to a particular
provider or supplier.

. Second, individuals and entities
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. The provider or supplier
may impose reasonable overall limits
related to the resources it will devote to
health center patients. For example, a
provider can cap the aggregate number
of health center patients it has the
capacity to treat, but it cannot determine
that it will only treat health center
patients who are Medicare beneficiaries.
This standard is intended to prevent
providers or suppliers in an
arrangement with a health center from
"cherry picking" particular types of
health center patients. In addition, this
standard helps ensure that health
centers remain free to refer patients
based on the patient's health care needs.
. Third, the protected arrangement
cannot be exclusive. The individual or

entity cannot restrict the health center's
ability, if it chooses, to enter into
agreements with other providers or
suppliers of comparable goods, items, or
services, or with other lenders or

donors. Where a health center has
multiple providers or suppliers willing
to offer comparable remuneration, the

health center must employ a reasonable
methodology to determine which
prospective partners to select and must
document its determination. In making
these determinations, health centers

should look to the procurement
standards for recipients of Federal
grants. See 45 CFR 74.40 et seq.

referred to the particular individual or

entity. This 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. The health center must provide
required patient disclosures in a timely
fashion and in a manner reasonably

patients at a reduced rate or free of

charge (where the discount applies to
the total charge and not just to the costsharing portion owed by an insured
patient). This condition would apply
when the individual or entity is billing
patients or third parties, rather than the
health center, for the items or services.

. Second, no arrangement may enjoy

protection under this safe harbor unless
it complies with the requirements of the
health center's section 330 grant

funding.
We further note that providers and
suppliers who furnish items and
services to Federal health care program

patients referred by a health center must
comply with all Federal and State laws,
calculated to provide effective notice
and to be understood by the patient. The including, without limitation, relevant
appropriate disclosure method will

necessarily vary depending on the
individual characteristics of the health
center and its patients. We are electing

not to require broader disclosure to
patients of all relationships covered by
the safe harbor, because we do not
believe broader disclosure would be an
effective means of preserving health
center patients' freedom of choice and,

in some situations, might be confusing
to the patients served by the health
center. Notwithstanding, health centers
would be encouraged to consider
whether broader disclosure would
benefit their patients and, if so, how

best to convey useful information to
patients. We note that, in many
situations, it may be feasible for health
centers to provide the required notice
through posting lists of arrangements in
conspicuous places in the health center
and directing patients to those postings.
2. Additional Standards To Prevent
Abuse of Federal Health Care Programs
and To Protect Patients

As noted above, in accordance with
our authority under section 431(b)(1) of

MMA to consider other factors and to
add additional standards and criteria,
we have also considered whether
arrangements between health centers
and individuals or entities may pose a
risk of abuse to Federal health care
programs other than the section 330

grant program, such as Medicare or
Medicaid, or to beneficiaries. To
safeguard these programs and their
beneficiaries, we propose adding the
following standards to the safe harbor;

Federal health care program rules

governing billing and claims
submission. We are concerned that
some providers and suppliers may seek
to recoup amounts donated to a health
center through improper billing of
Federal health care programs or

inappropriate transfers of governmental
funds. We will give further
consideration to this potential problem

in the final regulations. Once the final
regulations are promulgated, we intend
to monitor participants in the safeharbored arrangements for compliance

with billing rules.
We are soliciting public comments on
these standards, as well as any other

standards or criteria that should be
included in this safe harbor to achieve
its purpose of protecting beneficial, low-

risk arrangements.
III. Regulatory Impact Statement
A. Regulatory Analysis
We have examined the impact of this

proposed rulemaking as required by
Executive Order 12866, the Unfunded
Mandates Reform Act of 1995, the
Regulatory Flexibility Act (RF A) of

1980, and Executive Order 13132.

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

regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health,
and safety effects; distributive impacts;
and equity). A regulatory impact

Federal Register / Vol. 70, No. 126/ Friday, July 1, 2005/ Proposed Rules
analysis must be prepared for major
rules with economically significant
effects (i.e., $100 million or more in any
given year).

This is not a major rule, as defined at
5 U.S.C. 804(2), and it is not
economically significant since the
overall economic effect of the rule is
less than $100 million annually. This
proposed safe harbor is designed to

allow health centers to enter into certain
beneficial arrangements with
individuals or entities providing goods,
items, services, donations, loans, or a
combination thereof to the health
center. In doing so, this regulation
would impose no requirements on any
party. Health centers may voluntarily
seek to comply with final regulations,
once promulgated, so that they have
assurance that participating in covered
agreements will not subject them to any
enforcement actions under the antikickback statute. The safe harbor would
facilitate health centers' ability to
provide important health care services
to communities in need and help these
centers fulfill their mission as integral
components of the health care safety
net. As such, we believe that the
aggregate economic impact of this
rulemaking would be minimal and
would have no effect on the economy or
on Federal or State expenditures. To the
extent that there is any economic
impact, that impact would likely result

in savings of Federal grant dollars.
Unfunded Mandates Reform Act

Section 202 of the Unfunded
Mandates Reform Act of 1995, Public
Law 104-4, requires that agencies assess
anticipated costs and benefits before

issuing any rule that may result in
expenditures in anyone year by State,
local or tribal governments, in the
aggregate, or by the private sector, of

$110 million. Since compliance with
safe harbor requirements is voluntary,
we believe that there are no significant
costs associated with this proposed safe
harbor that would impose any mandates
on State, local, or tribal governments, or
the private sector that would result in
an expenditure of $110 million or more
(adjusted for inflation) in any given
year, and that a full analysis under the
Unfunded Mandates Reform Act is not
necessary.
Regulatory Flexibility Act

nonprofit organizations, and small

governmental jurisdictions. Individuals
and States are not included in the
definition of a small entity. Pursuant to
the RF A, some of the health centers that

may avail themselves of the protections
of the safe harbor are considered to be
small entities.
the Act
In addition, section 1102(b) of
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
hospitals. This analysis must conform to

the provisions of section 604 of the
RF A. While this proposed safe harbor

may have an impact on small rural
hospitals, we believe that the aggregate

economic impact of this rulemaking
would 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 anti-kickback 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 transactions involving goods,
items, 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 opportuniu'es 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
rulemaking do not engage in prohibited
arrangements, schemes, or practices in
violation of the law, we have concluded
that this proposed 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
proposed rule would not significantly
limit the rights, roles, and

38087

B. Paperwork Reduction Act

In accordance with section
3506(c)(2)(A) of the Paperwork

Reduction Act of 1995 (PRA), we are
required to solicit public comments, and
receive final OMB approval, on any
information collection requirements set
forth in rulemaking.
This proposed safe harbor would
impose some minimal information
collection requirements on health
centers. Specifically, for an arrangement
to fall within the proposed safe harbor

it would have to fulfill the following
documentation requirements: (1) It must

be in writing; (2) the written agreement
must be signed by the parties; (3) the

written agreement must cover all the
goods, items, services, donations, and
loans provided to the health center; and
(4) the health center must document a
potential benefit to a medically
underserved population. However, these

requirements deviate minimally, if at
all, from the information these entities
would routinely collect in their normal
course of business. The statute applies

only to the health centers' receipt of
goods, items, services, donations, or

loans pursuant to a contract, lease,
grant, loan, or other agreement. As
recipients of Federal grant money, these
health centers are already obligated to

comply with the administrative
requirements, including certain
documentation requirements, outlined
in 45 CFR part 74. We believe it is usual
and customary for health centers to
memorialize contracts, 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 all health centers
serve at least one such population) and
the section 330 grant program,
documentation of such benefit would

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

purposes of the RFA, small entities

only with the proposed safe harbor but
also with the section 330 grant program.
therefore, that a full analysis under
Under certain circumstances, we
these Acts is not necessary.
would require health centers to provide
The Office of Management and Budget effective notification to patients,
disclosing the existence of arrangements
(OMB) has reviewed this proposed rule
protected under this safe harbor and
in accordance with Executive Order

include small businesses, certain

12866.

The Regulatory Flexibility Act (RF A)

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

responsibilities of State or local

governments. We have determined,

reminding patients of their freedom to

38088

Federal Register/Vol. 70, No. 126/Friday, July 1, 2005/Proposed Rules
Comments and

choose any willing provider or supplier.

iv. Public Inspection of

Disclosures would not need to be in
writing; rather, we would require that
health centers provide patient
disclosures in a manner reasonably

Response to Comments

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 this notification
requirement would achieve the goal of
protecting patients without imposing a
significant additional administrative
burden on health centers. Moreover, we

believe the notification requirement
would be consistent with health centers'
existing interest in 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
merely offer an optional framework
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.
Thus, we believe that the

documentation requirements necessary
to enjoy safe harbor protection would
not qualify as an added paperwork
burden in accordance with 5 CFR
1320.3(b)(2), because the requirements

are consistent with the usual and
customary business practices of health
centers and because the time, effort, and
financial resources necessary to comply
with the requirements would largely be
incurred by health centers in the normal
course of their business activities. With
respect to the patient notification
requirement, we do not believe the
requirement would impose an added
paperwork burden because the notice
need not be written. Furthermore, the
notice would only need to be provided
in a limited number of circumstances
and the requirement is consistent with
the health centers' ongoing mission to

protect vulnerable patients.
We are specifically soliciting public
comments with respect to these
requirements. Comments on these
requirements should be sent to the
following address within 60 days
following the Federal Register
publication of this interim final rule:
HHS OIG Desk Officer, Office of
Management and Budget, Room 10235,
New Executive Office Building, 725
17th Street, NW., Washington, DC
20053, FAX; (202) 395-6974.

Comments will be available for public
inspection beginning on July 15, 2005 in
Room 5518 of
the Office ofInspector
General at 330 Independence Avenue,
SW., Washington, DC on Monday and

through Friday of each week (Federal
holidays excepted) between the hours of
8 a.m. and 4 p.m., (202) 619-0089.

Because of the large number of
comments we normally receive on
regulations, we cannot acknowledge or
respond to comments individually.
However, we will consider all timely
and appropriate comments when

determining whether to revise this
interim final rule.
List of Subjects in 42 CFR Part 1001
Administrative practice and
procedure, Fraud, Grant programshealth, Health facilities, Health

professions, Maternal and child health,
Medicaid, Medicare.

Accordingly, 42 CFR part 1001 would
be amended as set forth below:
PART 1001-(AMENDED)

1. The authority citation for part 1001
would continue to read as follows:
Authority: 42 U.S.C. 1302, 1320a-7,

1320a-7b, 1395u(j), 1395u(k), 1395y(d),
1395y(e), 1395cc(b)(2)(D), (El and (F), and
1395hh; and sec. 2455, Pub. L. 103-355, 108
Stat. 3327 (31 U.S.C. 6101 note).

2. Section 1001.952 would be
amended by republishing the
introductory paragraph for this section
and by adding a new paragraph (w) 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, loans, or
combination thereof from an individual
or entity to a health center (as defined
in this paragraph), as long as the
following eleven standards are met(1) The transfer is made pursuant to

a contract, lease, grant, loan, or other
agreement that is set out in writing,

signed by the parties, and covers all the

goods, items, services, donations, and
loans to be provided by the individual

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 written agreement specifies
and sets forth the amount of goods,

items, services, donations, or loans to be
provided to the health center (where
such amount may be a fixed sum, fixed
percentage, or set forth by a fixed

methodology), and the amount is not
conditioned on the volume or value of
Federal health care program business
generated between the parties.
(4) 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. Health centers must apply
reasonable, consistent, and uniform
standards when making the

determination. The documentation must
be made available to the Secretary upon
request.
(5) At reasonable intervals, but at least

annually, the health center must reevaluate the arrangement to ensure that
the arrangement is expected to continue

to satisfy the standard set forth in
paragraph (w)(4) of this section. The

health center must apply reasonable,
consistent, and uniform standards when
making the re-evaluation, and must
document the re-evaluation
contemporaneously. The documentation

must be made available to the Secretary
upon request. Noncompliant
arrangements must be promptly
terminated. Terminated agreements
must not be renegotiated in a manner
that is conditioned on the volume or
value of Federal health care program
business generated between the parties.

Similarly, arrangements must not be
renewed or renegotiated unless the
health center reasonably expects the

standard set forth in paragraph (w)(4) of

this section to be satisfied in the next
agreement term. Renewed or
renegotiated agreements must comply
with the requirements of paragraph
(w)(4) ofthis section.

(6) The health center (and its affiliated

(2) The goods, items, services,
donations, or loans are medical or

health care professionals) must not be
required to refer patients to a particular
individual or entity, and the health
center (and its affiliated health care

clinical in nature or relate directly to
patient services furnished by the health

professionals) must be free to refer
patients to any provider or supplier.

or entity to the health center.

Federal Register/Vol. 70, No. 126/Friday, July 1, 2005/Proposed Rules
(7) Individuals and entities that offer

to provide goods, items, or services to
health center patients must accept all

referrals of 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 referrals it
will accept.

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

recipients of Federal grants. See 45 CFR
74.40 et seq.
(9) The health center must provide

38089

the health center or that the individual
or entity charge a referred health center
patient a reduced rate (where the
discount applies to the total charge and

effective notification to patients of their
freedom to choose any willing provider not just to the cost-sharing portion owed
by an insured patient).
or supplier. In addition, the health
center must disclose the existence and
(11) The agreement must comply with
all relevant requirements of the health
nature of an arrangement under this
center's section 330 grant funding. For
paragraph to any patient who inquires
and upon the initial such referral, to any purposes of this paragraph, the term
"health center" means a Federally
patient referred to an individual or
entity that is a party to the arrangement qualified health center under section
1905(l)(2)(B)(i) or 1905(1)(2)(B)(ii) of the
for the furnishing of separately billable
items or services (i.e., an item or service Act, and "medically underserved
population" means a medically
for which the patient or a third-party
payor, rather than the health center,

lenders or donors. Where a health center

may be obligated to pay). The health

has multiple individuals or entities
willing to offer comparable
remuneration, the health center must
employ a reasonable methodology to
determine which prospective partners to
select and must document its
determination. In making these
determinations, health centers should
look to the procurement standards for

center must provide required patient
disclosures in a timely fashion and in a
manner reasonably calculated to be
effective and understood by the patient.

(10) Under the arrangement, the
health center may elect to require that

the individual or eiitity charge a referred
health center patient the same rate it
charges other patients not referred by

underserved population as defined in
regulations at 42 CFR 51c.l02(e).
Dated: January 31, 2005.

Daniel R. Levinson,
Acting Inspector General.

Approved: March 2, 2005.
Michael O. Leavitt,
Secretary.

¡FR Doc. 05-13049 Filed 6-30-05; 8:45 am)
BILLING CODE 4150-o1-P