HHS Call for New Safe Harbors Demonstrates Ongoing Value to Federal Health Programs

Every year, the U.S. Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) solicits recommendations for potential new “safe harbor” provisions under the federal anti-kickback statute of the Social Security Act. HHS recently announced the comment period, which runs through March 2nd, in the Federal Register.

So-called “safe harbors” under the Social Security Act exist because Congress was concerned that the range of activity potentially proscribed by the statute was so broad as to include innocuous and even beneficial commercial arrangements. Congress empowered OIG to create safe harbors to limit the statute’s reach and ensure that federal healthcare programs would continue to capture the benefits of legal business activity.

Safe harbors are now commonplace – there are currently 25 existing safe harbor provisions under the law. A broad array of business practices are now protected within federal healthcare programs by safe harbors, including price reductions offered in health plans, equipment rentals, replenishment of ambulance supplies, and referral arrangements in specialty services. Safe harbors have been enacted to protect the benefits delivered by cooperative hospital service organizations, ambulatory surgical centers, and healthcare group purchasing organizations (GPOs).

OIG codified the so-called GPO safe harbor to protect the billions of dollars in annual savings and additional efficiencies that GPOs deliver to hospitals, Medicare and Medicaid, and the healthcare system. The GPO safe harbor allows supply chain organizations to charge administrative fees to suppliers in order to help hospitals source life-saving products and to lower overall healthcare costs.

Healthcare Supply Chain Association (HSCA) member organizations go above and beyond the ethical business conduct contained in the GPO safe harbor. All HSCA members are also part of the Healthcare Group Purchasing Industry Initiative, an independent and voluntary organization dedicated to establishing the highest ethical standards and business conduct practices in the healthcare group purchasing industry. All HGPII member supply chain organizations must adhere to a strict Code of Conduct, report annually on adherence to these principles using an Annual Public Accountability Questionnaire, and participate in an Annual Best Practices Forum to discuss best ethical and business conduct practices with other supply chain organization representatives and interested parties.

In its annual review of safe harbors, the OIG considers a number of factors regarding the existing safe harbor provisions to ensure that practices are aboveboard and meet the agency’s strict qualifications. OIG then issues the report to Congress to ensure transparency. This process has repeatedly shown the value that safe harbor provisions continue to yield federal healthcare programs.

For in-depth analysis on the GPO Safe Harbor, read a full report from Richard P. Kusserow, former Inspector General of the HHS, here: Activities and Perspectives of the Office of Inspector General in the U.S. Department of Health and Human Services Regarding Group Purchasing Organizations (GPOs)

To read the OIG’s notice seeking comments for potential new safe harbors, click here.