Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations 38311

1Public Law 104–191 erroneously cited this

provision as section 1128B(b) of the Act. Section

4331(a) of the Balanced Budget Act of 1997, Public

Law 105–33, corrected this citation to section

1128A(b) of the Act.

2Any individual or entity may submit a request

for an advisory opinion. However, we anticipate

that most requests will apply to health care

business arrangements. Therefore, for purposes of

this discussion, we will generally use the term

‘‘arrangement’’ to refer to the factual circumstances

about which an advisory opinion is requested, even

though we realize that some requests will involve

facts not related to a business arrangement.

* * * * *

An appropriate amendment to 39 CFR

111.3 will be published to reflect these

changes.

Stanley F. Mires,

Chief Counsel, Legislative.

[FR Doc. 98–19017 Filed 7–15–98; 8:45 am]

BILLING CODE 7710–12–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Office of Inspector General

42 CFR Part 1008

RIN 0991–AA85

Medicare and State Health Care

Programs: Fraud and Abuse; Issuance

of Advisory Opinions by the OIG

AGENCY: Office of Inspector General

(OIG), HHS.

ACTION: Final rule.

SUMMARY: In accordance with section

205 of the Health Insurance Portability

and Accountability Act of 1996, this

final rule sets forth the specific

procedures by which the Department,

through the Office of Inspector General

(OIG), in consultation with the

Department of Justice (DoJ), will issue

advisory opinions to outside parties

regarding the interpretation and

applicability of certain statutes relating

to the Federal and State health care

programs. The procedures for

submitting a request and obtaining an

advisory opinion from the OIG were

established through interim final

regulations published in the Federal

Register on February 19, 1997. In

response to public comments received

on these interim final regulations, this

final rule revises and clarifies various

aspects of the earlier rulemaking.

EFFECTIVE DATE: This rule is effective on

July 16, 1998.

FOR FURTHER INFORMATION CONTACT: Joel

Schaer, (202) 619–0089, OIG

Regulations Officer.

SUPPLEMENTARY INFORMATION:

I. Background

A. Section 205 of Public Law 104–191

The Health Insurance Portability and

Accountability Act of 1996 (HIPAA),

Public Law 104–191, specifically

required the Department to provide a

formal guidance process to requesting

individuals and entities regarding the

application of the anti-kickback statute,

the safe harbor provisions, and other

OIG health care fraud and abuse

sanctions. In accordance with section

205 of HIPAA, the Department, in

consultation with the DoJ, issues written

advisory opinions to parties with regard

to: (1) what constitutes prohibited

remuneration under the anti-kickback

statute; (2) whether an arrangement or

proposed arrangement satisfies the

criteria in section 1128B(b)(3) of the

Social Security Act (the Act), or

established by regulation, for activities

which do not result in prohibited

remuneration; (3) what constitutes an

inducement to reduce or limit services

to Medicare or Medicaid program

beneficiaries under section 1128A(b) of

the Act 1; and (4) whether an activity or

proposed activity constitutes grounds

for the imposition of civil or criminal

sanctions under sections 1128, 1128A,

or 1128B of the Act. Thus, advisory

opinions may be issued with regard to

the criminal provisions of section 1128B

of the Act, which includes the antikickback statute, as well as the

provisions of section 1128 of the Act,

which authorizes the Department to

exclude individuals and entities from

participation in Federal and State health

care programs. Exclusions are

authorized in a wide variety of

circumstances, including, for example,

conviction of health care related

offenses, State licensure action, and

submission of claims in excess of usual

charges or for services that fail to meet

professionally recognized standards of

health care. In addition, advisory

opinions are available regarding the

civil money penalty provisions of

section 1128A of the Act, which

authorizes penalties for a variety of acts,

including, among others, presentation of

a false or fraudulent Medicare or

Medicaid claim and hospital payments

to physicians to induce them to reduce

or limit care to any Medicare or

Medicaid beneficiary under their direct

care.

B. OIG Interim Final Regulations

Because HIPAA required that specific

procedures and final regulations on the

advisory opinion process be in place by

February 21, 1997, the Secretary

determined that it was both

impracticable and contrary to the public

interest to first issue regulations in

proposed rulemaking form. As a result,

on February 19, 1997, the OIG

published interim final regulations (62

FR 7350) establishing a new part 1008

in 42 CFR chapter V addressing the

various procedural issues and aspects of

the advisory opinion process.

Specifically, the interim final rule set

forth (1) the procedures to be followed

by parties applying for advisory

opinions and by the OIG in responding

to these requests; (2) the time frames

pursuant to which the OIG will receive

and respond to requests; (3) the type

and amount of fees to be charged to

requesting parties; and (4) the manner in

which the public will be informed of the

issuance of any advisory opinions.

The interim final rule also set forth a

60-day public comment period for

specific comments and

recommendations for refining the

advisory opinion process.

C. Summary of the Interim Final Rule

The establishment of a new part 1008

in 42 CFR chapter V specifically

addressed, among other provisions, the

following procedural aspects of the

advisory opinion process:

1. Responsibilities of Outside Parties

Section 1008.15 of the interim final

rule indicated that any individual or

entity may submit a request for an

advisory opinion, but that the

arrangement in question must, at the

time of the request for an opinion, either

be in existence or be an arrangement

into which the parties have a good faith

intention to enter in the future.2 Section

1008.15(b) stated that requests

presenting general questions of

interpretation, posing hypothetical

situations, or seeking an opinion about

the activities of third parties would not

qualify for advisory opinions. Section

1008.11 stated that the OIG would not

provide advisory opinions to persons

not involved directly in the

arrangement. In addition, §§ 1008.53

and 1008.55(b) of the rule stated that an

advisory opinion would be legally

binding on the Department and the

requesting party only with respect to the

specific conduct of the requesting party;

it would not be legally binding with

respect to third party conduct, even if

such conduct appears similar to the

conduct of the initial requestor.

Section 1008.36 of the interim final

rule indicated that a request for an

advisory opinion must be submitted to

the OIG in written form and must

present all facts relevant to the subject

matter for which the opinion is being

requested. Section 1008.37 provided

that all parties and potential parties to

the arrangement must be identified.
38312 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations

3http://www.dhhs.gov/progorg/oig

Section 1008.38 of the regulations

required the requesting party to certify

to the truth, correctness, and

completeness of all information

submitted to the OIG, to the requestor’s

best knowledge. It also required a

requesting party seeking an advisory

opinion about a proposed arrangement

to certify its good faith intent to enter

into the arrangement upon receipt of a

favorable advisory opinion.

Section 1008.18 of the interim final

rule provided that requestors may

contact the OIG directly to inquire about

the type and scope of information

needed to process their requests, and

that the OIG could provide requestors

with a list of suggested preliminary

questions to aid in formulating their

requests. As set forth in § 1008.39, at

any time after the preliminary request

for an advisory opinion, the OIG may

request additional information that the

OIG deems necessary to address the

advisory opinion request.

2. Fees To Be Charged

In accordance with HIPAA, subpart C

of 42 CFR part 1008 of the regulations

addressed fees for the cost of advisory

opinions. Specifically, § 1008.31 of the

regulations stated that the OIG will

charge a fee to the requestor (payable to

the U.S. Treasury) equal to the costs

incurred by the Department in

responding to the request. The

regulations stated that the fees will

factor in the salary, benefits, and

overhead costs of attorneys and others

who work on analyzing the request and

writing the advisory opinion. Because

processing fees will vary according to

the complexity of the request and the

time needed to prepare the response, the

rule did not establish specific

processing costs in advance. The

interim final rule’s preamble discussion,

however, contains broad estimates of

costs and staff time to aid prospective

requestors.

3. Responding to the Advisory Opinion

Request

Subpart E of the interim final rule

addressed the obligations and

responsibilities of the OIG in accepting

and issuing formal advisory opinions.

Section 1008.41 specifically indicated

that the OIG would promptly examine

the request for an advisory opinion

upon receipt and determine whether

additional information would be

required. The regulations established

that within ten (10) working days of

receiving the request, the OIG would

notify the requestor in writing that (i) it

was formally accepting the request, (ii)

it was declining to accept the request, or

(iii) it needed additional information to

process the request.

In accordance with § 1008.43(c) of the

rule, once sufficient information is

provided to the OIG, the OIG will

consult with DoJ and issue an advisory

opinion within sixty (60) days after

formally accepting the advisory opinion

request. Section 1008.45 of the

regulations addresses the OIG’s right to

rescind an advisory opinion after its

issuance in limited circumstances.

4. Dissemination of Advisory Opinions

Section 1008.47 of the interim final

rule addressed the circumstances under

which the OIG may disclose information

submitted by requestors, including

making copies of issued opinions

available for public inspection and on

the OIG’s Internet web site.3

II. Response to Comments and

Summary of Revisions

As indicated above, the interim final

rule established a 60 day comment

period for soliciting relevant public

comments on the scope and

applicability of the provisions set forth

in 42 CFR part 1008. We received a total

of twenty (20) timely-filed public

comments from various health care

associations and organizations and from

several State and professional medical

societies. The comments included both

broad concerns about the issuance of

advisory opinions in general and more

detailed comments on specific aspects

of the advisory opinion process. In

addition, based on informal discussions

with potential requestors and

experience gained in reviewing and

processing advisory opinion requests

since issuance of the interim final rule,

the OIG is using this opportunity to

clarify portions of the regulations

consistent with the statute and the

intent of this procedural rulemaking. Set

forth below is a synopsis of the various

comments received and a summary of

the specific revisions and clarifications

being made to the regulations in 42 CFR

part 1008.

A. General Comments

Comment: Many commenters

welcomed the prospect of advisory

opinions and expressed general support

for the advisory opinion process

established by the interim final rule.

One commenter indicated that the

interim final rule is an attempt ‘‘to

develop an effective advisory opinion

process as a method of bringing clarity

to the current Federal fraud and abuse

statutory and regulatory system.’’

Another commenter stated that the

interim final rule was a ‘‘positive step

in the right direction.’’ A third

commenter, reflecting the view of

several, stated that ‘‘the best deterrent to

fraud and abuse in the health care

industry is clear guidance from the

Government concerning its view of the

applicable requirements.’’

The general support of these remarks

notwithstanding, these commenters and

others expressed concerns about the

advisory opinion process. Several

commenters viewed the regulations as

overly restrictive and complex.

Commenters stated that the

requirements for submitting substantial

amounts of supporting information

would dissuade parties from seeking

advisory opinions. One commenter

stated that other agencies rendering

advisory opinions have less onerous

requirements, citing the DoJ Antitrust

Division Procedures for Business

Review Letters, 28 CFR 50.6, and the

Federal Trade Commission (FTC)

Advisory Opinion Procedures, 16 CFR

1.1 through 1.4. This commenter and

others believed that the OIG advisory

opinion process could be simplified

without compromising the OIG’s

position. One commenter suggested that

the requirements, which it perceived as

burdensome, reflect the OIG’s

opposition to issuing advisory opinions

during the legislative process.

Response: The OIG intends to carry

out Congress’ mandate in good faith and

to the best of our ability. We are hopeful

that an effective advisory opinion

program will further the OIG’s fraudfighting mission by aiding requestors in

complying with the fraud and abuse

laws. Deterring fraud and abuse in the

Federal health care programs continues

to be an integral part of that mission.

For example, the OIG special fraud

alerts and model compliance plans are

specifically targeted at deterring

fraudulent and abusive activities.

Consistent with the OIG mission, we

endeavored to develop an advisory

opinion process that balances the

industry’s desire for a process that is not

overly burdensome with the OIG’s need

for full and complete disclosure of facts

pertaining to the arrangements under

review.

Our goal is to render meaningful and

informed opinions based on a complete

and comprehensive understanding of

the relevant facts and circumstances of

a given arrangement, protecting in the

process only those arrangements that

pose little or no risk of fraud or abuse

to the Federal health care programs. For

complex arrangements, this may require

relatively extensive submissions by a

requestor. We believe that it is difficult

to develop bright line rules for the
Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations 38313

submission of information uniformly

applicable to the wide array of

arrangements and sanction authorities

that may be the subject of advisory

opinions.

The Department is in a unique

position among agencies of being

compelled by statute to provide

advisory opinions that bind the

Department and the requestors in

criminal, as well as civil, matters. The

Department must issue these opinions

within a sixty (60) day period,

regardless of the complexity of the

arrangement in question. Accordingly,

the OIG has a heightened need to

scrutinize arrangements closely to

assure that fraudulent or abusive

arrangements are not inappropriately

granted protection from sanction.

As we gain experience in issuing

advisory opinions, we will continue to

look for ways to simplify the process.

Presently, we are revising these

regulations to provide increased

flexibility to respond to the

circumstances of individual situations.

As described in greater detail below,

these changes include, among others,

expressly permitting submission of

requests by counsel; allowing

submission of drafts, models, or

narrative descriptions of operative

documents for proposed arrangements;

providing for informal consultation with

requestors to aid the OIG’s deliberative

process; and providing for notice, an

opportunity to respond, and a

reasonable unwinding period in the

unlikely event of termination of a

favorable advisory opinion. In addition,

these regulations add a procedure for

obtaining initial non-binding fee

estimates.

Comment: One commenter

recommended that the OIG publish

generic standards and criteria by which

the ‘‘case specific’’ safe harbors afforded

by advisory opinions would be granted.

The commenter believed that without

the promulgation of such standards and

criteria, the advisory opinion process

could be viewed as arbitrary and

capricious.

Response: These regulations are

designed to establish procedures for

obtaining advisory opinions that will

provide the public with meaningful

advice regarding the anti-kickback

statutes and other OIG sanction

authorities as applied to specific factual

situations. The statutory and regulatory

safe harbors to the anti-kickback statute

describe generalized, hypothetical

arrangements that are protected. In

contrast, an advisory opinion is a means

of relating the anti-kickback statute, as

well as other OIG sanction authorities,

to the facts of a particular arrangement.

There are likely to be factors that make

some specific arrangements appropriate

for a favorable advisory opinion, even in

subject matter areas where a generalized

safe harbor may be impractical. Thus,

we believe that particularized or ‘‘case

specific’’ safe harbor treatment is

appropriate where the specific

arrangement contains limitations,

requirements, or controls that give

adequate assurance that Federal health

care programs cannot be abused. Our

use of the phrase ‘‘particularized’’ or

‘‘case specific’’ safe harbors refers

simply to a determination by the OIG,

in the exercise of prosecutorial

discretion, not to impose sanctions for

specific arrangements that may

constitute technical violations of OIG

authorities.

B. Specific Comments on the Advisory

Opinion Process

Section 1008.1, Basis and Purpose

Comment: A number of commenters

suggested that requiring a requestor to

be a party to the arrangement, or

proposed arrangement, that is the

subject of a request appears to prevent

an attorney from requesting an advisory

opinion on behalf of a client.

Response: We recognize that many

requesting parties will employ attorneys

to assist them in preparing advisory

opinion requests. We believe that it is

appropriate for an attorney, acting as

counsel, to submit an advisory opinion

request on behalf of a client, provided

that the client is a proper requesting

party in all respects under these

regulations. This means that the client

itself must comply with all

requirements for being a proper

requesting party under these

regulations, including, but not limited

to, the requirements under § 1008.36

that the requesting party be specifically

identified, and under § 1008.38 that the

requesting party provide certain

certifications (these certifications must

be signed by the client, not by the

attorney). Section 1008.1 is being

clarified accordingly.

Section 1008.5, Matters Subject to

Advisory Opinions

Comment: One commenter requested

that we clarify the meaning of the term

‘‘authority’’ as we used it in our

preamble to the interim final rule at

page 7352. Specifically, the preamble

stated:

‘‘To the extent that the subject matter of the

request is the requestor’s potential liability

under one sanction authority, we believe the

request should provide a complete

description of the facts addressing the

elements of that authority. Under these

interim final regulations, if the request asks

the OIG to advise on whether an arrangement

is subject to sanction under more than one

legal authority, we believe the submission

should include a complete description of the

facts regarding the different sanction

authorities in those statutes.’’

Response: We agree with the

commenter that clarification of our use

of the term ‘‘authority’’ would be

helpful. ‘‘Authority,’’ as used in the

interim final rule preamble cited above,

refers to each separate sanction

authority enumerated in sections 1128,

1128A, 1128B of the Act, i.e., each

potential ground for exclusion, civil

money penalty, or criminal penalty. The

section 1128, 1128A, and 1128B

sanction authorities cover a wide range

of conduct, from kickbacks to false

claims to doing business with

sanctioned persons. It is unlikely that

any one arrangement that is the subject

of an advisory opinion would implicate

all of the section 1128, 1128A, and

1128B sanction authorities. Because it is

most familiar with the circumstances of

its arrangement, a requesting party is in

the best position, as an initial matter, to

identify those authorities that may be

implicated in its arrangement and thus

expedite processing of its advisory

opinion request. Accordingly, when

submitting advisory opinion requests,

requestors should identify the specific

sanction authority or authorities within

sections 1128, 1128A, and 1128B of the

Act about which they seek an advisory

opinion and should describe the facts

relevant to each identified authority.

Requesting parties may seek an advisory

opinion on all sanction authorities they

believe may be implicated by their

arrangements. However, a blanket

designation that a party seeks an

advisory opinion on sections 1128,

1128A, and 1128B of the Act, without

more specificity, is likely to elicit an

OIG request for substantial additional

information and delay processing of the

advisory opinion. For these same

reasons, requestors seeking opinions on

compliance with the anti-kickback safe

harbors should specify those safe

harbors they believe may apply to their

arrangements. We have revised the

regulations to require designation of the

specific sanction authorities about

which an advisory opinion has been

requested.

Comment: In HIPAA, Congress

enacted a new statutory safe harbor to

the anti-kickback statute for certain

shared-risk arrangements (section

1128B(b)(3)(F) of the Act). This safe

harbor is the subject of an on-going

negotiated rulemaking process

mandated by HIPAA and being
38314 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations

conducted under the auspices of the

OIG. The goal of the negotiated

rulemaking is the promulgation of

regulations governing the safe harbor.

One commenter expressed the view that

the OIG should not withhold advisory

opinions on the shared-risk exception

pending the outcome of the negotiated

rulemaking.

Response: We discern nothing in

HIPAA that permits us to decline to give

advisory opinions on the shared-risk

safe harbor pending the outcome of the

negotiated rulemaking and

promulgation of applicable regulations.

Accordingly, we will opine on the

statute as written. Any advisory opinion

issued will be binding on the

Department and the requesting parties

as provided in these regulations.

However, favorable and unfavorable

advisory opinions issued before the

outcome of the rulemaking process may

be subject to modification or

termination based on the rule eventually

promulgated.

Comment: Two commenters believed

that the OIG advisory opinions should

address the application of the ‘‘Stark

amendment’’ under section 1877 of the

Act.

Response: Section 4314 of the

Balanced Budget Act of 1997, Public

Law 105–33, includes a new

requirement that the Department issue

advisory opinions on the ‘‘Stark’’

provisions. These opinions will be

issued by the Health Care Financing

Administration (HCFA) in accordance

with regulations issued by the

Department. To aid in coordinating both

advisory opinion processes, we are

modifying our regulations to require

requesting parties to notify the OIG if

they apply to HCFA for a ‘‘Stark’’

opinion on the same arrangement for

which they are seeking an OIG advisory

opinion.

Section 1008.15, Facts Subject to

Advisory Opinions

Comment: Several commenters

suggested that trade associations should

be permitted to seek advisory opinions

on behalf of their members. These

commenters assert that such requests

would benefit association members who

may not have sufficient resources to

obtain an advisory opinion

independently. One commenter noted

that trade association opinions would be

particularly valuable for arrangements

involving ‘‘national issues.’’ Several

commenters also suggested that we

issue advisory opinions about ‘‘model’’

arrangements that might be duplicated

by many individual entities and that we

issue non-binding opinions or business

guidance to individual parties and trade

associations similar to advice provided

by the FTC and DoJ on antitrust matters.

Response: Section 205 of HIPAA

contemplates advisory opinions

regarding arrangements currently

existing or proposed by specific,

identified requestors. This follows from

HIPAA’s mandate that advisory

opinions be binding on the parties, as

well as the Department. It is difficult to

discern how an advisory opinion issued

to a trade association could be made

binding for association members or

others who later implement an

arrangement described in a trade

association request. The same difficulty

would arise with respect to parties

attempting to duplicate protected

‘‘model’’ arrangements. HIPAA’s

requirements notwithstanding, it is

unlikely that a party could precisely

duplicate an approved arrangement;

invariably, there would be differences,

some of which might be significant.

Sanction authorities impose liability

based on acts by specific people in

particular factual circumstances. Thus, a

particular arrangement may be legal

with respect to one party, but not with

respect to another. We believe that it is

impossible to identify all hypothetical

factors that might lead to different

results.

We will continue, however, to offer

other industry guidance in the form of

safe harbor regulations and special fraud

alerts. As part of the OIG’s expanded

fraud-fighting efforts, we are actively

working to finalize the existing

proposed safe harbors, to issue new

special fraud alerts, and to consider new

safe harbors proposed by the public. In

accordance with HIPAA, we will

formally solicit public comments

annually regarding new proposals for

safe harbors and special fraud alerts.

However, we welcome written

comments from the public at any time

regarding these topics or other fraud and

abuse concerns.

Section 1008.31, Oig Fees for the Cost

of Advisory Opinions

Comment: We received several

comments regarding the fee provisions

of the regulations. A number of

commenters objected to the OIG

charging a fee for processing an advisory

opinion. These commenters believed

that a fee would deter some requesting

parties and would impose an undue

burden on small companies.

Response: Under section 205 of

HIPAA Congress directed that the

Department charge a fee equal to the

costs incurred by the Department in

processing an advisory opinion (42

U.S.C. 1320a–7d(b)(5)(B)(ii)).

Comment: Many commenters believed

that the amount of the fee charged for

an advisory opinion should be limited.

These commenters contend that

uncertainty about the ultimate fee to be

charged for an opinion will be

especially problematic for individuals

and small entities. Several commenters

suggested that the ‘‘triggering dollar

amount’’ provided for in the interim

final rule, permitting requestors to

designate the maximum fee they are

willing to incur, does not adequately

address the problem of unlimited fees,

although some commenters generally

supported the concept and advocated its

retention. One commenter observed that

once the triggering dollar amount is

reached, a requesting party ‘‘is faced

with the untenable decision of paying

the triggering dollar amount and

receiving nothing to show for its money,

or authorizing the OIG to proceed to

process the request regardless of the

cost.’’ Many commenters suggested that

the solution to this dilemma would be

for the OIG to provide a fee estimate

based on an initial review of the request.

Commenters essentially proposed two

types of estimates: (1) an initial

estimate, with a cap on the final fee

equal to a certain percentage above the

original estimate (for example, 110% of

the original estimate), or (2) a nonbinding estimate combined with

continued use of the triggering dollar

amount designation, which designation

could be amended based on the nonbinding estimate. Additionally, four

commenters suggested that the OIG

adopt a fixed fee schedule similar to the

one used by the Internal Revenue

Service (IRS) for processing private

letter rulings.

Response: In light of our limited

experience with the advisory opinion

process, at this time we believe that a

binding estimate with a percentage cap

would be contrary to section 205 of

HIPAA, which requires recovery of

actual costs incurred. We do not have

enough experience to estimate actual

costs with sufficient reliability to make

such estimates binding. Similarly, it is

not possible at this time to develop fee

schedules that would reflect actual

costs. As the OIG gains experience, we

may be able to provide binding

estimates or fee schedules; nothing in

these regulations precludes us from

revising these proposals at a later date

if circumstances warrant.

Until such time, we believe that

providing an initial, non-binding

estimate is reasonable and feasible.

Accordingly, we are revising the

regulations to provide for a non-binding,

good faith estimate, if requested, based

on an initial review of an advisory
Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations 38315

opinion request. This initial estimate

will be provided at the time an advisory

opinion is accepted. However, we will

toll processing of the advisory opinion

request from the date of acceptance of

the request until the requesting party

authorizes us in writing to continue the

processing. This tolling will enable

requesting parties who find that the

estimated fee is more than they wish to

spend to withdraw their requests before

incurring additional costs. We are

retaining the triggering dollar amount

designation procedures and providing

for revised designations in response to

our non-binding fee estimates. We note

that fees for advisory opinions issued to

date generally have been in the range of

$1,500 to $3,000, with several costing

considerably less.

Comment: Some commenters believed

that not all requestors may be able to

afford advisory opinions. One

commenter suggested that the OIG use

a sliding fee schedule based on after-tax

net profits of the requestor. Further, one

commenter believed that the $250

deposit was excessive for individuals

and small entities making simple

requests for which the costs might not

total $250, i.e., requesting confirmation

of the applicability of an existing

opinion to a new participant in the

arrangement. Another commenter urged

the OIG to notify the requestor prior to

processing an advisor opinion if the

processing costs are likely to exceed the

designated triggering dollar amount to

permit requestors who do not wish to

pay more than the designated amount to

withdraw their requests before incurring

costs.

Response: Section 205 of HIPAA

contains no financial hardship

exception to the mandate that the

Department collect a fee equal to the

costs incurred by the Department. Even

if there were such an exception, the

proposal for a sliding scale based on a

requestor’s after-tax net profits strikes us

as impractical to calculate and

administer. It is unclear how such a

system would apply to individual

requestors or non-profit organizations.

The $250 initial deposit represents the

OIG’s reasonable assessment of the

minimum processing costs for advisory

opinion requests. Every request for an

advisory opinion takes time to read and

analyze to ensure that the OIG has an

accurate understanding of the facts

submitted and the application of the

fraud statutes to those facts. The OIG

must then consult with DoJ and write

the actual advisory opinion. Our

experience thus far demonstrates that it

is unlikely that even the simplest

advisory opinions will cost the agency

less than $250. Where possible, we will

try to notify requestors informally if, as

an initial matter, we believe that their

designated triggering dollar amounts are

likely to be exceeded.

Comment: One commenter suggested

that the OIG notify requestors if experts

for which costs will be incurred will be

required.

Response: Section 1008.33 of the

interim final rule provided for notice to

requestors, with an estimate of costs, if

expert opinions are required. For

purposes of clarity, that provision is

being moved to § 1008.31(e). We are

further revising the rule to clarify that

requestors will be responsible for

payment of the actual costs of expert

opinions and that the expert’s work and

opinion will be subject to the sole

direction of the OIG regardless of the

source of payment.

Section 1008.33, Expert Opinions From

Outside Sources

Comment: One commenter suggested

that requestors should be permitted to

review and comment on expert opinions

from outside sources, and should be

given an opportunity to provide their

own expert opinions.

Response: Nothing in the regulations

precludes a requestor from submitting

an expert opinion if they so desire. In

addition, the OIG can solicit a

requestor’s views on expert opinions if

the OIG believes such input would aid

its deliberative process. However, we do

not believe that it is necessary or costefficient to require the OIG to consult

with requestors regarding expert

opinions in all cases.

Subpart D, Submission of a Formal

Request for an Advisory Opinion

Comment: Subpart D of these

regulations enumerates the information

requestors must submit with their

advisory opinion requests. A number of

commenters found the requirements of

this subpart overly burdensome and

likely to dissuade parties from seeking

advisory opinions. These commenters

expressed the view that the advisory

opinion process was not intended as a

preliminary enforcement tool by which

the OIG could collect large quantities of

information about providers and other

health care entities.

Response: The procedural

requirements set forth in this subpart

are intended to ensure that the OIG has

a complete record on which to base its

advisory opinion, which will bind the

Department and the parties. An advisory

opinion serves as an individualized safe

harbor against criminal and civil

penalties; therefore, it is incumbent

upon the OIG to conduct a thorough

review.

Section 1008.36, Submission of a

Request

Comment: Several commenters stated

that requesting parties should not be

required to provide extensive

information about potential participants

in an arrangement who are not actual

requestors. One commenter expressed

the view that the focus of an advisory

opinion should be on the factual

circumstances of an arrangement, not on

the identities of the parties.

Additionally, several commenters

believed that sometimes it would be

impossible or highly impractical to

identify all potential participants to an

arrangement. According to their

concerns, some arrangements might

involve hundreds or even thousands of

parties. One commenter cited as an

example a request involving all network

providers in a managed care plan. The

commenter explained that there might

be practical difficulties in identifying all

such providers; moreover, the problem

could be further complicated if the

roster of providers were subject to

change as a direct result of

implementation of the arrangement.

Response: We believe that the identity

of parties is sometimes important to

rendering an informed decision about

an arrangement. There may be different

implications under the sanction

authorities for different parties in

similar factual circumstances. For

example, the analysis of a proposed

joint venture arrangement under the

anti-kickback statute may depend on

whether or not the proposed investors

are potential referral sources or have

other business relationships.

Furthermore, identification of parties

helps the OIG to determine if the

arrangement in question or a similar

arrangement is the subject of any

ongoing investigation or is, or has been,

the subject of a governmental

proceeding. As stated in § 1008.15 of

these regulations, the OIG will not opine

on any matters under investigation.

Section 1008.36(b)(1) requires

disclosure of participants to the extent

known to the requestor. We agree that

there may be situations in which it is

not possible or practical to identify all

potential participants in an

arrangement. In many of these select

cases, the OIG may be able to render an

informed opinion without knowing the

identities of all participants. The

managed care network described above

might be one such case. Another

example might be a proposed pricing

arrangement affecting hundreds or

thousands of potential customers. In
38316 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations

these types of circumstances, requesting

parties should make clear in their

requests the reasons why the identities

of all potential participants cannot be

provided. If it appears to the OIG that

the identities of potential participants

are reasonably available, the OIG may

decline to process the request or may

accept the request subject to the

subsequent receipt of the identities of

potential participants. An advisory

opinion issued in such circumstances

will be binding only on the requesting

party. The requesting party may not be

protected by an advisory opinion if the

material facts about the unidentified

parties differ from the material facts

described in the request. For example, if

a requestor seeking an advisory opinion

about a pricing arrangement describes

potential customers as hospitals and the

character of the customers is material, a

favorable advisory opinion would not be

binding on sales to non-hospital

customers. Parties joining an

arrangement after issuance of an

advisory opinion may seek a separate

advisory opinion in their own right.

Comment: Several commenters

recommended that requestors be

permitted to submit anonymous

requests, identifying themselves only

when it appeared that the OIG would

issue a favorable opinion.

Response: Early identification of

requestors helps the OIG determine

whether the party making the request is

under investigation or is involved in

proceedings involving the Department

or other governmental agencies that

would preclude issuance of an advisory

opinion under § 1008.15. By making this

determination as early in the process as

practicable, the OIG can minimize

processing fees incurred by requestors.

Comment: Several commenters

objected to the required disclosure of

the identities of non-requesting parties.

Commenters were concerned that such

disclosures could undermine the

business and competitive interests of all

parties to an arrangement. One

commenter explained that nonrequesting parties may not want to

identify themselves in the early

planning stages of a transaction, before

they are assured that the proposed

transaction passes fraud and abuse

muster. This is especially true,

according to some commenters, because

the anti-kickback statute reaches mere

offers of prohibited remuneration.

Further, they believe there may also be

proprietary business reasons for nonrequesting parties to withhold their

identities. For example, they may be

engaged in preliminary discussions and

not want to risk being disadvantaged by

competitors who may discover their

identity. For these reasons, some

commenters believed that the OIG

should permit generic descriptions of

non-requesting parties to the

transaction.

Response: For reasons previously

stated, we believe that the identities of

parties can be essential to rendering an

informed opinion about an arrangement.

We recognize that some proposed

arrangements may be presented to us at

an early stage before all parties are fully

committed to participate in the

arrangement. For example, a group of

surgeons planning an ambulatory

surgical center may not have

commitments from all prospective

investors. Requestors in such

circumstances run the risk that the OIG

response may be rendered meaningless

by subsequent changes in the identities

of the parties, i.e., a non-referral source

party is replaced in an arrangement by

a potential referral source. As set forth

in § 1008.53, advisory opinions are

operative and binding only for

requestors. If parties desire protection,

they must be identified as requestors.

Non-requesting parties seeking

protection after the advisory opinion is

issued would need to submit a new

request for an advisory opinion.

We are mindful that the risk of

disclosures of proprietary information

may be troublesome from a business

perspective. The OIG is subject to the

Freedom of Information Act (FOIA), 5

U.S.C. 552, and the Department’s FOIA

regulations set forth in 45 CFR part 5.

The OIG will endeavor to protect

submissions of proprietary information

to the extent and in the manner

permitted by these authorities.

Comment: Several commenters

suggested that the OIG not require

requestors to provide complete copies of

all operative documents. Instead, these

commenters advocated permitting

detailed descriptions of such

documents. In addition, some

commenters noted that operative

documents may not be available for

proposed arrangements and that

requiring their preparation would

impose significant costs for

arrangements that might never be

implemented. Commenters also

expressed concerns regarding the

potential for disclosure of operative

documents under FOIA. One

commenter asked that the OIG clarify

the meaning of the term ‘‘operative

documents.’’

Response: As used in these

regulations, ‘‘operative documents’’

broadly encompasses all written

documents relevant to the organization

or operation of the arrangement in

question. These may include, but are

not limited to, contracts, leases, lease

guarantees, deeds, loan documents

(promissory notes, loan agreements,

guarantees, mortgages, etc.),

employment agreements, court

documents and records, settlement

agreements, licenses, permits, corporate

and partnership organizational

documents (articles of incorporation,

bylaws, partnership agreements,

operating agreements, etc.), and any

documents related to these documents.

The specific documents required for

review of a particular arrangement will

depend on the nature of the

arrangement.

We are clarifying the regulations to

provide that for proposed arrangements,

draft or model documents or detailed

descriptions of material terms to be

contained in such documents may be

provided in lieu of operative

documents. We caution requestors that

material differences between the drafts,

models, or descriptions provided and

the final operative documents,

including changes or omissions, may

affect the enforceability of their options.

Accordingly, requestors are encouraged

to provide full, complete, and accurate

information regarding material terms of

operative documents for proposed

arrangements.

We are further revising these

regulations to permit parties to submit

initially only those portions of

documents relevant to the arrangement

at issue. Parties submitting partial

documents must clearly identify and

describe in general terms those portions

that have been withheld. For example,

a diversified corporation may elect to

submit only those portions of its

business plan relating to health care

items or services that are the subject of

the request. Nothing in these regulations

precludes the OIG from subsequently

requesting copies of the withheld

portions (and from tolling the

processing time in accordance with §

1008.39 pending receipt), if the OIG

deems those portions necessary in order

to render an informed opinion. The

ultimate determination of the relevancy

of operative documents, or portions

thereof, rests in the sole discretion of

the OIG.

Comment: One commenter proposed

eliminating the requirement that

requesting parties provide Medicare and

Medicaid provider numbers.

Response: We agree that provider

numbers are not necessary in every case.

We are eliminating the requirement for

submitting these numbers, but reserve

the right to request provider numbers, or

other identifying information, if we

determine that they are necessary in

particular circumstances. We have
Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations 38317

determined, however, that the Debt

Collection Improvement Act of 1996

(section 31001 of Public Law 104–134)

requires agencies to collect the Taxpayer

Identification Number (TIN) from all

persons or business entities ‘‘doing

business with a Federal agency’’ (see 31

U.S.C. 7701(c)). We believe that

requesting, receiving and paying for the

OIG’s work on an advisory opinion fits

into the category of ‘‘doing business

with a Federal agency.’’ Therefore, a

request for an advisory opinion must

include the requestor’s TIN. The TIN

will be used for purposes of collecting

and reporting on any delinquent

amounts arising out of the requestor’s

failure to render proper payment for the

advisory opinion.

Comment: Five commenters stated

that requiring requestors to provide

detailed and highly specific information

regarding existing or prospective

arrangements raises questions about the

requesting and non-requesting parties’

exposure to sanction in the event of an

unfavorable opinion. These commenters

considered this potential exposure to be

a disincentive to using the advisory

opinion process. One commenter

explained, for example, that if the OIG

determines that an arrangement violates

the anti-kickback statute, the requester

will have given the OIG much, if not all,

of the information necessary to

prosecute. This commenter suggested

that the OIG adopt a ‘‘grace’’ period to

allow parties found to be in violation to

terminate or restrict an arrangement

without risk of prosecution.

Response: There is an unavoidable

risk in submitting a request for an

advisory opinion regarding the potential

applicability of a criminal statute to an

existing arrangement. A thorough and

detailed understanding of arrangements

about which advisory opinions are

sought is necessary for the OIG to render

an informed opinion. to the extent the

arrangement does not qualify for a ‘‘safe

harbor’’ or a favorable advisory opinion,

it is subject to scrutiny and potential

investigation. Otherwise, we believe

unscrupulous parties could use the

advisory opinion process to immunize

themselves from prosecution. In most

instances, however, we believe the risk

to be minimal. First, most requests will

be about arrangements that are not yet

operative. Second, in seeking an

advisory opinion, most requesting

parties presumably will have reviewed

the arrangement and determined that it

poses little risk of fraud and abuse to

Federal health care programs. Third, the

failure to obtain a favorable advisory

opinion does not mean that an

arrangement is illegal; it means only

that the arrangement may pose some

risk of fraud and abuse.

As we have observed in the past, the

fact that an arrangement does not

qualify for a safe harbor or for a

favorable advisory opinion does not

mean that the anti-kickback statute has

been violated or that an enforcement

action is appropriate. For example, in an

enforcement proceeding, whether an

arrangement in fact constitutes a

violation of the anti-kickback statute

would depend on a showing of requisite

intent to solicit, receive, offer, or pay

remuneration to induce referrals or

business covered by a Federal health

care program.

Comment: We indicated in the

preamble to the interim final rule that

because of the wide diversity of

arrangements about which the OIG

might be asked to opine, we could not

detail in the regulations all of the

information a particular requestor

would need to submit. Instead, we

provided for the use of suggested

preliminary questions, which we would

provide, and permitted potential

requestors to contact us for further

guidance about what information to

submit. We specifically solicited

comments regarding this approach. One

commenter agreed that the information

necessary to issue an advisory opinion

depends on the nature of the request,

and that it is not feasible to set hard and

fast rules regarding the specific types of

information required to issue an

advisory opinion.

Response: We are leaving in place the

provision regarding the use of the

preliminary questions. Moreover, we

will continue to permit potential

requestors to contact us in writing for

guidance on the specific types of

information that might be needed for

their particular requests.

Section 1008.37, Disclosure of

Ownership and Related Information

Comment: One commenter opposed

the requirement that requesting parties

disclose ownership and related

information on the ground that such

requirement is burdensome.

Response: We are not persuaded that

this requirement is burdensome. The

majority of requestors will likely already

be providing this information to HCFA

through required filings of HCFA form

1513. A copy of a requestor’s current

HCFA form 1513 will satisfy this

requirement.

Section 1008.38, Signed Certifications

by the Requestor

Comment: We solicited comments

regarding the certification process

outlined in the interim final rule. This

process requires requesting parties to

certify to the truthfulness of their

submissions, including their good faith

intent to enter into proposed

arrangements. Several commenters

viewed the certification requirement as

an unnecessary and burdensome

requirement not contemplated by

section 205 of HIPAA. These

commenters stated that the certification

requirement is unnecessary because the

OIG is not bound by an advisory

opinion if it later discovers that a

requestor did not fully and accurately

disclose information. One commenter

suggested that we replace the

certification requirement with a

provision stating that the protection

afforded by an advisory opinion would

be applicable only to the arrangement as

described in the request and only to the

extent implemented by the requestor in

accordance with the facts represented in

the request. Another commenter

believed that certifications were

unnecessary, because the advisory

opinion process itself is a complicated

and costly procedure adequate to deter

providers from seeking advisory

opinions on arrangements that are

hypothetical or not under serious

consideration.

Response: The required certifications

help ensure that the OIG’s time and

resources are spent addressing real

concerns of legitimate requestors. In

particular, the requirement that

requestors seeking advisory opinions

about proposed arrangements certify to

a good faith intent to enter into the

proposed arrangement safeguards

against abuse of the advisory opinion

process by requestors seeking opinions

about competitor’s practices or

hypothetical questions. We are not

persuaded that our ability to invalidate

an opinion upon later discovery of

discrepancies in the facts or

implementation is a sufficient or

efficient means of protecting against

improper or inappropriate requests. In

addition, we are not convinced that the

advisory opinion process is so costly or

complex as to thwart misuse of the

process.

As a practical matter, our experience

suggests that the certification

requirement benefits requesting parties

as well. The requirement serves as an

incentive to requestors to focus on the

completeness and accuracy of their

presentations and to research
38318 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations

thoroughly and document their

arrangements before submitting their

requests or submitting additional

information. We believe that this keeps

costs down and expedites issuance of

opinions by reducing our need to

request clarifications and additional

information. Additionally, enhanced

diligence should reduce the need for

ancillary opinions after issuance of the

original advisory opinion when new

facts or understandings surface that

were not fully investigated or

considered by the requestor at the time

of the initial request. Consequently, we

believe that certifications will help

ensure more meaningful and informed

opinions.

We are clarifying the certification

requirements in § 1008.38 in two ways.

First, we are adding a provision,

inadvertently omitted from the interim

final rule, designating the appropriate

signatory on behalf of requestors that are

limited liability companies. Second, we

are clarifying that each requesting party

must provide the required certification.

These certifications must be signed by

the requesting party, not by its attorney.

Comment: Several commenters

objected to the requirement for

certification of a good faith intent to

enter into an arrangement upon receipt

of a favorably advisory opinion. These

commenters argue that there may be

legitimate business reasons, unrelated to

the fraud and abuse determination, that

an arrangement is not consummated.

For example, seeking an advisory

opinion may be part of the parties’

initial feasibility determinations.

Commenters explained that in the fluid

and changing health care marketplace,

many legitimate business factors may

arise between the time a request is filed

and the advisory opinion is issued

would cause the parties to abandon

their proposed arrangements. One

commenter questioned what action the

OIG would or could take if an

arrangement described in a favorable

advisory opinion is not implemented.

Several commenters urged that failure to

implement an approved arrangement

should not subject a requestor to any

adverse action or inference.

Response: We continue to believe that

requiring a good faith intent to enter

into a transaction is a reasonable

safeguard against misuse of an advisory

opinion process. The certification

requirement as set forth in these

regulations does not preclude

abandonment of a proposed

arrangement for legitimate business

reasons (i.e., an investor withdraws,

financing becomes unavailable) that

were not reasonably foreseeable at the

time the certification was signed.

Comment: One commentor requested

that we revise § 1008.38 to

accommodate a change in the individual

signing additional certifications if, for

example, the requestor hires a new chief

executive officer while the advisory

opinion is pending.

Response: The person signing

certifications on behalf of a requestor

should be the person occupying the

position listed in § 1008.38(c). We are

clarifying this section to make clear that

changes of the type described by this

commentor are allowed.

Section 1008.40, Withdrawal

Comment: Three commenters

suggested that all documents submitted

in support of a withdrawal request

should be returned to the requestor.

Response: We do not believe that

requesting parties have a right to the

return of documents voluntarily

submitted to the Government. In

particular, there is no right to the return

of potential evidence of a violation of

law, and the Government would be

remiss in returning such information. In

addition, it may be necessary to retain

submitted materials to document the

workings of the advisory opinion

process. Nevertheless, although the OIG

reserves the right to retain documents

submitted by requestors, nothing in

these regulations precludes the OIG

from returning documents in its

discretion to the extent allowed by law.

Parties should note that as part of OIG’s

required consultation with DoJ, copies

of requests and related documents may

be sent to DoJ. The OIG can make no

representation as to return of such

documents to DoJ.

Section 1008.41, Oig Acceptance of the

Request

Comment: We requested comments on

the process for screening requests for

advisory opinions. One commenter

suggested that instead of screening and

rejecting incomplete requests, such

requests should be accepted contingent

on receipt of the missing information,

and the processing time should be tolled

until the missing information is

submitted. This commenter explained

that in the dynamic health care

marketplace, all information may not be

available at the time of the request.

Another commenter maintained that

§ 1008.41(b)(3), which provides for

formally declining a request, is

unnecessary and should be deleted.

Response: We disagree that

§ 1008.41(b)(3) is unnecessary. There

may be circumstances in which a

request must be declined in accordance

with section 205 of HIPAA, for example,

where it seeks a determination of fair

market value or asks whether a

physician is an employee of a hospital

for purposes of qualifying for the

employee safe harbor to the antikickback statute. However, nothing in

these regulations precludes the OIG, in

appropriate circumstances, from

accepting incomplete requests

conditionally, and we have done so in

practice.

Comment: One commenter suggested

that the OIG should provide a written

statement of reasons for declining a

request.

Response: In order to make the

advisory opinion program meaningful, it

has generally been our practice to

inform requestors of the bases for

declining to issue a requested advisory

opinion, particularly in situations where

the requestor may be able to correct or

modify a request so as to make it

acceptable. Section 1008.15 sets forth

certain circumstances under which

advisory opinions will not be issued.

We are taking this opportunity to clarify

in the rule that the circumstances set

forth in § 1008.15 preclude both

acceptance and issuance of advisory

opinions. In addition, requests will not

be accepted if they fall outside the scope

of the advisory opinion process, as set

forth in § 1008.5, or otherwise fail to

satisfy the technical requirements of

these regulations.

Section 1008.43, Issuance of a Formal

Advisory Opinion

Comment: Several commenters

suggested that requestors be given an

opportunity to meet with the OIG

during processing of requests to answer

questions and address any concerns the

OIG might have about their

arrangements. Commenters proposed

that the OIG provide prior notice to

requestors if the OIG determines that it

is going to issue an unfavorable opinion,

thus permitting requestors to withdraw

their requests or make changes to their

proposed arrangements to address OIG

objections.

Response: Our experience with

advisory opinions has demonstrated

that informal oral consultation with

requestors often aids our understanding

of the arrangements at issue and better

enables us to render meaningful and

informed opinions. However, requiring

consultation for every request would

impose an unwarranted burden on the

OIG and, in many cases, serve only to

increase costs to requesting parties with

no significant benefit to the process.

Nothing in these regulations precludes

informal consultation, and we intend to

continue working with requestors in

appropriate circumstances to facilitate

the advisory opinion process. During
Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations 38319

these informal consultations, we may

identify concerns that, if not adequately

addressed by the requestor before the

advisory opinion is issued, may lead us

to render an unfavorable opinion.

However, it is not our role to structure

business arrangements. We believe that

parties needing such assistance should

seek private business and legal

guidance.

We are aware that some requestors

may want an opportunity to address the

OIG’s concerns about their arrangements

in a manner that would enable them to

structure acceptable arrangements and

avoid, where possible, an unfavorable

outcome. A formal notification

requirement, however, could permit

unscrupulous parties to misuse the

advisory opinion process to ‘‘test’’

hypothetical arrangements, as well as

lead to inefficient use of the OIG’s

resources. We believe that the informal

consultation process described above is

a better approach and will more

effectively address the concerns of

requestors who may want an

opportunity to modify their

arrangements in response to the OIG’s

concerns.

While requestors may request

informal consultations, we anticipate

that we will initiate most consultations

when we determine that the requestor’s

input would be helpful. If there are facts

or issues that a requestor wants us to

consider, the requestor should bring

those facts or issues to our attention

(and provide any desired explanation)

either in its request for an advisory

opinion or, if the facts or issues arise

after the initial request, in a

supplemental submission of additional

information.

Additional material information

provided in the course of oral

consultations will need to be submitted

in writing and certified in accordance

with §§ 1008.38 and 1008.39. For

purposes of calculating the time for

issuing the opinion, if the additional

information substantially changes the

arrangement under consideration, the

original request will be treated as having

been withdrawn and a new request as

having been resubmitted as of the date

the OIG receives the additional

information in writing.

Comment: Several commenters

proposed that the OIG be required to

explain its analysis and bases for

decision in the written advisory

opinion, since the analysis and

reasoning will serve as useful guidance

to the requestors, the Department and

the health care industry.

Response: As indicated in the

preamble to the interim final rule,

advisory opinions will restate the

material facts known to the OIG and

will discuss the OIG’s analysis and

conclusions regarding the legal

questions to be applied to the facts

presented. We believe that § 1008.43, as

written, reflects this intent. We iterate

that opinions are only binding upon the

specific parties to whom they are

issued.

Comment: One commenter suggested

that changes made to an arrangement to

correct aspects deemed objectionable by

the OIG in an unfavorable advisory

opinion should not require an

additional advisory opinion in order to

be protected.

Response: We are not persuaded that

this suggestion is workable in practice.

We are unwilling to rely on a

determination by the parties that

modifications or changes they have

made to their arrangements correct in all

respects those aspects to which we

objected. Moreover, we could not be

certain, without further review, that

modifications or changes made to one

aspect of an arrangement would not

adversely impact some other aspect of

the arrangement. We are mindful,

however, that requestors want to

minimize costs associated with

requesting a second opinion. We will

make a good faith effort to control costs

of a subsequent advisory opinion by

avoiding duplication of effort expended

on the first advisory opinion to the

extent possible.

Section 1008.45, Rescission

Comment: The OIG received many

responses to its solicitation of comments

regarding whether § 1008.45 reasonably

balances the Government’s need to

ensure that advisory opinions are legally

correct and the requestor’s interest in

finality of advisory opinions. Most

commenters were concerned that the

OIG’s authority to rescind advisory

opinions defeats the main purpose of

obtaining an opinion, which is to ensure

that an arrangement will not be subject

to sanction under the fraud and abuse

statutes. Several commenters urged the

OIG to identify a narrower standard to

be applied in deciding to rescind an

advisory opinion than ‘‘in the public

interest’’. These commenters indicated

that rescission should be limited to

changes in law or material facts. Some

commenters objected to using good faith

reliance on the request as the standard

for enforcement proceedings, suggesting

instead that the OIG not proceed against

a requestor unless the requestor failed to

disclose materially adverse facts. One

commenter thought that the OIG should

not require parties to unwind

transactions unless the OIG had not

been provided with all relevant

information or the information provided

was misleading or inaccurate. If

unwinding were to be required, several

commenters urged the OIG to permit a

reasonable unwinding period during

which a requestor would not be subject

to sanction. Further, several

commenters noted the significant

investment of time and money involved

in arrangements operating under the

protection of advisory opinions. It was

suggested that the OIG limit the use of

rescinded opinions to putting parties on

notice that the OIG has changed its

analysis for the future. Another

commenter recommended that the OIG’s

right to rescind an advisory opinion

should be limited to one year from the

date of the opinion.

Response: In crafting these

regulations, we have been mindful of a

requestor’s significant interest in the

finality of an advisory opinion and have

endeavored to balance that interest

against the government’s compelling

interest in protecting the integrity of the

Federal agencies, including the Federal

Trade Commission, the International

Trade Commission, the Food and Drug

Administration, and the Internal

Revenue Service (See, for example, 16

CFR 1.1.3, 19 CFR 211.54(b), 21 CFR

108.5, and 26 CFR 601.201(1).)

Our use of the words ‘‘rescind’’ and

‘‘revoke’’ in § 1008.45 may have led

some members of the public to

misconstrue the intent of this section. If

a requestor has fully and accurately

provided all material information

regarding an arrangement in its

submission to the OIG, its advisory

opinion will bind the Department and

the parties during the period it is in

effect, that is, until it is terminated, if

ever. If, on the other hand, the OIG

determines that a requestor’s

submissions did not fully and

accurately provide all material

information regarding an arrangement,

the OIG may rescind the advisory

opinion retroactively to the date of

issuance. For purposes of clarity, we are

substituting the word ‘‘terminate’’ for

‘‘revoke’’ where appropriate in this

section, to more clearly distinguish

these two concepts. In addition, as

discussed below, we are amending

§ 1008.45 to make clear that in

appropriate cases there is a third,

intermediate possibility which is

modification of an advisory opinion.

Accordingly, for the purposes of part

1008 we are adding definitions in

§ 1008.45 for the terms ‘‘rescind,’’

‘‘terminate,’’ and ‘‘modify.’’ To

‘‘rescind’’ an advisory opinion will

mean that the advisory opinion is

revoked retroactively to the original date

of issuance with the result that the
38320 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations

advisory opinion will be deemed to

have been without force and effect from

the original date of issuance. Rescission

will be reserved for those situations

where a requestor has not fully,

completely and accurately disclosed

facts to the OIG that it knew, or should

have known, were relevant and material

to the subject matter of the advisory

opinion. (The OIG will make the

determination of whether the requestor

had this state of mind following an

opportunity for the requestor to

comment on this issue.)

To ‘‘terminate’’ an advisory opinion

will mean that the advisory opinion is

revoked as of the termination date and

is no longer in force and effect after the

termination date. However, the opinion

will have been in effect as originally

issued from the date of issuance until

the date of termination.

To ‘‘modify’’ an advisory opinion will

mean that the advisory opinion is

amended, altered or limited, and that

the advisory opinion continues in full

force and effect in modified form

thereafter. However, the opinion will

have been in effect as originally issued

from the date of issuance until the date

of modification.

The regulations reserve the right of

the OIG to rescind, terminate, or modify

an advisory opinion after its issuance

solely in circumstances ‘‘where the

public interest requires.’’ We expect that

rescissions, terminations, and

modifications of advisory opinions will

be rare, occurring only in limited

circumstances, such as when the OIG

learns after the issuance of the opinion

that the arrangement in question may

lead to fraud or abuse, and the potential

for such fraud or abuse was not

foreseeable at the time the advisory

opinion was issued. Situations that

might lead to termination or

modification of an advisory opinion

may include the following

circumstances—

• changes in the law or the business

operations of the health care industry

that make it possible for an arrangement

that previously carried little risk of

fraud or abuse to result in fraud or abuse

in the future;

• changes in medical science or

technology that render an arrangement

subject to the risk of fraud or abuse;

• material changes in the arrangement

during the course of its implementation;

or,

• the operation of the arrangement in

practice differs from what the OIG

anticipated based on the advisory

opinion request.

The latter two examples reflect the

fact that proposed business

arrangements sometimes change in

unexpected ways during and after their

implementation.

Prior to any rescission, termination or

modification, the OIG will notify the

requesting party that it intends to

rescind, terminate, or modify the

advisory opinion and afford the

requesting party a reasonable

opportunity to comment in response.

An advisory opinion will only be

rescinded, terminated, or modified after

appropriate consultation with the

requesting party. With respect to

modifications, if the party does not

agree to modifications proposed by the

OIG, or does not itself suggest

modifications that satisfy the OIG’s

concerns, the OIG may instead

terminate the advisory opinion under

this section. In the event of a

determination to rescind, terminate, or

modify an advisory opinion under

§ 1008.45, the OIG will notify the

requestor and make such final notice

available to the same extent as an

advisory opinion.

Except as discussed below, the

requestor will not be subject to OIG

sanction for actions it took prior to the

final notice of termination or

modification if the requestor (1) acted in

good faith reliance on the advisory

opinion, and (2) promptly discontinues

such actions upon notification of a

termination or promptly modifies such

actions upon notification of a

modification, as the case may be. We

recognize that it may be impracticable to

discontinue immediately certain

complex business arrangements.

Accordingly, except in exceptional

circumstances or as otherwise described

below, a requestor will be afforded a

reasonable opportunity to unwind or

otherwise disengage from arrangements

subject to terminated advisory opinions,

provided that the requestor pursues

such unwinding or disengagement

promptly, diligently and in good faith.

A requestor will be afforded a similar

reasonable opportunity to implement

modifications to an arrangement that is

subject to a modified advisory opinion.

During any unwinding period, the

protection afforded by the advisory

opinion will continue in effect.

We are revising § 1008.45 to provide

for a reasonable unwinding period set at

the discretion of OIG, after consultation

with the requestor, based on the facts

and circumstances of the arrangement.

For example, the unwinding period for

a complex business structure may be a

period of years, whereas it may be a

much shorter period for a simple

compensation arrangement. In

determining the duration of the

reasonable unwinding or modification

period, the OIG will take into account

the complexity of the arrangements

involved and the impact of unwinding

or modification of Federal program

beneficiaries. If the OIG determines,

however, that the requestor failed to

provide material information or

provided untruthful information in its

submissions to the OIG, the advisory

opinion will be deemed to have been

without effect from the time is was

issued and no unwinding period will be

recognized.

Comment: One commenter requested

that the OIG return documents

submitted in connection with rescinded

opinions. This commenter argued that

such documents should be exempted

from FOIA as pre-decisional documents.

Response: As indicated in our

discussion of § 1008.40, we do not

believe that requesting parties have a

right to the return of documents

voluntarily submitted to the

Government, especially where those

documents are potential evidence of a

violation of law. In addition, retention

of submitted materials may be necessary

to document the workings of the

advisory opinion process. However, the

OIG may return such documents at its

discretion to the extent allowed by law.

While certain documents may have been

provided to DoJ in the course of our

consultations, the OIG has no authority

over the return of such documents by

DoJ. The OIG is subject to FOIA and

intends to release documents if required

by FOIA, in accordance with procedures

set forth in 45 CFR part 5.

Section 1008.47, Disclosure

Comment: Several commenters stated

that the disclosure provisions of

§ 1008.47 do not comport with

congressional intent in enacting the

advisory opinion program. Several

commenters expressed concern about

our statement that we could use

information submitted by requestors for

‘‘any governmental purpose.’’ One

commenter specifically stated that if

‘‘any governmental purpose’’ means that

the OIG can use information submitted

with requests as a basis for

investigation, the OIG should expressly

say so and put parties on notice to that

effect. These commenters indicated that

the risk of information being used for

any governmental purpose would

inhibit the industry from seeking

guidance, and considered the risk of

public disclosure of a requestor’s

identity and of the result of its advisory

opinion as a further deterrent. One

commenter believed that such

disclosure could adversely impact a

requestor’s stock prices or general

competitiveness.
Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations 38321

Response: Our primary purpose under

these regulations is to gather and assess

information in order to render informed

advisory opinions. However, the antikickback statute is a criminal statute,

and therefore review of arrangements

that potentially implicate the statute

requires heightened scrutiny. As a law

enforcement agency, the OIG cannot

ignore information lawfully obtained to

further legitimate governmental

purposes.

Comment: Several commenters

recommended that the OIG redact

names and identifying information from

published advisory opinions, as the IRS

does with its private letter rulings.

Response: Our current practice is to

limit public disclosure of names and

identifying information, subject to the

requirements of FOIA. Unlike the OIG,

the IRS has a specific statutory

exception (26 U.S.C. 6110) to FOIA that

affords it greater latitude in protecting

information from disclosure.

Comment: One commenter requested

that the OIG not disclose information

without first notifying the requestor and

obtaining its consent.

Response: The OIG is subject to FOIA

and the Department’s FOIA regulations

set forth at 45 CFR part 5. These

regulations provide that the Department

will make reasonable efforts to notify

submitters—in this case, the

requestors—if the Department

determines that material that submitters

have designated as exempt from

disclosure under exemption 4 to FOIA

(trade secrets and confidential

commercial or financial information)

may have to be disclosed in response to

a FOIA request. The regulations at 45

CFR 5.65 provide that submitters of

records may designate in writing that all

or part of the information contained in

such records is exempt from disclosure

under exemption 4 at the time they

submit such records or within a

reasonable time thereafter. Under the

Department’s FOIA regulations,

requestors have an opportunity to

respond and, if desired, file a court

action to prevent disclosure of exempt

records. Requesting parties must

specifically identify in their requests for

advisory opinions any information they

reasonably believe is exempt from

disclosure under exemption 4.

These advisory opinion regulations

have been amended to incorporate more

clearly the requirement for designating

trade secrets and confidential

commercial or financial information

with specificity. Information should be

designated in the manner described in

45 CFR 5.65(c) and (d). Parties are

encouraged to refrain from designating

more information than arguably may be

classified as trade secrets or confidential

commercial or financial information.

Wholesale designations of entire request

letters are counterproductive and may

make it more difficult for legitimately

exempt information to be protected

under FOIA. The requestor’s assertions

about the nature of the information it

has submitted are not controlling.

Consistent with the OIG’s law

enforcement responsibilities, we reserve

the right to make disclosures other than

in response to FOIA requests where the

public interest requires, to the extent

authorized by law. Unauthorized

releases of confidential information

would be a criminal violation of 18

U.S.C. 1905 (the Trade Secrets Act).

In addition, although a document may

be exempt from disclosure under FOIA,

facts reflected in that document may

become part of the advisory opinion that

the OIG will provide to the public. We

will describe the material facts of the

arrangement in question in the body of

each advisory opinion, which will be

made available to the public. To the

extent that it may be necessary to reveal

specific facts that could be regarded as

confidential information, we believe we

have the authority to do so under

sections 1106(a) and 1128D(b) of the

Act. Nevertheless, we do not intend to

incorporate any such facts into the body

of an advisory opinion unless we

believe incorporating such information

is necessary in order to render an

informed opinion. Moreover, where we

intend to incorporate into an advisory

opinion information designated by the

requesting party as confidential

proprietary information, we will

endeavor to provide the requesting party

with reasonable notice and a reasonable

opportunity to respond or withdraw its

request.

Section 1008.53, Affected Parties

Comment: One commenter suggested

that all parties should be required to

consent to a request for an advisory

opinion and that the requestor should

be required to certify that such consent

has been obtained.

Response: The crux of this comment

appears to center around a concern that

one party to an arrangement may submit

information to the OIG without the

knowledge or consent of another party

who may not want such information

disclosed. We believe that this is a

matter best handled and resolved

between the parties. In addition, for

reasons set forth above, we believe that

it may be impractical, if not impossible,

to obtain consent from all potential

parties to certain types of arrangements.

Section 1008.55, Admissibility of

Evidence

Comment: While several commenters

commended the OIG for prohibiting

adverse inferences to be drawn from a

party’s failure to obtain an advisory

opinion, other commenters suggested

that we delete or clarify § 1008.55(b),

which they found confusing with regard

to the prohibition on the use of advisory

opinions by third parties. One

commenter objected to paragraph (b) of

this section because an advisory opinion

may be probative evidence as to why

someone structured an arrangement in a

particular way. The commenter

questioned whether the OIG has the

power to create evidentiary rules that

would be binding on courts or

administrative law judges.

Response: We agree that § 1008.55(b)

was confusing as originally written.

Consistent with our original intent to

preclude legal reliance by nonrequestors, this section is being revised

to read as follows: ‘‘An advisory opinion

may not be introduced into evidence by

a person or entity that was not the

requester of the advisory opinion to

prove that the person or entity did not

violate the provisions of sections 1128,

1128A, or 1128B of the Act or any other

law.’’ The Department has the authority

to create procedural rules applicable in

its tribunals (42 CFR 1005, for example).

With respect to other tribunals, the OIG

believes it is proper to limit the use of

documents created by the OIG for a

specific purpose. Consistent with

HIPAACs statutory directive that

advisory opinions bind only requesting

parties and the Department, it is our

intention to preclude legal reliance by

non-requestors; it follows necessarily

that an advisory opinion may not be

introduced into evidence by such nonrequestors in any tribunal.

Section 1008.59, Range of Advisory

Opinion

Comment: One commenter stated that

advisory opinions should be binding on

DoJ as well. The commenter believed

that it would be unfair if DoJ, which

must be consulted during the advisory

opinion process, could still instigate

enforcement proceedings against a

requestor that has a favorable advisory

opinion from the Department.

Response: Section 205 of HIPAA

requires only that advisory opinions be

binding on this Department. The

Department lacks the authority to bind

DoJ through the Department’s

rulemaking.

III. Additional Technical Changes

• In § 1008.5(b)(1), the phrase ‘‘what

the’’ is being changed to ‘‘whether’’ to
38322 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations

correct a technical error, and the word

‘‘and’’ is being changed to ‘‘or’’ to be

consistent with the statutory directive

and our intent that we will not opine on

questions of fair market value or bona

fide employee status.

• In § 1008.31(c), the phrase ‘‘to be’’

in the first sentence is being deleted to

be consistent with the intent of the

regulation that the OIG will calculate

the actual costs incurred by the

Department in responding to an

advisory opinion request.

• The phrase ‘‘from the time the OIG

notifies the requestor’’ is being added in

§ 1008.31(d)(4) to be consistent with our

original intention that the time period in

question commences upon the OIG’s

notice.

• In § 1008.37, the phrase ‘‘will’’ in

the first sentence is being replaced by

‘‘must’’ to be consistent with the

mandatory nature of the requirement,

and the phrase ‘‘or entity’’ is being

inserted to be consistent with the usage

of the same term at the beginning of the

sentence.

• In § 1008.38(c), the phrase ‘‘will’’ is

being replaced by ‘‘must’’ to be

consistent with the mandatory nature of

the requirement.

• In § 1008.43(a), the word ‘‘when’’ is

being replaced by ‘‘and’’ to clarify,

consistent with our original intent and

practice, that an advisory opinion is

issued when payment is received and

the opinion is dated, numbered, and

signed.

• In § 1008.43(b) is being revised to

provide internal consistency within the

section and to be consistent with our

intent that advisory opinions will be

based on the information provided by

requestors.

• The word ‘‘next’’ appearing in

§ 1008.43(c)(2) has been repositioned to

correct a technical error. In § 1008.47(c),

the word ‘‘in’’ is being replaced by the

word ‘‘by’’ to correct a technical error.

• Section 1008.59 has been revised to

reflect more clearly our intent that the

OIG will not provide legal opinions on

questions or issues regarding authorities

vested in other Federal, State, or local

government agencies.

IV. Regulatory Impact Analysis

Executive Order 12866

The Office of Management and Budget

(OMB) has reviewed this final rule in

accordance with the provisions of

Executive Order 12866. Executive Order

12866 directs agencies to assess all costs

and benefits of available regulatory

alternatives and, when rulemaking is

necessary, to select regulatory

approaches that maximize net benefits

(including potential economic,

environmental, public health, safety,

distributive, and equity effects).

As indicated in our preamble

discussions, this rule addresses

procedural issues involved in

processing requests for advisory

opinions submitted to the OIG. It sets up

the procedures, as required by Public

Law 104–191, for obtaining an advisory

opinion on whether or not certain

activities violate designated fraud and

abuse authorities. This rule does not

address the substance of the antikickback or other sanction statutes. Nor

does it address the substance or content

of advisory opinions which may be

issued in the future. To the extent that

advisory opinions affect the behavior of

health care providers, that effect is the

product of the substantive content of the

sanction statutes themselves and the

substantive content of the advisory

opinions which will be issued on a caseby-case basis in the future. The effect of

advisory opinions on health care

providers is not a function of the

process for requesting an advisory

opinion.

In addition, the extent to which

advisory opinions will result in

alteration of future business practices, if

any, is impossible to analyze without

experience. It would be completely

speculative to try to divine to what

degree business deals may or may not

occur as a result of the substance of

advisory opinions issued in the future.

Moreover, we have no way of

knowing in advance what the volume of

requests for advisory opinions will be.

However, we estimate that we will

receive approximately 100 requests per

year that will generally require between

3 and 60 hours each to process.

Accordingly, it would likely cost in the

range of $30,000 to $600,000 per year to

issue advisory opinions.

Regulatory Flexibility Act

Under the Regulatory Flexibility Act

(5 U.S.C. 601–612), if a rule has a

significant economic effect on a

substantial number of small businesses

the Secretary must specifically consider

the effects of the rule on small business

entities and analyze regulatory options

that could lessen the impact of the rule.

As stated above, this rule does not

address the substance of the fraud and

abuse statutes or the substance of

advisory opinions which may be issued

in the future. It describes the process by

which an individual or entity may

receive an opinion about the application

of these statutes to particular business

practices. The aggregate economic

impact of this rulemaking on small

business entities should, therefore, be

minimal. There will, however, be costs

involved in filing requests for opinions

by OIG. Those costs will vary depending

on the complexity of the request.

Compared to the costs of seeking private

legal advice, it would appear that fees

charged for the OIG’s review will not be

substantial. Furthermore, the

requirement that applicants pay costbased fees for advisory opinions is not

a product of this rulemaking; it is

prescribed by statute. This rule merely

lays out the procedures for such costs to

be paid. Thus, we have concluded, and

the Secretary certifies, that this final

rule will not have a significant

economic impact on a substantial

number of small business entities, and

that a regulatory flexibility analysis is

not required for this rulemaking.

V. Paperwork Reduction Act

A. Introduction

In order to provide appropriate

advisory opinions, the OIG has specified

certain information from the parties

who request advisory opinions. Under

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

Reduction Act of 1995, we are required

to solicit public comments and secure

final approval from OMB on these

information collection requirements. In

the interim final regulations published

on February 19, 1997, we indicated that

§§ 1008.18, 1008.36(b) and 1008.37

through 1008.40, along with a listing of

voluntary preliminary questions,

specifically contained information

collection requirements that required

approval by OMB. As a result, the OIG

published a Federal Register notice on

March 21, 1997 (62 FR 13621)

specifically requesting comments on

these information collection activities.

The information collection requirements

set forth in the interim final rule were

subsequently approved by OMB in

September, 1997 under control number

0990–0213. OMB also approved a set of

preliminary questions which provide

guidance as toe what should be

included in a request for an advisory

opinion.

B. Discussion of Revised Information

Collection Requirements

This final rulemaking is now easing or

streamlining a number of these

information collection activities in

response to public comments received

on the interim final regulations.

Specifically, as indicated in this

preamble, we are revising § 1008.36(b),

with respect to the submission of a

request, to permit parties to submit only

those portions of documents relevant to

the arrangement at issue, and describe

in general terms those portions of the

documents that have been withheld. In
Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations 38323

addition, to avoid a blanket designation

when a party seeks an advisory opinion,

we have revised § 1008.36(b)(3) to

indicate that requestors must give

explicit designation of the specific

sanction authorities about which an

advisory opinion has been requested.

Also in § 1008.36, we are eliminating

the requirement that requesting parties

submit their Medicare and Medicaid

provider numbers. We are, however,

adding a new paragraph (b)(8) to this

section to require, in accordance with

the Debt Collection Improvement Act of

1996, that requesting parties include

their Taxpayer Identification Number

when requesting an advisory opinion.

Further, new §§ 1008.36(b)(7) and

1008.39(e) are also being added to

require requesting parties to notify the

OIG if they apply to HCFA for an

advisory opinion in accordance with 42

CFR part 411 on the same arrangement

for which they are seeking an OIG

advisory opinion. We believe that this

change will better aid efforts to address

and coordinate both the OIG and the

HCFA advisory opinion processes.

Finally, we are revising or clarifying

certain requirements in § 1008.38(c)

concerning who may sign original (and

additional) certifications submitted by

requestors. Specifically, this revised

section now clearly designates the

appropriate signatory on behalf of

requestors that are limited liability

companies, and clarifies that each

requesting party, and not its attorney,

must provide the required certifications.

C. Proposed Information Collection

Activities

The proposed information collection

requirement described below will be

submitted to the OMB for review and

approval, as required by the Paperwork

Reduction Act. In accordance with the

Paperwork Reduction Act, we are

soliciting public comment on the

collection of the information in

conjunction with section 205 of HIPAA

that are contained in this revised final.

Interested persons are invited to send

comments regarding burden estimates or

any aspect of the collection of

information, including (1) whether the

proposed collection of information is

necessary for the proper performance of

the functions of the agency, including

whether the information will have

practical utility; (2) the accuracy of the

agency’s estimate of the burden of the

proposed collection of information; (3)

ways to enhance the quality, utility and

clarity of the information to be

collected; and (4) ways to minimize the

burden of the collection of information

on respondents, including through the

use of automated collection techniques

or other forms of information

technology.

Type of information collection

request: OIG Advisory Opinion

Procedures in 42 CFR Part 1008. Section

205 of HIPAA, Public Law 104–191,

requires the Department to provide

advisory opinions to the public

regarding several categories of subject

matter, including the requestor’s

potential liability under sections 1128,

1128A and 1128B of the Social Security

Act (the Act). The OIG published

interim final regulations in the Federal

Register on February 19, 1997 (62 FR

7350), setting forth the procedures

under which members of the public may

request advisory opinions from the OIG,

and a Federal Register notice on March

21, 1997 (62 FR 13621) that contained

a more thorough discussion of the

information collection activities

associated with the advisory opinion

process. In order to aid potential

requestors and the OIG in providing

opinions under this process, a series of

preliminary questions that may be

answered in an advisory opinion

request was developed by the OIG.

These preliminary questions remain

voluntary. The information collection

requirements in the interim final rule

and the preliminary questions were

approved by OMB under control

number 0990–0213.

The aggregate information burden for

the information collection requirements

contained in these revised final

regulations is set forth below.

Respondents: The ‘‘respondents’’ for

the collection of information described

in the OIG rulemaking will be selfselected individuals and entities that

choose to submit request for advisory

opinions to the OIG. We anticipate that

the respondents will include many

types of health care providers, from sole

practitioner physicians to large

diversified publicly-traded corporations.

Estimated number of respondents:

500. Most individuals and entities that

provide medical services that may be

paid for by Medicare, Medicaid or

Federal health care programs could

potentially have questions regarding one

of the subject matters about which the

OIG will issue advisory opinions. In

reality, we believe that the number of

requestors will be a small fraction of

such providers.

Over the past several years, the Office

of the General Counsel, Inspector

General Division has answered

telephone inquires from individuals and

entities seeking informal guidance with

respect to the Medicare and State health

care programs’ anti-kickback statute and

other sanction authorities. Many of the

inquires related to authorities outside

the scope of the advisory opinion

process, such as the self-referral

provisions of section 1877 of the Act. In

addition, we believe that most of the

inquiries received have been of a nature

that the caller or requestor would be

unlikely to request a formal written

advisory opinion on the subject matter.

Many inquiries related to rather simple

and straight-forward matters that could

have been researched by private counsel

at relatively minor expense.

Nevertheless, the rate of telephone

inquiries form a starting point for

estimating point for estimating the

potential number of advisory opinion

requests.

We estimate that the OIG received an

average of six related telephone

inquiries per day over the past several

years. Using that history as a general

guide and benchmark, we estimate an

annual number of 500 respondents.

Obviously, the actual number of

requests could be larger since, for the

first time, formal written opinions are

available. Conversely, the number of

inquiries could be less based on

combination of several unquantifiable

reasons, including the desire not to have

one’s arrangement be subject to scrutiny

by the OIG (following issuance of the

opinion) and the general public.

Estimated number of responses per

respondent: One.

Estimated total annual (hour) burden

on respondents: 5,000 hours. We believe

that the burden of preparing requests for

advisory opinions will vary widely

depending upon the differences in the

size of the entity making the request and

the complexity of the advice sought. We

estimate that the average burden for

each submitted request for an advisory

opinion will be in the range of 2 to 40

hours. We further believe that the

burden for most request will be closer

to the lower end of this range, with an

average burden of approximately 10

hours per respondent.

The OIG is requiring requests for

advisory opinions to involve actual or

intended fact scenarios. We anticipate

that most requests will involve business

arrangements into which the requesting

party intends to enter. Because the facts

will relate to business plans, the

requesting party will have collected and

analyzed all, or almost all, of the

information we will need to collect to

review the request. Therefore, in order

to request an advisory opinion, in many

instances the requestor will simply have

need to compile already collected

information for our examination. In

some cases, the requestor may need to

expend a more significant amount of

time and cost in preparing a submission

related to more complex arrangements
38324 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations

that involve a large number of parties or

participants.

Estimated annual cost burden on

respondents (in addition to the hour

burden): $1,000,000. In addition to the

hour burden on respondents discussed

above, some respondents may incur

additional information collection costs

related to the purchase of outside

professional services, such as attorneys

or consultants. We believe that the cost

burden related to such outside

assistance will vary from zero to 40

hours per request, with an average of 10

hours. At the rate of $200 per hour, this

total burden would amount to

$1,000,000.

Authority: Section 3506 of the

Paperwork Reduction Act of 1995, 44

U.S.C. Chapter 35, as amended.

Interested persons are invited to

submit comments regarding this

collection of information. Comments on

this information collection should refer

to the document identifier code OIG–

10–F, and should be sent both to:

Cynthia Agens Bauer, OS Reports

Clearance Officer, Room 503H,

Humphrey Building, 200 Independence

Avenue, S.W., Washington, D.C. 20201,

FAX: (202) 690–6352; and Allison

Herron Eydt, OIG Desk Officer, Office of

Management and Budget, Room 10235,

New Executive Office Building, 725

17th Street, N.W., Washington, D.C.

20053, FAX: (202) 395–6974.

To request more information on the

project or to obtain a copy of the

information collection plans, please

contact the OS Reports Clearance

Officer, (202) 690–6207. Written

comments should be received by [60

days from date of publication in the

Federal Register], but in order to

expedite full consideration of any

concerns we recommend that comments

be submitted as soon as possible within

the first 30 days. After due

consideration of all timely-filed public

comments on these revised information

collection activities, we will re-submit

these sections to OMB for their approval

under the Paperwork Reduction Act.

These sections will not become effective

until cleared by OMB. In the interim,

requestors should rely on the

preliminary questions issued by the OIG

on which OMB has already granted

approval.

List of Subjects in 42 CFR Part 1008

Administrative practice and

procedures, Fraud, Grant programs—

health, Health facilities, Health

professions, Medicaid, Medicare,

Penalties.

Accordingly, the interim final rule

adding 42 CFR part 1008, which was

published at 62 FR 7350 on February 19,

1997, is adopted as a final rule with the

following changes:

PART 1008—[AMENDED]

1. The authority citation for part 1008

continues to read as follows:

Authority: 42 U.S.C. 1320a–7d(b).

2. Section 1008.1 is amended by

revising paragraphs (a) and (b) to read

as follows:

§ 1008.1 Basis and purpose.

(a) This part contains the specific

procedures for the submission of

requests by an individual or entity for

advisory opinions to, and the issuance

of advisory opinions by, the OIG, in

consultation with the Department of

Justice (DoJ), in accordance with section

1128D(b) of the Social Security Act

(Act), 42 U.S.C. 1320a–7d(b). The OIG

will issue such advisory opinions based

on actual or proposed factual

circumstances submitted by the

requesting individual or entity, or by

counsel on behalf of the requesting

individual or entity, provided all other

requirements of this part are satisfied

(including the requirement that the

requesting individual or entity provide

the certifications required in accordance

with § 1008.38 of this part).

(b) An individual or entity may

request an advisory opinion from the

OIG regarding any of five specific

subject matters described in § 1008.5 of

this part.

* * * * *

3. Section 1008.5 is amended by

republishing introductory paragraph (b)

and by revising paragraph (b)(1) to read

as follows:

§ 1008.5 Matters subject to advisory

opinions.

* * * * *

(b) Exceptions. The OIG will not

address through the advisory opinion

process—

(1) What the fair market value will be,

or whether fair market value was paid

or received, for any goods, services or

property; or

* * * * *

4. Section 1008.15 is amended by

revising introductory paragraph (c) and

paragraph (c)(3) to read as follows:

§ 1008.15 Facts subject to advisory

opinions.

* * * * *

(c) Advisory opinion request will not

be accepted, and/or opinions will not be

issued when—

* * * * *

(3) An informed opinion cannot be

made, or could be made only after

extensive investigation, clinical study,

testing, or collateral inquiry.

5. Section 1008.18 is amended by

revising paragraph (b) to read as follows:

§ 1008.18 Preliminary questions

suggested for the requesting party.

* * * * *

(b) Questions the OIG suggests that

the requestor address may be obtained

from the OIG. Requests should be made

in writing, specify the subject matter,

and be sent to the headquarter offices of

the OIG.

* * * * *

6. Section 1008.31 is amended by

revising paragraphs (c), (d)(1), (d)(2),

(d)(3), and (e)(2); by redesignating

paragraphs (d)(2) through (d)(5) as

paragraphs (d)(3) through (d)(6)

respectively; and by adding a new

paragraph (d)(2) to read as follows:

§ 1008.31 OIG fees for the cost of advisory

opinions.

* * * * *

(c) Calculation of costs: Prior to the

issuance of the advisory opinion, the

OIG will calculate the costs incurred by

the Department in responding to the

request. The calculation will include the

costs of salaries and benefits payable to

attorneys and others who have worked

on the request in question, as well as

administrative and supervisory support

for such person. The OIG has the

exclusive authority to determine the

cost of responding to a request for an

advisory opinion and such

determination is not reviewable or

waiveable.

(d) Agreement to pay all costs. (1) By

submitting the request for an advisory

opinion, the requestor agrees, except as

indicated in paragraph (d)(4) of this

section, to pay all costs incurred by the

OIG in responding to the request for an

advisory opinion.

(2) In its request for an advisory

opinion, the requestor may request a

written estimate of the cost involved in

processing the advisory opinion. Within

10 business days of receipt of the

request, the OIG will notify in writing

of such estimate. Such estimate will not

be binding on the Department, and the

actual cost to be paid may be higher or

lower than estimated. The time period

for issuing the advisory opinion will be

tolled from the time the OIG notifies the

requestor of the estimate until the OIG

receives written confirmation from the

requestor that the requestor wants the

OIG to continue processing the request.

Such notice may include a new or

revised triggering dollar amount, as set

forth in paragraph (d)(3) of this section.

(3) In its request for an advisory

opinion, the requestor may designate a
Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations 38325

1The requestor is under an affirmative obligation

to make full and true disclosure with respect to the

facts regarding the advisory opinion being

requested.

triggering dollar amount. If the OIG

estimates that the costs of processing the

advisory opinion request have reached,

or are likely to exceed, the designated

triggering dollar amount, the OIG will

notify the requestor. The requestor may

revise its designated triggering dollar

amount in writing in its response to

notification of a cost estimate in

accordance with paragraph (d)(2) of this

section.

* * * * *

(e) Fees for outside experts. * * *

(2) If the OIG determines that it is

necessary to obtain expert advice to

issue a requested advisory opinion, the

OIG will notify the requestor of that fact

and provide the identity of the

appropriate expert and an estimate of

the costs of the expert advice.

7. Section 1008.33 is amended by

revising paragraphs (b) and (c) to read

as follows:

§ 1008.33 Expert opinions from outside

sources.

* * * * *

(b) The time period for issuing an

advisory opinion will be tolled from the

time that the OIG notifies the requestor

of the need for an outside expert

opinion until the time the OIG receives

the necessary expert opinion.

(c) Once payment is made for the cost

of the expert opinion, as set forth in

§ 1008.31(e) of this part, either directly

to the expert or otherwise, the OIG will

arrange for a prompt expert review of

the issue or issues in question.

Regardless of the manner of payment,

the expert’s work and opinion will be

subject to the sole direction of the OIG.

8. Section 1008.36 is amended by

republishing introductory paragraph (b);

by revising paragraphs (b)(1), (b)(3), and

(b)(4); by deleting existing paragraph

(b)(5); by redesignating (b)(6) and (b)(7)

as (b)(5) and (b)(6) respectively and

revising them; and by adding new

paragraphs (b)(7) and (b)(8) to read as

follows:

§ 1008.36 Submission of a request.

* * * * *

(b) Each request for an advisory

opinion must include—

(1) To the extent known to the

requestor, the identities, including the

names and addresses, of the requestor

and of all other actual and potential

parties to the arrangement, that are the

subject of the request for an advisory

opinion;

* * * * *

(3) A declaration of the subject

category or categories as described in

§ 1008.5 of this part for which the

advisory opinion is requested. To the

extent an individual or entity requests

an advisory opinion in accordance with

§§ 1008.5(a)(3) or (a)(5) of this part, the

requesting individual or entity should

identify the specific subsections of

sections 1128, 1128A or 1128B of the

Act or the specific provision of

§ 1001.952 of this chapter about which

an advisory opinion is sought:

(4) A complete and specific

description of all relevant information

bearing on the arrangement for which an

advisory opinion is requested and on

the circumstances of the conduct,1

including—

(i) Background information,

(ii) For existing arrangements,

complete copies of all operative

documents,

(iii) For proposed arrangements,

complete copies of all operative

documents, if possible, and otherwise

descriptions of proposed terms, drafts,

or models of documents sufficient to

permit the OIG to render an informed

opinion,

(iv) Detailed statements of all

collateral or oral understandings, if any,

and

(v) If applicable, a designation of trade

secrets or confidential commercial or

financial information in the manner

described in 45 CFR 5.65;

(5) Signed certifications by the

requestor(s), as described in § 1008.37 of

this part;

(6) A check or money order payable

to the Treasury of the United States in

the amount of $250, as discussed in

§ 1008.31(b) of this part;

(7) A declaration regarding whether

an advisory opinion in accordance with

part 411 of this title has been or will be

requested from HCFA about the

arrangement that is the subject of the

advisory opinion request; and

(8) Each requesting party’s Taxpayer

Identification Number. (Approved by

the Office of Management and Budget

under control number 0990–0213)

9. Section 1008.37 is revised to read

as follows:

§ 1008.37 Disclosure of ownership and

related information.

Each individual or entity requesting

an advisory opinion must supply full

and complete information as to the

identity of each entity owned or

controlled by the individual or entity,

and of each person with an ownership

or control interest in the entity, as

defined in section 1124(a)(1) of the

Social Security Act (42 U.S.C. 1302a–

3(a)(1)) and part 420 of this chapter.

(Approved by the Office of Management

and Budget under control #0990–0213)

10. Section 1008.38 is amended by

revising paragraphs (a) and (b),

introductory paragraph (c), paragraphs

(c)(2) and (c)(3); and by adding a new

paragraph (c)(4) to read as follows:

§ 1008.38 Signed certifications by the

requestor.

(a) Every request must include the

following signed certification from all

requestors: ‘‘With knowledge of the

penalties for false statements provided

by 18 U.S.C. 1001 and with knowledge

that this request for an advisory opinion

is being submitted to the Department of

Health and Human Services, I certify

that all of the information provided is

true and correct, and constitutes a

complete description of the facts

regarding which an advisory opinion is

sought, to the best of my knowledge and

belief.’’

(b) If the advisory opinion relates to

a proposed arrangement, the request

must also include the following signed

certification from all requestors: ‘‘The

arrangement described in this request

for an advisory opinion is one that [the

requestor(s)] in good faith plan(s) to

undertake.’’ This statement may be

made contingent on a favorable OIG

advisory opinion, in which case, the

phrase ‘‘if the OIG issues a favorable

advisory opinion’’ should be added to

the certification.

(c) The certification(s) must be signed

by—

* * * * *

(2) The chief executive officer, or

comparable officer, of the requestor, if

the requestor is a corporation;

(3) The managing partner of the

requestor, if the requestor is a

partnership; or

(4) The managing member, or

comparable person, if the requestor is a

limited liability company.

11. Section 1008.39 is amended by

revising paragraph (c) and by adding

new paragraphs (e) and (f) to read as

follows:

§ 1008.38 Additional information.

* * * * *

(c) Additional information should be

provided in writing and certified to be

a true, correct and complete disclosure

of the requested information in a

manner equivalent to that described in

§ 1008.38 of this part.

* * * * *

(e) Requesting parties are required to

notify the OIG if they request an

advisory opinion in accordance with

part 411 of this title from HCFA about

the arrangement that is the subject of

their advisory opinion request.
38326 Federal Register / Vol. 63, No. 136 /Thursday, July 16, 1998 /Rules and Regulations

(f) Where appropriate, after receipt of

an advisory opinion request, the OIG

may consult with the requesting parties

to the extent the OIG deems necessary.

12. Section 1008.41 is amended by

revising paragraph (a); and by

republishing introductory paragraph (b)

and revising paragraph (b)(3) to read as

follows:

§ 1008.41 OIG acceptance of the request.

(a) Upon receipt of a request for an

advisory opinion, the OIG will promptly

make an initial determination whether

the submission includes all of the

information the OIG will require to

process the request.

(b) Within 10 working days of receipt

of the request, the OIG will—

* * * * *

(3) Formally decline to accept the

request.

* * * * *

13. Section 1008.43 is amended by

revising paragraphs (a), (b) and (c)(2);

and by republishing introductory

paragraph (c)(3) and revising paragraph

(c)(3)(i) to read as follows:

§ 1008.43 Issuance of a formal advisory

opinion.

(a) An advisory opinion will be

considered issued once payment is

received and it is dated, numbered, and

signed by an authorized official of the

OIG.

(b) An advisory opinion will contain

a description of the material facts

provided to the OIG with regard to the

arrangement for which an advisory

opinion has been requested. The

advisory opinion will state the OIG’s

opinion regarding the subject matter of

the request based on the facts provided

to the OIG. If necessary, to fully describe

the arrangement, the OIG is authorized

to include in the advisory opinion the

material facts of the arrangement,

notwithstanding that some of these facts

could be considered confidential

information or trade secrets within the

meaning of 18 U.S.C. 1905.

(c) * * * * *

(2) If the 60th day falls on a Saturday,

Sunday, or Federal holiday, the time

period will end at the close of the next

business day following the weekend or

holiday;

(3) The 60 day period will be tolled

from the time the OIG—

(i) Notifies the requestor that the costs

have reached, or are likely to exceed,

the triggering amount until the time

when the OIG receives written notice

from the requestor to continue

processing the request;

* * * * *

14. Section 1008.45 is revised to read

as follows:

§ 1008.45 Rescission, termination or

modification.

(a) Any advisory opinion given by the

OIG is without prejudice to the right of

the OIG to reconsider the questions

involved and, where the public interest

requires, to rescind, terminate or modify

the advisory opinion. Requestors will be

given a preliminary notice of the OIG’s

intent to rescind, terminate or modify

the opinion, and will be provided a

reasonable opportunity to respond. A

final notice of rescission, termination or

modification will be given to the

requestor so that the individual or entity

may discontinue or modify, as the case

may be, the course of action taken in

accordance with the OIG advisory

opinion.

(b) For purposes of this part—

(1) To rescind an advisory opinion

means that the advisory opinion is

revoked retroactively to the original date

of issuance with the result that the

advisory opinion will be deemed to

have been without force and effect from

the original date of issuance. Recission

may occur only where relevant and

material facts were not fully, completely

and accurately disclosed to the OIG.

(2) To terminate an advisory opinion

means that the advisory opinion is

revoked as of the termination date and

is no longer in force and effect after the

termination date. The OIG will not

proceed against the requestor under this

part if such action was promptly,

diligently, and in good faith

discontinued in accordance with

reasonable time frames established by

the OIG after consultation with the

requestor.

(3) To modify an advisory opinion

means that the advisory opinion is

amended, altered, or limited, and that

the advisory opinion continues in full

force and effect in modified form

thereafter. The OIG will not proceed

against the requestor under this part if

such action was promptly, diligently,

and in good faith modified in

accordance with reasonable time frames

established by the OIG after

consultation with the requestor.

15. Section 1008.47 is amended by

revising paragraphs (c) and (d) to read

as follows:

§ 1008.47 Disclosure.

* * * * *

(c) Any pre-decisional document, or

part of such pre-decisional document,

that is prepared by the OIG, DoJ, or any

other Department or agency of the

United States in connection with an

advisory opinion request under the

procedures set forth in this part

generally will be exempt from

disclosure under 5 U.S.C. 552, and will

not be made publicly available.

(d) Documents submitted by the

requestor to the OIG in connection with

a request for an advisory opinion may

be available to the public in accordance

with 5 U.S.C. 552 through procedures

set forth in 45 CFR part 5.

* * * * *

16. Section 1008.55 is amended by

revising paragraph (b) to read as follows:

§ 1008.55 Admissibility of evidence.

* * * * *

(b) An advisory opinion may not be

introduced into evidence by a person or

entity that was not the requestor of the

advisory opinion to prove that the

person or entity did not violate the

provisions of sections 1128, 1128A or

1128B of the Act or any other law.

17. Section 1008.59 is amended by

revising paragraph (a) to read as follows:

§ 1008.59 Range of the advisory opinion.

(a) An advisory opinion will state

only the OIG’s opinion regarding the

subject matter of the request. If the

arrangement for which an advisory

opinion is requested is subject to

approval or regulation by any other

Federal, State or local government

agency, such advisory opinion may not

be taken to indicate the OIG’s views on

the legal or factual issues that may be

raised before that agency. The OIG will

not provide any legal opinion on

questions or issues regarding an

authority which is vested in other

Federal, State or local government

agencies.

* * * * *

Dated: February 6, 1998.

June Gibbs Brown,

Inspector General, Department of Health and

Human Services.

Approved: March 24, 1998.

Donna E. Shalala,

Secretary.

[FR Doc. 98–18874 Filed 7–15–98; 8:45 am]

BILLING CODE 4150–04–M

FEDERAL EMERGENCY

MANAGEMENT AGENCY

44 CFR Part 65

[Docket No. FEMA–7248]

Changes in Flood Elevation

Determinations

AGENCY: Federal Emergency

Management Agency (FEMA).

ACTION: Interim rule.

SUMMARY: This interim rule lists

communities where modification of the