The five most important Federal fraud and abuse laws that apply to physicians and some other health care providers are the False Claims Act (FCA), the Anti-Kickback Statute (AKS), the Physician Self-Referral Law (Stark law), the Exclusion Authorities, and the Civil Monetary Penalties Law (CMPL). Government agencies, including the Department of Justice, the Department of Health & Human Services Office of Inspector General (OIG), and the Centers for Medicare & Medicaid Services (CMS), are charged with enforcing these laws.
It is crucial to understand these laws not only because following them is the right thing to do, but also because violating them could result in criminal
penalties, civil fines, exclusion from the Federal health care programs, or loss of your medical license from your State medical board
Here is a brief summary of the federal Anti-Kickback Statute (AKS):
The Statute: You'll find it at 42 United States Code § 1320a-7b(b)
The Prohibition: It prohibits offering, paying, soliciting or receiving anything of value (includes non-monetary items such as free or below market rent, excessive compensation for medical directorships, excessive relocation agreements, payment for employees, expensive meals or hotels, and so on) to induce or reward referrals or generate federal health care program business. Includes Medicare, Medi-Cal (Medicaid), Tricare or anything federally funded. Includes not collecting co-pays or deductibles from patients where the safe harbor is not met.
Items or Services: Any items or services fall within this statute. Includes relationships with other providers, vendors, hospitals and so on.
Intent: Intent must be proven (knowing and willful). Intent can be shown if you act with deliberate ignorance or reckless disregard of the truth. This means you cannot hide your head in the sand and avoid liability.
Penalties: Criminal and Civil
Criminal: Fines up to $25,000 per violation Up to a 5 year prison term per violation
Civil/Administrative: False Claims Act liability Civil monetary penalties and program exclusion Potential $50,000 CMP per violation
Civil assessment of up to three times amount of kickback
Exceptions: Voluntary safe harbors (this is where compliance is useful to ensure that any business arrangements with referral sources meet a safe harbor).
Safe harbors protect certain payment and business practices that could otherwise implicate the AKS from criminal and civil prosecution. To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor and satisfy all of its requirements. Some safe harbors address personal services and rental agreements, investments in ambulatory surgical centers, waiving patient co-pays or deductibles, and payments to bona fide employees
Key Question to ask yourself:
Any time a health care business to whom you can refer business offers something to you (especially if free or at below fair market value), you always should ask yourself, “Why?”
For example, if a DME supplier offers to provide lunches for your office on a regular basis, pay above market rent for space or offer some incentive (even if it is not cash), you should question whether the supplier is trying to induce you to refer your patients to that vendor. If a laboratory offers to decorate your patient waiting room, for example, you should suspect that it is trying to induce you to send your lab business its way and determine if this offer is allowed.
The Government does not need to prove patient harm or financial loss to the programs to show that a physician violated the AKS. A physician can be guilty of violating the AKS even if the physician actually rendered the service and the service was medically necessary.
Taking money or gifts from a drug or device company or a durable medical equipment (DME) supplier is not justified by the argument that you would have prescribed that drug or ordered that wheelchair even without a kickback.
The kickback prohibition applies to all sources of referrals, even patients. For example, where the Medicare and Medicaid programs require patients to
pay copays for services, you are generally required to collect that money from your patients. Routinely waiving these copays could implicate the AKS and you may not advertise that you will forgive copayments. However, you are free to waive a copayment if you make an individual determination that the patient cannot afford to pay or if your reasonable collection efforts fail. It is also legal to provide free or discounted services to uninsured people.
Compliance - Obtain Legal Opinion. Obtaining an opinion that a business relationship or investment does not fall within the AKS helps negate the intent needed to prove a violation and provides a reliance on the advice of counsel. However, you must disclose all facts to counsel and retain someone knowledgeable in the industry. Having a second year attorney with little to no experience will typically not provide the type of opinion needed for a safe harbor opinion.