Healthcare fraud costs the government billions of dollars. To minimize this damage, there are a number of laws in place to protect federal healthcare programs and patients. One such law is the federal Anti-Kickback law, which prohibits the exchange of money or anything of value (kickbacks) in return for federal healthcare program referrals, also called remuneration. Remuneration occurs when someone offers, gives, or receives payment for a referral that will involve payments by a federally funded healthcare program, such as Medicare, Medicaid, or Tricare.
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The Anti-Kickback Statute under the False Claims Act
The Anti-Kickback Statute was written broadly, so that in addition to banning actual exchanges, it also bans offers to exchange money for referrals. The Anti-Kickback Statute applies to both parties involved in the transaction, both the party giving the referral and the party receiving the referral.
The Anti-Kickback Statute can be enforced through the False Claims Act for civil liability. Under the False Claims Act, individuals who come forward with information concerning a kickback scheme can share between 15-30% of any money recovered by the government as a result of the lawsuit.
What types of kickbacks are prohibited?
The Anti-Kickback Law defines a kickback as anything of value that is offered or given, either directly or indirectly. Almost any benefit between medical providers can be considered a kickback as shown by the following examples:
Giving cash or reducing or waiving loans or payments in exchange for a government contract or an opportunity to provide services to the government
Paying cash or providing other benefits in exchange for government healthcare program patient referrals
Providing sports tickets, expensive dinners, reduced rent, or other gifts in exchange for Medicare contracts or patients
Safe harbors in the Anti-Kickback Statute
Because the Anti-Kickback Statute was written broadly, Congress added so-called “safe harbors” to keep certain payment practices from being prosecuted. There are currently over 20 safe harbors included in the Anti-Kickback Statute. Examples of safe harbors include:
- Price discounts that are properly disclosed to the government
- Sale of a medical practice
- Costs associated with the operation of ambulatory surgical centers
- Referral arrangements for specialty services
- Payments made from an employer to a bona fide employee
- Interest paid on investments
- Joint ventures in underserved areas, including rural and urban areas
Physician self-referrals and the Stark Law
In 1989, Congress passed the Stark Law, also known as the Physician Self-Referral Law. Like the federal Anti-Kickback Statute, the Stark Law can also be enforced through the False Claims Act, and it awards 15-30% of monies recovered by the government to the qui tam relator, or whistleblower.
The Stark Law also prohibits kickbacks, but with more specificity. Initially, the law barred physicians from making Medicare patient referrals to clinical laboratories with which either the physician or an immediate family member of the physician had a financial relationship. Under the Stark Law, a financial relationship exists when a physician has an ownership or investment interest in the entity or when there is a compensation arrangement between the physician and the entity.
What is a Designated Health Service under the Stark Law?
The purpose of the law as originally written was to stop physicians and their family members from profiting from their own referrals. In 1993, Congress extended the Stark Law to include referrals for certain medical services, or designated health services (DHS), in addition to patient referrals. The scope of a financial relationship as defined within the Stark Law was also broadened at this time to include direct and indirect ownership, investment interests, and other compensation arrangements.
The following twelve types of health services qualify as designated health services. Only referrals for these specific services are banned.
- Clinical laboratory services
- Physical therapy services
- Occupational therapy services
- Radiology services
- Radiation therapy services and supplies
- Durable medical equipment and supplies
- Parenteral and enteral nutrients, equipment, and supplies
- Prosthetics, orthotics, and prosthetic devices and supplies
- Home health services
- Outpatient prescription drugs
- Inpatient and outpatient hospital services
- Outpatient speech-language pathology services