• Federal Anti-Kickback Statute
  • March 7, 2012 | Author: David S. Barmak
  • Law Firm: Law Offices Of David S. Barmak, LLC - Princeton Office
  • What is the harm in giving a bottle of champagne with caviar to a favorite physician who refers many patients to a skilled nursing facility? Will the penalties be severe? YES

    Under the recently passed Patient Protection and Affordable Care Act, the necessity for the government to prove “intent” to induce a referral has been eliminated. The penalties include $50,000 per violation (that’s right - just one violation can yield a penalty can be $50,000!) plus an assessment of three times the value of the unlawful remuneration. If the federal government believes that there is a pattern of kickbacks, it might impose a Corporate Integrity Agreement as well as possible exclusion from participation in federal and state health care programs. In addition, there is always the possibility of a potential qui tam action filed against the health care provider or supplier by an employee or independent contractor. As always, an effective compliance program is critical in not only maximizing the detection in advance of possible kickback situations but in also persuading the government that any improprieties were inadvertent, that the healthcare provider continues to make appropriate good faith efforts at complying with the federal anti-kickback statue and therefore the provider or supplier can continue to self-monitor rather than require the imposition of an onerous Corporate Integrity Agreement.

    The federal anti-kickback statute prohibits individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid or any other federally funded program (except the Federal Employees Health Benefits Program).

    There are exceptions. The Office of Inspector General (OIG) at the U.S. Department of Health and Human Services issued "safe harbor" rules in 1991, identifying specific types of activities not subject to enforcement actions under the anti-kickback statute as long as various conditions are satisfied.

    The safe harbor rules cover such activities as investments in publicly traded companies, joint ventures, rentals of space or equipment, personal services agreements, sales of practice, discounts and other arrangements.

    Conduct that falls outside a safe harbor does not mean an individual or entity automatically has violated the law. However, compliance with the safe harbor requirements will protect a transaction from anti-kickback scrutiny by the OIG and the Justice Department. Healthcare providers and suppliers should carefully evaluate the unique facts and circumstances of each situation with their compliance attorney.

    The OIG and the Justice Department, as well as state Medicaid Fraud Units have viewed the anti-kickback statute as the primary weapon in their anti-fraud efforts. A violation of the anti-kickback law is a felony offense that carries criminal fines of up to $25,000 per violation, imprisonment for up to five years and exclusion from government health care programs. The government also has an alternate sanction to impose: a civil fine of up to $50,000 for each violation of the statute and an assessment of three times the amount of the kickback.

    A common example of a violation of the anti-kickback statue is the routine waiver of Medicare Part B service copayments for federal program beneficiaries. The OIG has recognized an exception based on an individual's financial hardship or where a "good-faith effort" to collect copayments or deductibles has been made; nevertheless, the OIG assesses those situations case-by-case.

    Many healthcare providers provide "professional courtesy" discounts to other healthcare providers as well as to employees, family members and healthcare provider employees. While there have been no reported cases of prosecution for violation of the anti-kickback statute in this situation, theoretically such action could be construed as a violation of the anti-kickback statute depending upon who the recipient of the professional courtesy and his / her ability to refer patients to the healthcare provider.

    If a healthcare provider shares a fee with another healthcare provider in exchange for a patient referral, this is most definitely a violation of the anti-kickback statue. Fee-splitting may also be considered a separate offense on a state level thereby also subjecting the healthcare provider to possible disciplinary action by a state’s licensing board.

    The best way to protect oneself and one’s practice / entity is to develop and implement an effective compliance program. Consult with your compliance program attorney to review and analyze all relationships with referral sources and ensure that if there is some sort of additional business relationship (renting of space, etc.) that there is full disclosure and that the safe harbor rules are adhered to in order to maximize protection.