Understanding the Anti-Kickback Statute

by Leanne Alvarado and Rrita Osmani

What is the Anti-Kickback Statute?

The Anti-Kickback Statute (“AKS”) (42 U.S.C § 1320a-7b(b)), is a federal law that prohibits healthcare providers from knowingly and willfully offering or accepting any form of remuneration to induce or reward patient referrals for services covered by federally funded health programs, including Medicaid, Medicare, or TRICARE also known as a “kickback.”  Remunerations refer to anything of value such as a gift, money, or service, offered as a form of bribery whether in a direct or indirect, overt or covert, in cash or in-kind manner.

The AKS is an intent-based statute that requires a showing of knowing and willful conduct. Courts have held that a violation may exist where at least “one purpose” of the remuneration is to induce or reward referrals, regardless of whether the arrangement also serves legitimate business objectives.

How Can Healthcare Providers Become Liable Under the Anti-Kickback Statute?

Healthcare providers are responsible for upholding the guidelines of the AKS and acting in accordance with federal guidelines to prevent false claims against the federal government.  Offering remuneration of any form to healthcare professionals in exchange for referrals is considered prohibited under the AKS.  Such prohibited conduct may include providing healthcare providers with financial incentives, improper benefits, payments for referrals, and/or excessive compensation.

Routine arrangements such as speaker programs can trigger AKS liability claims if they improperly influence clinical decision making.  Services provided by healthcare workers are conducted in a manner that serves the best interests of any given patient.  When remuneration is tied to referrals, it may improperly influence medical decision-making and increase the risk of fraud, abuse, and compromised patient care, which the AKS is designed to prevent.

Safe Harbor Provisions Under the Anti-Kickback Statute

In an effort to protect legitimate business arrangements from being prosecuted under the AKS, the Office of Inspector General (OIG) of the U.S. Department of Health and Human Services (HHS), created safe harbor provisions for the AKS (42 CFR § 1001.952).  Safe harbor provisions refer to legal clauses that offer protection from liability or penalties if set conditions are met.

The safe harbor provisions under the AKS include regulations that protect business arrangements that potentially implicate the statute because they are unlikely to cause fraud or abuse.  Protections under safe harbor provisions can prevent lengthy and expensive criminal and civil prosecution as well as ensure continued coverage by federally funded health insurance programs. Qualification for safe harbor provisions requires that individuals comply with all requirements set forth by the OIG. There are currently over 35 safe harbor provisions under the AKS. Common AKS safe harbors include arrangements involving:

• Investment Interests
• Group Purchasing Organizations
• Space Rentals
• Equipment Rentals
• Personal services and management contracts
• Employee Compensation arrangements (“Bona fide Employee”)
• Practioner Recruitment

Enforcement and Penalties for Violating the Anti-Kickback Statute

Healthcare providers, pharmaceuticals, medical device companies, and any individual or entity that knowingly and willfully accepts or provides remuneration for patient referrals will be subject to penalties imposed by the AKS.  Healthcare professionals and other third-party groups can avoid potential liability under the AKS by adhering to various practices including,

• Structuring business arrangements to align with safe harbor provision regulations
• Ensuring all payments are made under fair market value (“FMV”) rather than a volume of referrals
• Maintaining thorough documentation of all business transactions and referral transactions
• Conducting routine compliance training and business audits
• Seek legal advice and review regarding referral related financial arrangements

Violations of the AKS are considered criminal felonies punishable by up to 10 years of imprisonment, criminal fines of up to $100,000 per violation, and exclusion from participation in federal health care programs. Additionally, individuals or entities that receive or provide remunerations are subject to civil monetary penalties of up to $100,000 per kickback and assessments of up to three times the amount of remuneration. Violations under the AKS may also serve as the basis for liability under the False Claims Act. Such liability can expose providers to treble damages and additional statutory penalties that increase annually.

Frequently Asked Questions:

Does the Anti-Kickback Statute only apply to physicians?

No, the AKS applies to a wide variety of individuals and entities that submit claims to federally funded health insurance programs. Examples include pharmaceutical companies, medical device manufacturers, hospitals, clinics, laboratories, or third-party marketers.

Are all referral payments illegal under the AKS?

No, specific referral agreements can qualify for protections under a safe harbor provision. The given referral agreement must meet specific requirements under 42 CFR § 1001.952 (f) or be structured for legitimate business purposes without improper intent.

Can AKS violations lead to False Claims Act liability?

Yes, claims that have been submitted to federal health insurance programs that result from AKS violations can be considered false claims.

Are compliance mistakes considered intentional fraud?

The OIG may not always consider compliance mistakes as intentional. Actions taken after identifying the compliance mistake can be considered when determining penalties. However, unintentional violations can also result in significant civil liability.

Legal Help for Anti-Kickback Statute Violations

If you have any questions regarding potential liability with respect to AKS enforcement, please contact Miller Shah LLP.  Our team of attorneys and supporting staff have extensive experience with litigating False Claims Act cases associated with violations of the Anti-Kickback Statute.