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What Health Care Providers Need to Know about the Anti-Kickback Statute Safe Harbors

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The Anti-Kickback Statute (AKS) prohibits health care providers from paying or receiving compensation for referrals involving federal program beneficiaries. However, the AKS “safe harbors” scale back the statute’s broad prohibitions in many circumstances.

For health care providers who bill Medicare, Medicaid, Tricare, and other government benefit programs for patient services, supplies, and equipment, the Anti-Kickback Statute (AKS) presents one of the greatest risks for federal enforcement. The AKS prohibits health care providers from paying or receiving compensation for referrals involving federal program beneficiaries, and it includes provisions for both civil and criminal penalties.

However, while the AKS’s statutory language is extremely broad (prohibiting the offering, soliciting, payment, or acceptance of all forms of remuneration in connection with program referrals), this language is subject to a number of “safe harbor” provisions. These safe harbors exclude certain types of transactions and compensation-based relationships from AKS enforcement, and they can provide critical protection for providers facing federal health care fraud investigations.

3 Basic Requirements for AKS Safe Harbor Protection

While each of the various safe harbors under the Anti-Kickback Statute has its own unique and highly-specific requirements, there are certain overarching principles behind the AKS’s safe harbor provisions. Understanding these principles provides a foundation for making sense of the dense, confusing, and seemingly inconsistent language of the safe harbors as compared to the rest of the statute:

1. Compensation May Not Be Tied to the Volume or Value of Referrals

There is nothing inherently wrong with entering into a compensation-based relationship, and there is also nothing inherently wrong with providing patient referrals. It is when compensation becomes linked to the volume or value of referrals that the Department of Health and Human Services’ Office of Inspector General (OIG) takes notice.

The Anti-Kickback Statute’s safe harbor provisions permit compensation-based relationships between parties that provide one another with referrals, and there is even a specific safe harbor for “referral services.” The key to avoiding AKS liability (or one of the keys) is to ensure that the relationship does not incentivize referrals for reasons other than serving patients’ best interests.

2.  All Services Must Be Billed in Accordance with the Applicable Program Guidelines

In many instances, compensation-based relationships will trigger federal government scrutiny because they involve violations of program billing guidelines. For example, a provider may separately bill for ancillary services that are subject to bundling and then pay a fee that constitutes improper “remuneration” under the AKS. Health care providers are subject to a complex web of federal laws and regulations. And despite the potential penalties, ensuring AKS compliance is just a small part of the process.

3. Health Care Providers May Not Treat Program Beneficiaries in a Discriminatory Manner

A third reason why federal authorities closely scrutinize referral fees (or “kickbacks”) is because they often result in patients being treated in a discriminatory manner. The presumption is that providers will be more willing to provide treatment in circumstances where they receive referral fees than in circumstances where they don’t.

When structuring compensation-based relationships with potential Anti-Kickback Statute implications, health care providers must be sure to address this concern and make clear that any payments will not result in disparate patient care.

Examples of Frequently-Used Anti-Kickback Statute Safe Harbors

With these general principles in mind, let’s look at some of the specific Anti-Kickback Statute safe harbors:

  • Bona Fide Employment Relationships – The Anti-Kickback Statute does not prohibit health care providers from entering into bona fide employment relationships. If you hire an employee (whether a physician, physician assistant, nurse, or administrator) and the employment relationship results in new business for your practice, this will not trigger AKS liability as long as the employee’s compensation is based upon the non-referral services he or she provides to your practice.
  • Personal Services and Management Contracts – Similar to bona fide employment relationships, arms-length personal services and management contracts qualify for safe harbor protection as long as they do not involve direct compensation for referrals. Under 42 CFR 1001.952, there are seven specific requirements for a personal services or management contract to satisfy the safe harbor.
  • Referral Services – Referral services exist within the health care industry thanks to a safe harbor that has four specific requirements for eligibility: (i) no participant exclusion, (ii) equal assessment of payment across participants, (iii) no restrictions on medical services, and (iv) compliance with five mandatory disclosures.
  • Referral Arrangements for Specialty Services – 42 CFR 1001.952 also includes specific provisions for referrals involving specialty services. These referrals must satisfy four conditions in order to qualify for safe harbor protection.
  • Group Purchasing Organizations – Group purchasing organizations (GPOs) qualify for safe harbor protection if: (i) the GPO has a written agreement with each participating individual or entity, and (ii) the GPO discloses vendor rebates to the government as required by law.
  • Practitioner Recruitment – Bringing a new practitioner in-house has potential AKS implications. However, these implications can be avoided by satisfying the nine conditions laid out in the “practitioner recruitment” safe harbor under 42 CFR 1001.952.

Additional safe harbors exist for:

  • Investment interests
  • Facility rentals
  • Equipment rentals
  • Sale of health care practices
  • Warranties
  • Discounts
  • Waiver of coinsurance and deductibles
  • Increased coverage or reduced premiums offered by health plans
  • Price reductions offered to health plans
  • Obstetrical malpractice insurance subsidies
  • Investments in group practices
  • Cooperative hospital service organizations
  • Ambulatory surgical centers
  • Price reductions offered to eligible managed care organizations
  • Health centers
  • Electronic prescribing items and services
  • Electronic health records items and services
  • Federally Qualified Health Centers and Medicare Advantage Organizations
  • Medicare Coverage Gap Discount Program
  • Local transportation

Keep in mind, it simply is not possible to cover the nuances of any one of the Anti-Kickback Statute’s safe harbors in a blog post. Many of the safe harbor provisions are pages long, and determining whether a particular relationship or transaction qualifies for protection requires a detailed assessment of the specific facts and circumstances involved. If you are facing a federal investigation under the AKS, it is important that you obtain competent legal advice as soon as possible.

Contact Us about Your Anti-Kickback Statute Investigation

Dr. Nick Oberheiden is a federal health care fraud defense attorney who represents providers in Anti-Kickback Statute investigations nationwide. He also has extensive experience helping providers structure compensation-based relationships for safe harbor protection. If your business or practice is under investigation, you need experienced legal representation. We encourage you to call (214) 469-9009 or contact us online for a free consultation.

Orange County 714-294-2000
Los Angeles 310-873-8140
Detroit 313-888-8807
Nationwide 888-452-2503