Physicians and health service providers whose patients are on federal healthcare programs like Medicare or Medicaid sometimes run afoul of the Federal Anti-Kickback Statute. When this happens, it often leads to steep penalties.

To avoid violating the Anti-Kickback Statute, it is important to know what it is about.

Here are the 10 most important things to know about the law:

  1. Enactment

The Anti-Kickback Statute was originally enacted by the congress in 1972. It was enacted as an amendment to the Social Security Act.

  1. Aim

The Statute was enacted to limit physicians and healthcare providers from defrauding federal healthcare programs like Medicare and Medicaid. Prior to the Statute, the Social Security Act had numerous loopholes which made it easy to defraud healthcare programs through kickbacks. The loopholes also made it difficult to persecute offenders.

The Anti-Kickback Statute was enacted to close the loopholes in the Social Security Act by providing clear standards through which healthcare fraudsters could be prosecuted. Its aim was to achieve two things.

First of all, to clearly spell out specific kinds of offences (i.e. kickbacks, bribes, solicitations and rebates) relating to healthcare referrals. Secondly, to outline clear penalties for those who violate the law.

  1. General Overview/Summary

In a nutshell, the Statute prohibits soliciting or accepting any type of gift, remuneration or compensation in exchange for making referrals for patients in federal healthcare programs. Basically, the statute makes it illegal for:

  • A physician or health service provider to be ask for compensation in return for referring patients who are on Medicaid or Medicare.
  • A health service provider to compensate a physician or another service provider for referring Medicare or Medicaid patients to them.
  • A physician or health service provider to claim reimbursements from Medicare or Medicaid for payments made in kickbacks.

The Statute categorizes such payments as “kickbacks, bribes or rebates”, and considers them a felony. Whoever violates the Statue can face felony charges – with steep penalties.

  1. Penalties For Violations

The Anti-Kickback Statute imposes a number of penalties for violations. Here is a summary of the major penalties:

  • Criminal penalties can include fines of up to $25,000 per kickback
  • Civil penalties can include a prison sentence of up to 5 years per kickback
  • Civil penalties can include fines of up to $50,000
  • Civil penalties can include damages of three times of the amount incurred by the government as a result of the violation
  • Violators can also face expulsion from federal healthcare programs such as Medicare and Medicaid.
  1. Some Costly Settlements

Over the past few years, a number of healthcare providers have faced lawsuits for violating the Statute. A few of these have ended up paying some costly amounts in settlements. A few of these settlements include the following:

  • In 2014, Amedisys – a LA-based health services provider – paid $150 million to settle Statute violation allegations. The company allegedly claimed Medicare reimbursements for money which it had offered to physicians to refer patients to its services. Click to read more.
  • In 2014, Omnicare – a Cincinnati-based pharmaceutical company – paid $124 million to settle claims that it violated the Anti-Kickback Statute. The company allegedly offered financial incentives to nursing homes to recommend its services to Medicare and Medicaid patients. Click here to read more.
  1. Whistleblower Compensation

The Anti-Kickback Statute doesn’t explicitly mention whistle-blowers. However, in the Amedisys case, the violations were first revealed by a whistle-blower. That whistle-blower ended up receiving $26 million out of the $150 million paid by the company, click here to read more.

This payment causes a predicament for potential Ant-Kickback Statute violators. It means that their own employees now have an incentive to report on violations.

  1. The Question of Intent

Prior to the Anti-Kickback Statute, to charge someone with committing healthcare fraud required proving that they had “knowingly” or “willfully” committed the violation. Basically, the burden of proof was on the government or prosecutor.

The Anti-Kickback Statute eliminated the question of “willful intent”. The only requirement for culpability is committing any of the forbidden acts. This eliminates the scenarios where individuals deliberately commit violations and then claim that they had no idea that they were breaking any law. It also makes prosecuting violations quite straightforward.

  1. Exemptions from the Statute

The Anti-Kickback Statute has a wide interpretation which can have a stifling effect on legitimate business operations. To prevent this stifling effect, the Congress outlined so-called “safe harbor arrangements” through which an individual or healthcare provider can avoid violating the Statute.

These safe harbor arrangements are exempt from the Statute. Examples include:

  • Rentals for space and equipment
  • Contracts for personal services and management
  • Payments to bona fide employees
  • Electronic prescriptions arrangements
  • Electronic health records arrangements
  1. State Anti-Kickback Laws

Although the Anti-Kickback Statute is a federal law, many states have their own anti-kickback laws. Most of these laws are based on the Statute, and are similar in many respects. However, some have provisions which differ from the Statute. For instance, many state laws differ on what constitutes a referral source.

The onus is on every physician or health service provider to find out the anti-kickback laws which are relevant to the state within which their operations are based. Even then, except for provisions which differ from the Statute, the state laws do not nullify the Anti-Kickback Statute.

  1. Enforcement Authority

The agency which is charged with enforcing the Anti-Kickback Statute is the Office of the Inspector General (OIG) in the US Department of Health & Human Services. It is the OIG which investigates violations, brings lawsuits against violators, and recommends penalties such as suspension from federal healthcare programs. Since 1972, the OIG gas secured over 800 convictions, judgments and settlements under the Statute.

In 2009, the Health Care Fraud Prevention and Enforcement Action Team (HEAT) was created by the Department of Justice to investigate Medicare and Medicaid fraud and abuse. The HEAT follows up on the Anti-Kickback Statute as well. In this respect, it works in conjunction with the OIG.

In a nutshell, those are the 10 key things to know about the Anti-Kickback Statute. This information is vital for any physician or healthcare provider whose patients include recipients of Medicaid and Medicare. Observing the Statute is critical towards ensuring that one steers clear of violating it. The relative importance of Medicaid and Medicare means that the federal government clamps down hard on any perceived fraud. To steer clear of the violations, it is critical to study and understand the Statute.