The federal Anti-Kickback Statute (AKS) and the Stark Law were enacted to prevent health care providers from providing services due to monetary inducements. The aim was to curb unnecessary and wasteful health care services.
In short, the AKS prohibits the exchange of anything of value in order to induce the referral of health care business. The AKS prohibits the knowing and willful payment of remuneration to induce patient referrals or generate business involving any item or service payable by Medicare, Medicaid, or other federal health care programs. There are steep penalties for violations, including criminal penalties.
The Stark laws also contain hefty civil penalties for violations. The Stark law prohibits certain financial and compensation relationships between a physician (or immediate family member) and an entity that furnishes designated health care services, such as:
Clinical laboratory services.
Physical therapy, occupational therapy, and outpatient speech-language pathology services.
Radiology and certain other imaging services.
Radiation therapy services and supplies.
Durable medical equipment and supplies.
Prosthetics, orthotics, and prosthetic devices and supplies.
Home health services.
Outpatient prescription drugs.
Violations of the AKS or Stark laws can result in disqualification from Medicare and Medicaid.
There are plenty of scenarios where physicians can inadvertently veer into the lane of prohibitive conduct, sometimes with the most altruistic of intentions. For example, a violation can be as simple as routinely waiving the deductible for patients. A company that offers a free lunch at a medical seminar to physicians who prescribe products distributed by the company can land in hot water. A company that offers free office space to a physician can find itself under scrutiny. An above-market-rate fee paid by a pharmaceutical company to a physician for speaking at an event or conducting research could be vulnerable to challenge. In one case a manufacturer’s contribution to a nonprofit corporation was found to be an illegal kickback because the referring physician volunteered medical services sponsored by the nonprofit organization in a third world country.
The prohibitions can impact not just the provider who accepts the inducement, but clinic leaders who are held responsible for the actions of others.
It is important for health care organizations to know the ins and outs of these laws. For many of the rules, there are exceptions. For example, exceptions in the Stark law include the following:
Designated health services furnished in a rural area if substantially all of the designated health services furnished by an entity are furnished to individuals residing in such a rural area;
Payments for the use of office space made by a lessee to a lessor if there is a rental or lease agreement where the space rented or leased does not exceed that which is reasonable and necessary for the legitimate business purposes of the lease and where the rent is not tied to a percentage of the revenue of the lessee.
Payments made by a lessee to a lessor for the use of equipment where the equipment being leased does not exceed that which is reasonable for the legitimate business purposes of the lease and where the amount of the rent is not attributable to the services performed.
Personal service arrangements where the compensation to be paid over the term of each arrangement is set in advance, does not exceed fair market value, and, except in the case of a physician incentive plan is not determined in a manner that takes into account the volume or value of any referrals or other business generated between the parties.
There are also “safe harbors” under the AKS. They include bona fide: (1) rental of office space; (2) rental of equipment; (3) personal services and management contracts; and (4) employee compensation. It is important that the requirements of the safe harbors be strictly followed.
The Centers for Medicare and Medicaid Services (CMS) has published the following table comparing the AKS to the Stark Laws:
Health care is a highly-regulated industry. As can be seen from the above chart, violations of the federal “fraud, waste, and abuse” laws can result from subtle conduct and lead to significant penalties. Providers are well-served to discuss business arrangements that could implicate these laws with their legal counsel.
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The law firm of Swanson Hatch, P.A. represents health care providers in complex legal, regulatory, compliance, and professional licensing matters and helps health care organizations establish regulatory compliance programs. Former Minnesota Attorneys General Lori Swanson and Mike Hatch were active participants in health care matters during their respective tenures as attorneys general. They supervised the office’s Medicaid Fraud Control Unit, which enforces state Medical Assistance laws and undertakes actions against medical providers that overbill Medical Assistance. They also provided legal representation to the Minnesota Board of Medical Practice and the Minnesota Departments of Human Services, Health, and Commerce. Prior to her twelve years as Minnesota Attorney General, Lori Swanson previously served as Solicitor General and Deputy Attorney General of the State of Minnesota. Swanson is a member of the American Health Law Association and was named by Health Leaders magazine as one of 20 American making a difference in health care. Before he became Attorney General, Mike Hatch previously served as Commissioner of the Minnesota Department of Commerce for eight years, where he regulated the insurance industry. Lori Swanson can be reached at lswanson@swansonhatch.com, or at 612-315-3037. Mike Hatch can be reached at mhatch@swansonhatch.com, or at 612-315-3037. The firm’s website is www.swansonhatch.com .
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www.swansonhatch.com
431 S Seventh Street, Suite 2545
Minneapolis, MN 55415 612-315-3037
The materials in this article are for informational purposes and do not constitute legal advice, nor does your unsolicited transmission of information to us create a lawyer-client relationship. Sending us an email will not make you a client of our firm. Until we have agreed to represent you, nothing you send us will be confidential or privileged. Readers should not act on information contained in this article without seeking professional counsel. The best way for you to inquire about possible representation is to contact an attorney of the firm. Actual results depend on the specific factual and legal circumstances of each client’s case. Past results do not guarantee future results in any matter.
The federal Anti-Kickback Statute (AKS) and the Stark Law were enacted to prevent health care providers from providing services due to monetary inducements. The aim was to curb unnecessary and wasteful health care services.
In short, the AKS prohibits the exchange of anything of value in order to induce the referral of health care business. The AKS prohibits the knowing and willful payment of remuneration to induce patient referrals or generate business involving any item or service payable by Medicare, Medicaid, or other federal health care programs. There are steep penalties for violations, including criminal penalties.
The Stark laws also contain hefty civil penalties for violations. The Stark law prohibits certain financial and compensation relationships between a physician (or immediate family member) and an entity that furnishes designated health care services, such as:
Violations of the AKS or Stark laws can result in disqualification from Medicare and Medicaid. There are plenty of scenarios where physicians can inadvertently veer into the lane of prohibitive conduct, sometimes with the most altruistic of intentions. For example, a violation can be as simple as routinely waiving the deductible for patients. A company that offers a free lunch at a medical seminar to physicians who prescribe products distributed by the company can land in hot water. A company that offers free office space to a physician can find itself under scrutiny. An above-market-rate fee paid by a pharmaceutical company to a physician for speaking at an event or conducting research could be vulnerable to challenge. In one case a manufacturer’s contribution to a nonprofit corporation was found to be an illegal kickback because the referring physician volunteered medical services sponsored by the nonprofit organization in a third world country.
The prohibitions can impact not just the provider who accepts the inducement, but clinic leaders who are held responsible for the actions of others.
It is important for health care organizations to know the ins and outs of these laws. For many of the rules, there are exceptions. For example, exceptions in the Stark law include the following:
There are also “safe harbors” under the AKS. They include bona fide: (1) rental of office space; (2) rental of equipment; (3) personal services and management contracts; and (4) employee compensation. It is important that the requirements of the safe harbors be strictly followed.
The Centers for Medicare and Medicaid Services (CMS) has published the following table comparing the AKS to the Stark Laws:
Health care is a highly-regulated industry. As can be seen from the above chart, violations of the federal “fraud, waste, and abuse” laws can result from subtle conduct and lead to significant penalties. Providers are well-served to discuss business arrangements that could implicate these laws with their legal counsel.
www.swansonhatch.com
431 S Seventh Street, Suite 2545
Minneapolis, MN 55415
612-315-3037
The materials in this article are for informational purposes and do not constitute legal advice, nor does your unsolicited transmission of information to us create a lawyer-client relationship. Sending us an email will not make you a client of our firm. Until we have agreed to represent you, nothing you send us will be confidential or privileged. Readers should not act on information contained in this article without seeking professional counsel. The best way for you to inquire about possible representation is to contact an attorney of the firm. Actual results depend on the specific factual and legal circumstances of each client’s case. Past results do not guarantee future results in any matter.
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Swanson | Hatch, P.A.
431 S. 7th Street, Suite #2545
Minneapolis, MN 55415
612-315-3037
www.swansonhatch.com