Anti-Kickback Statute | Everything You Need to Know

An email, a text, or a call from a referral is exciting, especially when it offers you a package full of opportunities and surprises. But in the federal healthcare programs, it is another story to tell.

Admit it or not, getting yourself a discount or a freebie warms your heart. This capitalist set-up shapes your thought that market referrals give you more reason to be part of the company by positioning your friends, family, or your most followed celebrity as their point of reference. By reading between the lines, you slowly bargain your trust and change your purchasing behavior through these marketing referrals. 

But in the field of medical industry, kickbacks are generally considered as illegal, contrary to the law. Due to the abuse and influence by healthcare providers, healthcare beneficiaries suffer from fraud – whether provided by public or private healthcare providers.

When this Medicare fraud is left overlooked, many of your loved ones could be in danger. But the Anti-Kickback Statute is your safeguard. 

We will help you learn how to combat illegal kickbacks and defend yourself from being accused of by an in-depth understanding of the Anti-Kickback Statute – how it works and applies in your daily living.

What is the Anti-Kickback Statute?

The Anti-Kickback Statute or AKS is a healthcare law that prohibits individuals and entities from a willful and knowing payment of “remuneration” or rewarding anything of value – such as position, property, or privileges – in exchange for patient referrals that involve payables by the Federal healthcare programs. 

These payables include, but are not limited to, drugs, medical supplies, and healthcare services availed by Medicare or Medicaid beneficiaries. 

Under the provisions of the Anti-Kickback Statute, the law prohibits the soliciting, receiving, offering, or paying any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or kind. 

Besides monetary reward, remunerations can be in the form of properties (hotel rentals, real estate), positions (excessive compensation for medical directorships), or privileges (opportunity to induce more recipients for income-generating jobs).

What are the Safe Harbors in the Anti-Kickback Law? 

But remind yourself that the referral restrictions in Anti-Kickback Statute are not absolute. Meaning, when you are accused of violating the law, your best defense is identifying your case on whether or not it covers the Safe Harbors – or the exceptions for engaging in referral activities. 

The safe harbor regulations in the Anti-Kickback Statute focus on payments and business activities identified as lawful inducement of payments by Medicare or Medicaid programs. As a general rule, safe harbor regulations set protection between financial and business relations and referring parties conducted at fair market view. 

According to the Anti-Kickback Law, the following situations are considered as the Safe Harbors:

(a) Bona Fide Employment Relationship

The Anti-Kickback Statute respects the bona fide employment relationship between an employer and an employee by exempting the amount received by the latter as covered by the provisions. As suggested by the Office of the Inspector General, AKS exempts the employment status based upon the following situations and factors involved:

1) The level of an employer’s authority by which an employee is bounded;

2) The method of compensation; and

3) The tools and locations used by employees during work hours.

(b) Practitioner Recruitment 

Rewards and other forms of remunerations for a practitioner’s relocation is one of the safe harbors in the Anti-Kickback Statute. The law highly respects that such recruitment is not a malicious intent to benefit any person or entity in a position to make or influence referrals. 

This exception provides that the value of benefits provided by an entity is not directly connected or related to the referral for services covered by Medicare or Medicaid.

(b) Personal Service Arrangements

Also, the Anti-Kickback Statute is clear that personal service arrangements not qualifying as bona fide employment relationships are covered by the Safe Harbor clause. These exceptions encompass service arrangements by business agencies in the following factors:

1) A provision in the written and signed agency agreement covering all the services to be provided in a contract term of one year or longer; 

2) If services are not performed on a full-time basis, scheduling of the services must be determined;

3) Compensation has to be independent of the number of referrals between the parties and services.

(c) Lease or Rental of Office Space of Equipment

Of course, the Anti-Kickback Statute exempts the rental agreements of office spaces and equipment, provided that parties will comply with the following conditions:

1) A written and signed lease or rental agreement is signed by the parties, which specifies premises or items covered in a contract term of not less than a year;

2) The aggregate rental charge is set in advance consistent with fair market value, provided that such rental charge is apart under Medicare, Medicaid, or all other federal healthcare programs.

3) The rental or lease agreement must specify the actual date of occupancy.

(d) Referral Services

As already mentioned, the “remuneration” clause of the Anti-Kickback Statute specifies only limited conditions. For your advantage when accused of AKS violation, here are the four quality standards to abide:

1) That an entity providing the referral service should not be a participant and redounded from the remunerations of the said service;

2) That the payments of the participants to the referral services have to be assessed and collected – based on the cost of referral service operation only.

3) That the referring entity must not impose requirements to participating individuals who provide services to a referred person. However, the entity may charge the participating person only that the latter charges other persons not referred by referral services. 

4) That the referring entity has to disclose the following matters to the participating individuals:

A) The method of referral system;

B) The payment requirements;

C) The nature of the relationship between the referring entity and the participating individuals;

D) The manner of selecting referrals;

E) The restrictions of the referral system.

Are the requirements for safe harbors needed to comply? What would happen if all of the conditions set forth won’t meet?

Yes. The Anti-Kickback Statute is rigid in interpreting the safe harbors for cases to be exempted. In other words, only those arrangements that precisely meet all of the conditions set forth can only afford the safe harbor protection. 

As already mentioned, the following are the common safe harbors:

1) Bona Fide Employment Relationship;

2) Personal Service Arrangements;

3) Lease or Rental of Office Spaces and Equipment; and

4) Referral Services.

Failure to comply with any conditions and requirements constitutes no exemption. Thus, payments purportedly made to lease property, personal service arrangements, and referral services, with an intent to reward and remunerate participating individuals, equate to a violation of the Anti-Kickback Statute.

Do healthcare providers have to comply with the Anti-Kickback Statute?

Yes. Healthcare providers have to comply with the Anti-Kickback Statute as a precondition to participation under the Medicare, Medicare, TRICARE, CHAMPVA, Federal Employee Health Benefit Program, and among others. 

To participate in a federal health care program, healthcare providers must provide certification of compliance with the applicable federal rules and regulations, including the Anti-Kickback Statute. 

Thus, whatever activities or undertakings it is – either to provide claims forms or service agreements, referral programs, or employee remunerations, every hospital, physicians, and pharmacists participating in federal programs must certify their compliance with the healthcare laws and regulations, including the Anti-Kickback Law.

Is the Anti-Kickback Statute similar to Stark Law? 

Two healthcare laws might confuse you along the way – Stark Law and the Anti-Kickback Statute. While these healthcare laws uphold the integrity of Medicare and Medicaid beneficiaries, you should know that they have differences and similarities between the two. 

A. Scope of Enforcement

Stark Law has a limited scope of enforcement, where the law applies only to medical practitioners who have advanced applications – such as physicians, dentists, and chiropractors.

The Anti-Kickback Law has a broader scope of enforcement where everyone, including yourself, is bound to follow. Meaning, the law doesn’t recognize any level of profession for enforcement. 

B. Key Elements

Stark Law strictly prohibits physicians who refer patients to a designed healthcare service with a financial interest. In other words, the financial relationship is the key element for Stark Law. 

The Anti-Kickback Statute bars any referral sources and applies to any federal healthcare programs involving Medicaid, Medicare, TRICARE, the VA, the Federal Employees’ Compensation Act (FECA), and block grant programs. 

C. Proof of Intent 

As a strict liability statute, Stark Law requires no proof of specific intent to prove physicians held liable for accidental violations. 

The Anti-Kickback Statute urges the government to determine and prove a provider the intent of making referrals to obtain wilful and knowing remuneration in exchange for patients’ profiles. 

What is the nature of the Anti-Kickback Statute?

Unlike the civil nature of Stark Law, the Anti-Kickback Statute is under both civil (administrative) and criminal laws. Its criminal penalties include fines up to $25,000 per violation, and up to 5 years in federal prison. 

As to its civil penalties, the Anti-Kickback Statute includes monetary penalties up to $50,000 per violation, civil assessment up to 3x government damages, early investigations, medical license revocation, and possible exclusion from subscribing federal healthcare programs like Medicare, Medicaid, and other block grant programs.

What is the role of whistleblowers in enforcing the Anti-Kickback Statute? 

The Anti-Kickback Statute safeguards the confidentiality and safety of innocent and victims of unlawful kickbacks in the medical industry. Together with Stark Law, both statutes are the foundation to prosper the False Claims Act case. 

Becoming a whistleblower for Medicare and Medicaid doesn’t need professional skills. Anyone has the potential to become a whistleblower, including yourself. 

The general rule follows that as a whistleblower, you need to disclose confidential information in good faith – that you didn’t take part in the fraudulent process, making you innocent.

Fraudulent activities can be reported in three ways:

(1) Disclose the information to external organizations such as enforcement agencies, government hotlines, media outlets, and the like;

(2) File a complaint report to the management office of the healthcare provider; or

(3) Reveal such information online; 

However, you should take note that there are due processes to follow, such as the qualification of a whistleblower’s claim, and the type of lawsuit to file.

Does the Anti-Kickback Statute provide a private right of action? How can the False Claims Act help private whistleblowers? 

No. The Anti-Kickback Statute does not afford any private right of action, especially for whistleblowers. However, the False Claims Act provides wheels for whistleblowers to bring qui tam actions alleging violations of the Anti-Kickback Statute. 

False Claims Act criminalizes any health care organization or health care service provider suspected to commit reckless ignorance, in making a false record, or filing a false claim to any healthcare programs funded by the U.S. government. 

In the process of whistleblowing, you might encounter company employees, independent contractors, and agents. However, the FCA protects employees, contractors, or other agents of a company from being “discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer.” 

Blowing the whistle on unlawful kickbacks today

In cases of unlawful kickbacks, your ultimate safeguard is your courage and will to stand up against injustice and corruption. The medical industry is built by the wisdom of healing wounds and fostering trust in healthcare professionals. 

It is in your bold step to file your case with Khouri Law. 

Here at Khouri Law, we believe that your safety is our utmost priority. With our proven experiences in protecting healthcare professionals, representing victims of kickbacks, and winning numerous cases on qui tam lawsuits, it is now time to bring justice to you.

Bring out the confidence in you, whatever it takes.  Contact our Medicare fraud attorneys right away!

Key Takeaways 

Marketing referrals are a game-changer to increasing profit and generating more leads. But not all referrals are suitable for marketing operations. Some referrals are under the influence of malicious intent – such as illegal kickbacks in return for supplying information of Medicare beneficiaries and submitting fraudulent bills to the government-sponsored healthcare insurance. 

Lets recap what we covered regarding Anti-kickback statute:

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At the end of the day, you have to consider carefully the activities you engaged in a referral system in the medical industry – its goals, manner, and intent to promote referral services. In this way, you may not incriminate yourself from the rewards you receive. 

You have the Anti-Kickback Statute to safeguard your way. But the question is, how can you possibly eliminate the proliferation of kickbacks in your own ways?

Share your thoughts with us. Book your consultation today!