The Anti-Kickback Statute is one of the major tools the Federal government uses in enforcing fraud against Federal healthcare programs. In addition, it happens to be one of the oldest mechanisms for enforcement. Generally, the Anti-Kickback Statute is a criminal statute that prohibits a person or entity from exchanging, or offering to exchange, anything of value, in an effort to induce or reward the referral of Federal health care program business. This article highlights 25 facts you need to know about the Anti-Kickback Statute.
- The original Anti-Kickback Statute enacted in 1972 did not include a knowingly or willfully requirement meaning that violators were strictly liable for not meeting the specific requirements of the 1972 enacted law.
- It was not until 1980 that Congress enacted an amended version of the Anti-Kickback Statute that included the knowingly and willfully language. The primary motivation was to ensure that inadvertent conduct of individuals did not result in excessive fines and imprisonment.
- Advisory Opinions related to the Anti-Kickback Statute did not become a requirement until the late 1990’s. Specifically, when Congress enacted the Health Insurance Portability and Accountability Act (“HIPAA”), the new law required advisory opinions to be issued under the Anti-Kickback Statute.
- Advisory Opinions did occur in the early 1980’s but completely stopped by the early 1990’s because there was no specific mandate for Health and Human Services to provide such opinions. In fact, it appears the Department of Justice may have had issues with this due to their belief that it had exclusive authority.
- The Third Circuit’s famous case of United States v. Greber established the holding that if any one purpose of a compensation arrangement is to induce referrals, the arrangement violates the Anti-Kickback Statute. Keep in mind there is and continues to be dispute over the standard of intent required by the Anti-Kickback Statute.
- The Office of Inspector General’s oldest currently listed Advisory Opinion is Advisory Opinion No. 97-1. This Advisory Opinion established that “it is permissible for a charitable organization partly funded by kidney dialysis providers to pay Medicare Part B, Medigap and other health insurance premiums for end-stage renal disease patients who are financially needy.”
- When an organization seeks out an Advisory Opinion, the Office of Inspector General is able to retract and/or modify a previous Advisory Opinion if the facts change or a new arrangement is similar to a previous arrangement. See Advisory Opinion No. 98-5.
- In 2001, Tap Pharmaceutical Products, Inc., agreed to settle allegations that in part stemmed from alleged Anti-Kickback Statute violates. The settlement amounts to $875 million and resulted in charges against 7 individuals (all later acquitted).
- The Tap Pharmaceutical Products, Inc., settlement was one of the largest settlement with the Federal government regarding the Anti-Kickback Statute and remained one of the largest until 2009 when Pfizer entered into a $2.3 billion settlement with the Federal government.
- The Anti-Kickback Statute is a law that goes against rewarding others for referring business to others. In fact, the Office of Inspector General plainly states that “[i]n some industries, it is acceptable to reward those who refer business to you. However, in the Federal health care programs, paying for referrals is a crime.”
- In 1991, the first 10 Safe Harbors of the Anti-Kickback Statute were provided in 56 Federal Register 35952. Through these regulations, the Anti-Kickback State now included limited liability for investments, rentals, service contracts, discounts, and sales of practices.
- Substantial compliance with the Anti-Kickback Statute was always proposed by some as a defense. In fact, the Office of Inspector General specifically noted that United States v. Bay State Ambulance and Hospital Rental Service, Inc., 874 F.2d 20 (1st Cir., 1989) was a case in which an individual was prosecuted but argued substantial compliance was enough. Although this was contemplated, the initial regulations stated other wise. The Federal government stated that “[w]e do not believe the Medicare and Medicaid programs would be properly served if we assured protection in all instances of “substantial compliance,” “technical violations,” or “de minimis” payments. Unfortunately, these are vague concepts, subject to differing interpretations. In this regulation, we have attempted to provide bright lines, to the extent possible, for safe harbors in order to provide clarity and predictability as to what conduct is immune from government action. Our endorsement of the concepts mentioned above would only serve to blur these lines and produce litigation as to what “substantial,” “technical” and “de minimis” really mean. The OIG therefore declines to adopt these concepts.”
- The Anti-Kickback Statute is actually a criminal law. A violation of the Anti-Kickback Statute is punishable by up to 5 years imprisonment and $25,000 in fines. This is different than the Stark Law which is limited to only civil actions.
- Since we are discussing healthcare fraud, many people might believe the Anti-Kickback Statute only applies to physicians and other practitioners. However, the Anti-Kickback Statute applies to anyone who is offering, paying, soliciting, or receiving remuneration in exchange for a referral for Federal health care program business. Nowhere in the Statute does it only mention physicians.
- Remuneration under the Anti-Kickback Statute not only includes cash but also discounts. For example, there have been settlements and enforcement actions focused upon discounts and below cost items being offered to referral sources. In the end, the Anti-Kickback Statute is focused more on inducement rather than the value of an inducement.
- Most entities do not realize that there are only two options if an arrangement is not covered by a Safe Harbor under the Anti-Kickback Statute. Option A is that the arrangement may be a criminal violation subject to prosecution. Option B is that the Anti-Kickback Statute is not implicated because there is not intent to induce referrals.
- The Anti-Kickback Statute does not mandate anything! In other words, the Safe Harbors that have been established are voluntary rather than mandatory. On the other hand the Stark Law exceptions are mandatory, otherwise the arrangement violates the Stark Law.
- The False Claims Act has a different type of knowledge requirement than the Anti-Kickback Statute. Although the Anti-Kickback Statute knowledge requirement appears to require some form of willful act or knowing act, the False Claims Act includes a reckless disregard standard. This means that if an individual has knowledge that something may be wrong, they could be acting in reckless disregarding if nothing is done.
- Paying physicians for jobs that are not required or for duties that are not actually performed can amount to an Anti-Kickback Statute violation. For example, in 2015, a skilled nursing facility allegedly paid physicians to act as medical directors. The Federal government alleged that the positions were “ghost positions” and that there were no actual duties.
- In what many found puzzling, the Department of Health and Human Services issued an opinion stating that insurance offered through the Affordable Care Act’s healthcare insurance exchanges were not considered Federal health care programs. Because of this stance, those are not subject to the Anti-Kickback Statute. This was such a big deal that Forbes even wrote about it!
- Oddly, in addition to the factual issues discussed in Number 20 above, the Affordable Care Act actually strengthened the power of the Anti-Kickback Statute. Under the Obamacare laws, a violation of the Anti-Kickback Statute is now automatically a violation of the False Claims Act.
- Many of the Safe Harbor relevant to the Anti-Kickback Statute include a requirement that compensation between the parties or payments between the parties be “fair market value.” Interestingly, there is no specific standard other than self-reported compensation surveys by physicians that establish what compensation might be considered “fair market value.”
- Outside of the healthcare context, the Anti-Kickback Statute has been utilized to settle allegations stemming from a government contractor accepting bribes for the purpose of distributing several subcontracts. This highlights how broadly the Anti-Kickback Statute can be used as a enforcement mechanism.
- Interestingly, the Anti-Kickback Statute actually spurred the development of various state Anti-Kickback Laws. Specifically, approximately 36 states and Washington D.C. maintain Anti-Kickback laws and some state laws are broader than the Federal law.
- The Advisory Opinions offered by the Office of Inspector General have even included in-depth analysis over the use of gift cards for services.
For more information about the Anti-Kickback Statute, please visit our resource page.