Primer on Anti-kickback Statue and Stark Law

Understanding government fraud and abuse laws is your best defense.

As the Obama administration further reinforces its federal and state health care fraud and abuse enforcement budgets, it is essential for practice managers to have a basic understanding of tow of the biggest fraud and abuse tools within the government's arsenal: the anti-kickback statue (AKS) and the Stark Law:

The Federal Anti-kickback Statue

The AKS (42 U.S.C $1320a-7b(b) (1-3)) prohibits the offer, soliciation, payment, or receipt of any remuneration, in cash or in kind, in return for, or to introduce, the referral of a patient for any service that is covered by a federal health care program (most notably, Medicare and Medicaid).
Reward in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or item reimbursed under a federal health care program is also prohibited.

Example for potential kickback violations include:

    *  A physician who offers a patient recruiter $100 per patient

    *  A manufacturere of Medical devices offering gifts and educational programs in exotic locales
        to physicians who prescribe its products.

    *  A pharmacy that pays for a patients' groceries and cleaning service in return for patient's
        continued loyalty.

Whether the remuneration atucally results in a referral is immaterial because it's sufficient that the reward may induce someone to refer or recommend. Under Greber (United States v Greber, 760 F.2nd 68, 71 (3rdCir.), cert, denied, 474 U.S. 988 (1985)), it is also irrelevant if there are other legitimate reasons for remuneration. If one purpose is to induce referrals, then the AKS may be violated.

The AKS contains exceptions protecting parties form criminal liability for conduct that would otherwise violate the statute. Similarly, the AKS permits the Department of Health & Human Services (HHS) secretary to promulgate "safe harbors," which identify referral arrangements that do not violate the AKS ( see 42 CFR 1001.952). If the requirements of the Safe Harbor are strictly complied with, individuals and entities can insulate themselves from prosecution under the AKS for conduct that would otherwise violate the statute. There are 25 exceptions and nine safe harbors.

A violation of the AKS constitues a felony criminal offense. Sanctions include imprisonment of up to five years, criminal fines of up to $25,000, civil  money penalties of $50,000 per act, and/or exclusion from all federal and/or state health care programs. Sanctions apply to all parties to the transaction- he who "offers/pays" and "solicits/receives."

The Patient Protection and Affordable Care Act (PPACA) is a federal statute that was signed inot law on March 23, 2010. The statute, among its many provisions clarifies the intent standard of the AKS by requiring there be a "knowing" and "willful" intent element to sustain a conviction. The law provides that a person need not have actual knowledge that the alleged activity violates the AKS itself, or that there be a specific intent to commit a violation of the AKS, so long as the defendant committed the act (knowingly) with the knowledge that such conduct was unlawful.

The PPACA also makes a violation of AKS a basis for False Claims Act (FCA) violation.