All individuals and entities that conduct business in the health care industry must comply with applicable state and federal anti-kickback laws that limit activities that may otherwise be viewed as common incentivization methods in other industries. Benkoff Health Law regularly advises clients as to the applicability of the federal Anti-Kickback Statute and similar state anti-kickback laws and provides real solutions to the compliance issues posed by these laws.
In addition, to the extent that an arrangement involves a potential inducement to a patient, federal and state patient or beneficiary inducement laws may apply and require that the arrangement be carefully structured to comply. We are experienced in analyzing patient inducement arrangements for the purpose of ensuring that any potential inducements are structured in a legally compliant manner.
What is the federal Anti-Kickback Statute?
The federal Anti-Kickback Statute (“AKS”) prohibits a person or entity from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward the:
- referral of an individual for the furnishing of any item or service that may be reimbursed under a federal health care program, or
- purchase, lease, ordering or arranging for or recommending the purchasing, leasing or ordering of any item, facility or service that may be reimbursed under a federal health care program.
Remuneration under the AKS includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.Federal health care programs, for purposes of the AKS, include Medicare, Medicaid, Tricare and other federally-funded and state-funded health care programs.
The AKS applies to a broad range of activities including arrangements between health care providers and entities as well as marketing and sales activities in the health care industry. If an arrangement implicates the AKS, the arrangement must be structured to comply with the AKS. Benkoff Health Law has extensive experience in analyzing fact patterns under the AKS and creating legally-compliant business structures and arrangements.
What to do if the AKS is Implicated
If an arrangement implicates the AKS, it must be structured to comply with the law. Because the AKS is an intent-based law, in interpreting compliance with the AKS, the government will look at the facts and circumstances of the arrangement to determine if it involves any purpose to violate the law. However, statutory exceptions and regulatory safe harbors exist to protect specific activities from enforcement action under the AKS or program exclusion.
Commonly used AKS safe harbors include:
- Investment interests safe harbor;
- Space rental safe harbor;
- Equipment rental safe harbor;
- Personal services and management contracts safe harbor;
- Employees safe harbor;
- Discount safe harbor;
- Group purchasing organizations safe harbor;
- Practitioner recruitment safe harbor;
- Investments in group practices safe harbor; and
- Ambulatory surgical centers safe harbor.
Determining which exception or safe harbor to use to comply with the AKS is a critical part of the structure of any arrangement that implicates the law. Oftentimes multiple exceptions and safe harbors are available for use in a given fact pattern. Further, the complexities of an arrangement may require that more than one AKS exception or safe harbor be used in order for the arrangement, as a whole, to comply with the AKS.
Further, in the event that AKS compliance under an applicable exception or safe harbor is unclear or unlikely, the parties to the arrangement can avail themselves of the Office of Inspector General’s (“OIG”) AKS advisory opinion process.
Benkoff Health Law regularly advises clients with respect to which AKS exceptions and safe harbors should be used in a given situation to meet our clients’ business and legal needs.
What Happens if the AKS has been Violated?
A violation of the AKS is a felony punishable by a maximum fine of $25,000, imprisonment up to five years, or both. The Department of Health and Human Services may also exclude those who violate the AKS from the Medicare and Medicaid programs.
In the event that a party involved in an arrangement suspects that the arrangement does not comply with the AKS, the parties should seek legal advice to determine whether an AKS violation has occurred. Benkoff Health Law performs in-depth retrospective analyses into existing relationships to determine whether the AKS has been complied with. If a legal analysis reveals that the AKS has been violated, the parties have 60 days to either return the overpayment to Medicare and Medicaid or submit a self-disclosure to the OIG pursuant to the provider self-disclosure protocol. We are experienced in assisting clients with the self-disclosure process.
What is the Beneficiary (Patient) Inducement Statute?
The federal Beneficiary Inducement Statute (“BIS”) prohibits an individual or entity from providing remuneration to patients who are eligible for Medicare or Medicaid benefits if that individual or entity knows (or should know) that doing so is likely to influence the patient’s decision to order or receive items or services from a particular provider.
Remuneration includes providing items or services for free or below fair market value, such as gifts, waivers of coinsurance and deductibles. However, the definition of “remuneration” for purposes of the BIS is important because it excludes certain types of benefits and, as a result, allows those types of benefits to be provided to Medicare and Medicaid beneficiaries without implicating the BIS. In addition, if the monetary value of the remuneration is below a certain threshold, the BIS will not apply. Benkoff Health Law has a great deal of experience in determining whether client arrangements implicate the BIS and, if so, structuring them to comply with the BIS.
What to do if the BIS is Implicated
If an arrangement implicates the BIS, it must be structured to comply with the law. Because the BIS is an intent-based law, in interpreting compliance with the BIS, the government will look at the facts and circumstances of the arrangement to determine if the involved individuals knew or should have known that the remuneration would have affected the Medicare or Medicaid beneficiary’s decision to order or receive items or services from a particular provider. Arrangements that would otherwise implicate the BIS can be structured to fit within an exception to the definition of remuneration under the BIS, thereby avoiding implication of the BIS.
Common exceptions to remuneration under the BIS include:
- Certain waivers of coinsurance and deductibles that meet specific requirements;
- Certain discounts or reductions in prices that meet specific requirements;
- Certain incentives to promote preventative care;
- Remuneration that promotes access to care and poses a low risk of harm; and
- Certain transfers for free or below fair market value that meet specific requirements.
Violations of the BIS may result in the imposition of civil money penalties and the OIG may exclude violators from the Medicare and Medicaid programs.Determining which exception to use to comply with the BIS is important for any arrangement that implicates the law. Oftentimes multiple exceptions are available for use in a given fact pattern. Further, the complexities of an arrangement may require that more than one BIS exception be used in order for the arrangement, as a whole, to comply with the BIS. Further, in the event that BIS compliance is unclear, the parties to the arrangement can avail themselves of the Office of Inspector General’s (“OIG”) advisory opinion process.
Benkoff Health Law successfully advises clients with respect to which BIS exceptions should be used in a given situation to meet our clients’ business and legal needs.
State Anti-Kickback and Patient Inducement Law Overview
States often have several anti-kickback laws pertaining to individuals and entities involved in the health care industry. Some state laws are similar to the AKS, some explicitly refer to the AKS, and others differ from the AKS. State laws vary and can be more or less restrictive than the AKS. In addition, states often have fee-splitting laws, which are similar to and may be found within state anti-kickback laws. Fee-splitting laws vary state to state, but they generally prohibit a health care provider or entity from sharing earned fees with referral sources in certain situations.
Similarly, state patient inducement laws can be similar to, or more or less restrictive than, the BIS. For example, some state patient inducement laws are limited to the waiver of copays and deductibles. In addition, state anti-kickback and patient inducement laws often apply to services reimbursable by Medicaid, commercial payors, and private (cash) payors.
The penalties for violating state anti-kickback and patient inducement laws also vary and may include fines and penalties, jailtime, and loss of professional licensure.We recommend that a state anti-kickback and patient inducement analysis be conducted for any arrangement that involves referrals or business generation in the health care industry or providing any form of remuneration or benefit to patients.
For more information about the AKS and BIS, please see the OIG’s Advisory Opinion page.