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The Anti-Kickback Statute: What You

Need to Know

An MD Ranger On-Demand Video

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Objectives

• What is the Anti-Kickback Statute

• Anti-Kickback vs. Stark Law

• Penalties for non-compliance

• Best practices

First thing’s first: call your attorney

• MD Ranger doesn’t give legal advice

• Kickbacks can be nuanced

• All matters regarding potential AKS or Stark

violations should go to your counsel under privilege

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The Anti-Kickback Statute

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The government needs to protect itself

from fraud and abuse

• Anti-Kickback Statute enacted

• Section 1877 of the Social Security Act, 42 U.S.C.

1320a-7b, 1972

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The law:

"Recipients and sub-recipients of Federal funds are subject to the strictures of

the Medicare and Medicaid anti-kickback statute (42 U.S.C. 1320a - 7b(b) and

should be cognizant of the risk of criminal and administrative liability under this

statute, specifically under 42 U.S.C. 1320 7b(b) 'Illegal remunerations' which

states, in part, that whoever knowingly and willfully: (1) solicits or receives (or

offers or pays) any remuneration (including kickback, bribe, or rebate) directly

or indirectly, overtly or covertly, in cash or in kind, in return for referring (or to

induce such person to refer) an individual to a person for the furnishing or

arranging for the furnishing of any item or service, OR (2) in return for

purchasing, leasing, ordering, or recommending purchasing, leasing, or

ordering, or to purchase, lease, or order, any good, facility, services or item

....for which payment may be made in whole or in part under subchapter XIII of

this chapter or a State health care program, shall be guilty of a felony and upon

conviction thereof, shall be fined not more than $25,000 or imprisoned for not

more than five years, or both."

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AKS in a “nutshell”

A criminal statute that forbids the exchange or offer to

exchange anything of value in an effort to entice or

reward the referral of federal health care services or

business.

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Tit for Tat…

• “If you send us patients from your cardiology private

practice, we’ll pay you $5,000 per patient.”

• “If you go ahead and add another zero to that

medical directorship annual stipend, you can expect

to see 25% more patients from my practice sent your

way.”

• “Thanks for signing on the dotted line. It would be

wonderful if we continued to see an increasing

amount of referrals our way.”

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Intent must be proven

• Intent to break the law must be proven in order to be

convicted

• Remember that even the OFFER to reward referrals

or offer to solicit referrals counts as violating AKS

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Referrals of…what?

• The law covers referrals of all federal health services

from any clinician, not just doctors

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Are there protections?

• Yes!

• Some activities may seem like they violate AKS but

are actually protected under “voluntary safe harbors”.

• Read all the safe harbors here:

http://www.gpo.gov/fdsys/pkg/CFR-2010-title42-

vol5/pdf/CFR-2010-title42-vol5-sec1001-952.pdf

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Safe harbors include…

• Ambulatory surgical centers

• Discounts

• EHR items and services

• Electronic prescribing items and services

• Equipment rental

• Health centers

• Investment interests

• Payments made to bona fide employees

• Personal services and management contracts

• Practitioner recruitment

• Referral services

• Space rental

• Warranties

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AKS vs. Stark Law vs. False Claims Act

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AKS vs. Stark

• Physician Self Referral Law, commonly referred to as

“Stark Law” enacted

• Section 1877 of the Social Security Act, 42 U.S.C.

1395.nn• Consists of original statute (Phase I, 1989)

• Phase II into effect in 1996

• Phase III throughout the 2000’s

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AKS vs. Stark

AKS

• Prohibits soliciting or offer

of anything of value for

referrals or to generate

Federal healthcare

program business

• Referrals from anyone

• Any service or item

• Criminal

• Intent must be proven

Stark

• Prohibits a physician from

referring Medicare/Medicaid

patients for DHS to an entity with

a financial relationship with that

physician

• Referrals from a physician

• DHS

• Civil

• Intent doesn’t have to be proven

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AKS and the False Claims Act

• Enacted during the Civil War, the law imposes liability

on people/organizations who defraud government

programs

• Payments to a hospital for services that violate AKS

could be subject to penalties because they defraud

the government

• Allows whistle-blowers to bring qui tam lawsuits and

sue on behalf of federal government for AKS

violations

• Yikes!

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Penalties

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Violating AKS is a serious crime.

Here’s what could happen:

• Criminal penalties are up to $25,000 plus up to a

five-year prison term per kickback violation

• Additional civil penalties are as much as $50,000

per kickback violation in addition to three times the

amount of damages sustained by the government

• Providers can be excluded from federal healthcare

programs

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Best Practices

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Check out MD Ranger resources

• Compliance checklists

• Structuring physician contracting programs

• How to identify risky contracts

• And more

www.mdranger.com/resources

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Have a written and signed contract

• Have written contracts for physician services with

payment terms set in advance!

• Both the hospital and the physician must sign the

agreement

• Though this step is obvious, sometimes it can be

quite challenging to determine if a contract exists.

• No money exchanged for the service? STILL

CREATE A CONTRACT

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Document non-monetary

compensation

• Are you providing non-monetary payments to

independent physicians (that you aren’t providing to

the entire medical staff) that exceed the cap? • Parking spaces?

• Meals?

• Electronic health records?

• Overhead from charity events involving doctors?

• Joint marketing?

• Office artwork?

• Technology?

• Infrastructure?

• ….?22

Be specific about the service

• The services to be provided must be described in

detail in the contract.

• Don’t forget important details, like number of hours in

administrative agreements

• Record keeping for time and performance of duties

• Periodic ‘audits’ of time cards to see if they are

accurate, meetings attended, reports filed, etc.

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Set rates at fair market value

• Check the fair market value documentation with the agreement

to ensure that methods/data are sufficient

• If documentation or methods are questionable, look up market

data for the service

• If no documentation exists and payment rates were determined

by something other than fair market value, flag the contract for

follow up

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Don’t pay for referrals! Period.

• Paying for referrals or bribing physicians in any way

is illegal

• Due diligence is required when reviewing contracts to

ensure that the payments are not for referrals; lack of

documentation leaves you vulnerable

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Compliance is mandatory

• Ensure that the hospital is paying the appropriate

rates as per the agreement (AP is great for this)

• Check physician documentation is up to standard,

medical directorship hours especially

• Read through the description of the service and

ensure it is not only being adhered to, but also if the

service is still needed

• Check up on ‘special deals’ that didn’t follow standard

procedures or legacy contracts that haven’t changed

in years

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Audit your contracts

• Review the entire auditing process and document this

discussion or meeting in full

• Create a file or document to capture your internal

process. Include:• Memos written by responsible executive or leader

• Minutes from meetings

• Flags and notes

• List of follow up items in one place, as collected from above

documents, notes, memos, and emails

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Fraud questions?

MD Ranger, Inc.

650-692-8873

inquiries@mdranger.com

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