Health Care Fraud Basics: The Difference Between Stark & Anti-Kickback Laws

The health care industry is highly demanding of providers, requiring them not only to utilize years of training to meet their duty of care when treating patients, but also to comply with a maze of what can be confusing and convoluted regulations. While competent care is crucial, providers should never neglect the importance of sound compliance plans, especially when federal regulations such as the Stark Law and Anti-Kickback Statute pose devastating penalties.

The Stark Law and Anti-Kickback Statute are among the federal government’s most important tools for fighting health care fraud. Because both concern remuneration related to improper referrals, however, they are often commonly confused. For any medical group or multi-specialty practice operating in the industry, understanding the key elements of these laws and their fundamental differences is critical to waging effective efforts that help them manage referrals and ancillary services, and ensure regulatory compliance.

Anti-Kickback Statute

The Anti-Kickback Statute is a federal criminal law (Title 42 U.S.C. §1320a-7b(b)) that can be used to against health care providers who willfully and knowingly pay, offer, solicit, or receive any form of remuneration in order to induce referrals or generate business involving any service or item payable by federal health care programs. “Remuneration” can be anything of value – whether it is money, reduced rent, or relief from financial obligations.

Here are a few of the Anti-Kickback Statute’s key distinctions:

• Civil and criminal penalties – One major distinction between the Anti-Kickback Statute and the Stark Law is that the AKS has both criminal and civil / administrative penalties. Criminal penalties include criminal fines up to $25,000 per violation, and up to 5 years in federal person per violation. Civil penalties include monetary penalties up to $50,000 per violation, civil assessment up to 3x government damages, provider exclusion and medical license revocation, and liability under the False Claims Act. Because the AKS has a criminal component, the focus in investigations and early negotiations is to keep cases civil in nature.
• Applies to any federal program – The AKS applies broadly to any federal health care program. This means it has implications for referrals involving Medicare and Medicaid, TRICARE, the VA, the Federal Employees’ Compensation Act (FECA), and block grant programs.
• Applies to any referral – The AKS applies to any referral source, unlike the Stark Law, which applies only to referrals involving a physician and a health care entity.
• Requires proof of intent – The AKS requires proof of improper intent, meaning it is the government’s burden to prove a provider acted willfully and knowingly.
• Safe Harbors – Safe harbors written into the AKS allow providers to make referrals for otherwise prohibited arrangements without committing violations. AKS safe harbors are voluntary, and providers must ensure arrangements meet qualifying criteria. Common payment and business practices considered safe harbors include space and equipment lease agreements, personal services, payment to bona fide employees, and ambulatory surgical center investments.

It is important to note that while providers who don’t refer items or services payable to federal programs are not subject to the AKS, there have cases where federal prosecutors bring charges under the Travel Act. In Texas, providers are also subject to the Solicitation of Patients Act, which is a state criminal law similar to the federal Anti-Kickback Statute.

The Stark Law

The Stark Law (Title 42 U.S.C. § 1395nn) is another health care fraud and abuse law, and it specifically prohibits physicians from referring Medicare or Medicaid patients for designated health services (DHS) to any entity with which the physician, or an immediate family member of the physician, has some type of financial relationship. Under the law, “immediate family members” may include spouses, children, parents, siblings, in-laws or step-siblings, and grandparents/children.

Important characteristics of the Stark Law include:

• Civil penalties only – Unlike the AKS, the Stark Law is only civil in nature. Civil penalties for violations may include refunds of overpayment, a $15,000 civil monetary penalty per violation, a $100,000 CMP for circumvention schemes, program exclusion in cases of knowing violations, and liability under the False Claims Act.
• Applies only to DHS – The Stark Law is less expansive in scope than the Anti-Kickback Statute, and applies only to designated health services paid by Medicare or Medicaid.
• Applies only to physicians – As its alternative title connotes (physician self-referral law), the Stark Law applies only to referrals made by a physician.
• No proof of intent required – Though the scope of the Stark Law’s application may not cover as many potential violators as the AKS, the Stark Law is a strict liability statute, which means there is no requirement for the government to prove specific intent, and that physicians can still be held liable even for accidental violations. However, proof of intent is required in order for the government to impose monetary penalties for knowing violations.
• Exceptions – As with the AKS, conduct that would otherwise constitute a violation can be permitted if the nature of a referral falls within one of over 30 qualifying exceptions. Stark exceptions, or safe harbors, require physicians to meet multiple conditions.

Need Help with Compliance or Defense? Hendershot Cowart P.C. Can Help.

Our health and medical law attorneys at Hendershot Cowart P.C., P.A. have considerable experience counseling and representing clients in a range of matters involving health care fraud regulatory compliance– from proactive work creating compliance plans and sound medical contracts that minimize exposure to violations to immediate responsive services that can help providers under audit or investigation take the right steps toward an effective defense at an opportune time.

To learn more about our services and how we may be of assistance with your particular matter, call (713) 909-7323 or contact us online to speak with an attorney. We serve all types of health care providers throughout Houston, Texas, and beyond.