Watch Out for These 5 Subtle Ways Physicians, Facilities Can Violate the Anti-Kickback Statute

Offering incentives for referrals is a standard practice in many industries. However, the federal Anti-Kickback Statute makes this practice illegal in the healthcare industry, specifically for federally funded healthcare programs.

What Is the Anti-Kickback Statute?

The Anti-Kickback Statute (AKS) is a federal law in the United States that prohibits offering or receiving anything of value to influence referrals for healthcare services paid for by government programs. This includes programs like Medicare, Medicaid, and TRICARE.

Here's a breakdown of the key aspects of the Anti-Kickback Statute:

• Focuses on federal healthcare: The AKS applies specifically to healthcare business involving federal programs, not private insurance.
• Prohibits exchanging value for referrals: You can't give (or receive) money, gifts, or anything else of value to get someone to refer patients to you for services covered by these programs.
• Intent matters: To be considered a violation, the exchange must be done with the intention of influencing referrals.
• Protects patient care: The goal of the AKS is to ensure medical decisions are based on what's best for the patient, not financial incentives.

5 Subtle Ways Physicians, Providers Violate the Anti-Kickback Statute

It’s clear that paying someone a fee for a referral is a violation of the AKS. But what are some of the more subtle ways healthcare providers, pharmacies, and service providers may engage in illegal kickbacks?

Consider these five examples of kickback allegations:

1. Cheap office space: Balance Diagnostics USA, LLC, a diagnostic testing facility, allegedly negotiated the rent for subleases in providers’ spaces based on the anticipated number of patient referrals. In most cases, the rent payments far exceeded the fair market value of the rented space, equipment, and services. Balance Diagnostics paid $2.5 million to settle the allegations.
2. Overpaying for an acquisition: The United States alleges that in exchange for referrals to DaVita Rx, DaVita paid to acquire certain European dialysis clinics and agreed to extend a prior commitment to purchase dialysis products from a competitor. According to the Department of Justice, DaVita would not have paid the price that it did for these deals without the competitor’s commitment to refer its Medicare patients’ prescriptions to DaVita Rx in return.
3. Uncollected fees for management services: DaVita also allegedly provided management services to vascular access centers owned by physicians in a position to refer patients to DaVita’s dialysis clinics and did not collect fees for those management services. For both illegal kickback allegations, DaVita agreed to a $34 million settlement.
4. Free services: Three Ohio treatment facilities – Cambridge Behavioral Hospital, Ridgeview Behavioral Hospital, and The Woods at Parkside – provided free long-distance van transportation to patients to induce them to seek treatment at the defendants’ facilities, in violation of the Anti-Kickback Statute. The three facilities, owned by Oglethorpe Inc., agreed to pay $10.25 million to resolve these fraud allegations.
5. Gifts: Guardian Health Care Inc., Gem City Home Care LLC, and Care Connection of Cincinnati LLC – three home health agencies operating in Texas, Ohio and Indiana – knowingly provided sports tickets, meals, wellness-related activities, and other gifts to staff, physicians, and residents of numerous assisted living facilities in exchange for referrals of Medicare beneficiaries. The three facilities along with their owner Evolution Health LLC agreed to pay $4.5 million to settle these kickback allegations.

What Are the Penalties for Violating the Anti-Kickback Statute?

The penalties for violating the Anti-Kickback Statute are severe, encompassing both criminal and civil consequences.

Here's a breakdown of the consequences you might face:

• Criminal penalties: A violation of the AKS is considered a felony offense. This can lead to up to 10 years imprisonment and you could be fined up to $100,000 per violation.
• Exclusion from federal healthcare programs: Being found in violation of the AKS can result in exclusion from participating in Medicare, Medicaid, and other federal healthcare programs.
• Civil monetary penalties: The government can impose civil monetary penalties of up to $50,000 per violation, along with three times the amount of the remuneration involved in the kickback scheme.

Being charged with violating the AKS can also have a significant negative impact on your reputation.

Review Arrangements With A Healthcare Compliance Attorney To Mitigate Kickback Allegations

If your facility or practice is considering an arrangement – such as an acquisition, management services agreement, medical lease, or revenue-sharing agreement – that could put your healthcare business at risk of violating the Anti-Kickback Statute, consult with a healthcare attorney first.

Hendershot Cowart P.C. has defended physicians, facilities, and other healthcare professionals against AKS investigations since 1987. This experience gives us valuable insight on how to structure arrangements that are compliant and within the statute’s safe harbors.

Our healthcare attorneys can guide you through complex fraud and abuse regulations to ensure your success without compromising compliance.