Anti-Kickback Statute

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The Anti-Kickback Statute arose out of Congressional concern that payoffs to those who can influence healthcare decisions will result in goods and services being provided that are medically inappropriate, unnecessary, of poor quality, or even harmful to a vulnerable patient population. To protect the integrity of federal healthcare programs from these difficult to detect harms, United States Congress in 1977 enacted a prohibition against the payment of kickbacks in any form.

The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), prohibits any person or entity from making or accepting payment to induce or reward any person for referring, recommending or arranging for the purchase of any item for which payment may be made under a federally-funded health care program. The statute not only prohibits outright bribes, but also prohibits offering inducements or remuneration that has as one of its purposes the inducement of a physician to refer patients for services that will be reimbursed by a federal healthcare program. The statute ascribes liability to both sides of an impermissible kickback relationship.

The Department of Health and Human Services had promulgated safe harbor regulations that define practices that are not subject to the anti-kickback statute because such practices would be unlikely to result in fraud or abuse. See 42 C.F.R. § 1001.952. The safe harbors set forth specific conditions that, if met, assure entities involved of not being prosecuted or sanctioned for the arrangement qualifying for the safe harbor. However, safe harbor protection is afforded only to those arrangements that precisely meet all of the conditions set forth in the safe harbor. These exceptions include regulatory safe harbors for space rental, equipment rental, and personal services and management contracts as long as certain standards are met. The space and equipment rental safe harbors apply to payments made to a lessor for the use of the premises or equipment as long as “the lease is intended to provide the lessee with access for periodic intervals of time” with schedules, intervals and costs expressly stated in the lease, the rental charge is consistent with fair market value in arms-length transactions and is not determined in a manner that takes into account the volume or value of any referrals or business otherwise generated between the parties. Thus, where payments purportedly made to lease real property or equipment do not comply with the conditions and are made with the intent to reward referrals, the Anti-Kickback Statute has been violated.

Either pursuant to provider agreements, claims forms, or other appropriate manner, hospitals, pharmacists and physicians who participate in a federal healthcare program generally must certify that they have complied with the applicable federal rules and regulations, including the Anti-Kickback law.

Compliance with the Anti-Kickback Statute is a precondition to participation as a healthcare provider under the Medicare, Medicaid, CHAMPUS/TRICARE, CHAMPVA, Federal Employee Health Benefit Program, and other federal healthcare programs. Accordingly, claims for reimbursement for inpatient or outpatient services under these programs that were the result of referrals tainted by kickbacks (or violations of the Stark law), are false claims and are not entitled to reimbursement.

The enactment of these various provisions and amendments demonstrates Congress’s commitment to the fundamental principle that federal healthcare programs will not tolerate the payment of kickbacks. Compliance with the Anti-Kickback Statute is a prerequisite to a provider’s right to receive or retain reimbursement payments from Medicare and other federal healthcare programs. Noncompliance in Medicare Fraud and may be the basis of a qui tam False Claims Act lawsuit brought by a whistleblower.

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