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 vulnerable patient populations. 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.

Illegal remuneration includes bribes and rebates, gifts, above- or below-market rent or lease arrangements, discounts, supplying services or equipment for free or at above- or below-market rates, cash or in kind, whether they are paid directly or indirectly. Almost anything bought by or between medical providers can be characterized as remuneration, if given with the intent to influence medical decision making.

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 only 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. Thu s, 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.

Although the Anti-Kickback Statute does not include a private right of action, the False Claims Act provides a vehicle whereby private citizens may bring qui tam actions alleging violations of the Anti-Kickback Statute.

In fact, Congress explicitly encouraged such qui tam actions, in 2010, when Congress included a provision in the Affordable Care Act that clarified that all AKS-violatitve claims run afoul of the False Claims Act. Moreover, while the Anti-Kickback Statute requires the government and/or relators to show that the party “knowingly and willfully” engaged in the prohibited conduct, the Affordable Care Act also included an amendment clarifying that they need not show that the defendant had the specific intent to commit a violation of the Anti-Kickback Statute. Thus, the government and/or relators may prove the requisite knowledge even without offering up evidence that the defendants actually knew that their actions violated the Anti-Kickback Statute.

Under the Anti-Kickback Statute and the False Claims Act, it does not matter if the care or item provided was medically necessary; the mere action of filing a claim tainted with a kickback triggers liability. For example, even if a cardiologist provides world-class treatment to a Medicare beneficiary, the Medicare claims submitted for such care could still run afoul of the False Claims Act if the cardiologist had received kickbacks in the provision of the care.