The Medicare and Medicaid Patient Protection Act of 1987 is referred to as the Anti-kickback Statute[i]. The statute provides criminal penalties for certain acts impacting Medicare and Medicaid reimbursable services. Particularly, the statute prohibits the offer or receipt of certain remuneration in return for referrals for or recommending purchase of supplies and services reimbursable under government health care programs.
The Medicare anti-kickback statute prohibits (1) the willful solicitation or receipt of remuneration in return for referrals of Medicare patients for any service for which payment may be made in whole or in part under Medicare or a State health care program, and (2) the offer or payment of remuneration to induce such referrals[ii]. Persons who violate the statute shall be guilty of a felony and upon conviction, shall be fined not more than $25,000 or imprisoned for not more than five years, or both. Thus, the Act explicitly prohibits any remuneration knowingly and willfully offered or paid to induce, or solicited or received in return for, Medicare or Medicaid patient referrals[iii].
While determining liability under the Anti-kickback Statute, courts have held that it is immaterial whether remuneration induces one in a position to refer or recommend or that there are other legitimate reasons for the remuneration. If the remuneration may induce one to refer or recommend, that would be sufficient to impose liability. Thus, a person who offers or pays remuneration to another person violates the Medicare Anti-kickback Act, so long as one’s purpose of the offer or payment is to induce Medicare or Medicaid patient referrals[iv]. The Act encompasses not only the services reimbursed by the Medicare or Medicaid programs but also to any services under the Federal health care program.
However, it is to be noted that certain discounts given by suppliers to cost-reporting providers are exempted by the statute and the statute confers discretion on the Secretary of the DHHS to promulgate regulations which identify other practices which do not violate the Anti-kickback Statute[v].
There is another federal legislation that prohibits similar physician referrals. The statute is known as the Stark law and provides that a physician may not refer a patient to an entity with which the physician has an ownership interest or compensation arrangement if payments for the services furnished under the referral are to be made by the Medicare or Medicaid programs.
Although both the anti-kickback statute and the Stark law were enacted to prevent health care providers from inappropriately profiting from referrals, these two statutes have significant differences. Firstly, the anti-kickback statute is a criminal statute prohibiting any willful solicitation or acceptance of any type of remuneration to induce referrals for health services that are reimbursable by the Federal government. On the other hand, unlike the anti-kickback statute, the Stark law prohibits referrals for specific “designated health services” like clinical laboratory services, physical and occupational therapy, radiology services, durable medical equipment and supplies prosthetics, orthotics and prosthetic devices and supplies, home health services, outpatient prescription drugs, inpatient and outpatient hospital services etc.
The Anti-kickback statute has several safe harbors or exceptions whereby arrangements that appear to violate the statute would be exempt from sanction because they do not violate the spirit of the law. The exceptions to Stark law are of a different nature. For instance, under the Stark Act, referrals within a group practice are allowable.
Although the Stark Act and the Anti-kickback statute operate in the civil and criminal arenas respectively, the statutes share the common objective of ensuring quality health care through the prevention of illegal referrals and hence are complementary in nature.
Courts have held that because the Stark Act is legislation that was enacted to combat kickbacks to physicians for referral of lab tests, its violation brings into play the Medicare anti-kickback statute[vi]. The Stark and Anti-Kickback Acts ensure the quality of patient care and deter abuse of federal health care programs by proscribing certain conflicts of interest that arise when third-party payers cover the cost of treatment. While the Stark Act prevents a physician’s personal financial interests from influencing the type and quality of care that patients receive, the Anti-Kickback Act reinforces the policies underlying the Stark Act through criminal sanctions[vii].
Courts have also held that violations of the Anti-kickback Statute and Stark Law can be pursued under the False Claims Act. Further, compliance with the Anti-kickback Statute and Stark Law is a condition for reimbursement under Medicare[viii].
[i] 42 U.S.C. §1320a-7b.
[iii] United States v. McClatchey, 316 F.3d 1122 (10th Cir. Kan. 2003).
[iv] United States v. Lahue, 261 F.3d 993 (10th Cir. Kan. 2001).
[v] 42 C.F.R. §1001.952.
[vi] United States ex rel. Thompson, 125 F.3d 899, 901 (5th Cir. 1997).
[vii] United States ex rel. Kosenske v. Carlisle HMA, Inc., 2007 U.S. Dist. LEXIS 84294, 16-17 (M.D. Pa. 2007).
[viii] United States ex rel. Ortega v. Columbia Healthcare, Inc., 240 F. Supp. 2d 8, 13 n.5 (D.D.C. 2003).