Stark Law/Anti Kickback Statue

On the books since 1972, the federal anti-kickback law’s main purpose is to protect patients and the federal healthcare program from fraud and abuse by curtailing the corrupting influence of money on health care decisions. Straightforward but broad, the law states that anyone who knowingly and willfully pays or receives anything of value to influence the referral of federal healthcare program business (Medicare and Medicaid) can be held accountable for a felony. Violations of the law are punishable with fines, exclusion from Medicare and Medicaid programs and even prison time. Over 1,000 cases of anti-kickback and Stark Law violations were prosecuted in 2010. The number is expected to keep rising.

Because of the broad generic nature of the statue, providers are naturally concerned as to what is and what is not acceptable. For example a rep may provide lunch to a physician’s office only if it is accompanied by a presentation of product. Without the presentation, the statue has been violated. The Office of Inspection General has also used the law in creative ways such as routine waivers of Part B service copayments for Medicare beneficiaries. In other words, if you do not bill a patient, you may be in violation.

One subsection of the anti-kickback laws is the Stark Law that refers to “self-referral”. Physician self-referral is the practice of a physician referring a patient to a medical facility in which he has a financial interest, be it ownership, investment, or a structured compensation arrangement. Critics of the practice allege an inherent conflict of interest, given the physician's position to benefit from the referral. They suggest that such arrangements may encourage over-utilization of services, in turn driving up health care costs. In addition, they argue that it would create a captive referral system, which limits competition by other providers.

Safe Harbor
In 1987 the Congress authorized regulation designating specific “safe harbors” for various payments and business practices that, while potentially prohibited by the law, would not be prosecuted. To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor. Failure to comply with this provision does not mean that an arrangement is per se illegal. Compliance with safe harbor is voluntary. If you are uncertain whether a current or proposed arrangement qualifies for the safe harbor protection, please contact Khouri Law. Safe harbors in areas like Ambulatory Surgical Centers, MRI’s and Joint Ventures are complex and Congress is regularly modifying these statues. Call us for more information. If you have already been contacted by the Department of Health and Human Services or law enforcement about possible violations, please call our firm first.