Legal: Comply with safe harbors

Q. How can I avoid anti-kickback statute liability?
Tuesday, August 25, 2015

A. During a recent Medicare conference, representatives of the Office of Inspector General announced that the healthcare industry should expect to see an uptick in the investigations of alleged Medicare fraud and abuse. True to their word, the OIG has been busy. As the new fiscal year approaches, now is a good time to review your agreements to confirm that they do not violate the federal anti-kickback statute (AKS) or applicable state laws.  

Generally, the federal AKS prohibits suppliers and providers from paying (or offering to pay) someone else to send them federal healthcare business because that may violate the AKS. Payment is not limited to cash, but rather can be anything of value, including use of office space, marketing, etc. Parties on both sides of the transaction face liability under the AKS. Violation of the law is a felony, punishable with up to five years in prison, a $25,000 fine, exclusion from Medicare and Medicaid, and license revocation.  AKS liability may also trigger liability under the False Claims Act for claims stemming from the prohibited activity.  

Several regulatory “safe harbors” shelter certain business relationships from the AKS’s very broad reach.  For example, the “personal services and management contract” and “space rental” safe harbors are often used to help shield suppliers from AKS liability. Although there is no legal requirement that transactions between referral sources comply with a safe harbor, it is prudent if at all possible. The OIG interprets failure to comply fully with a safe harbor as meaning one of three things: (1) The arrangement does not fall within the reach of the AKS and is not intended to induce the referral of business reimbursable under a federal health care program; (2) the arrangement could be a clear violation of the AKS; or (3) the arrangement may violate the AKS in a less serious manner, depending upon the circumstances and on a case-by-case basis.

Jill Vogel is a senior health care attorney at Brown & Fortunato, P.C. Reach her at