As we discussed in our previous blog, November 20, 2020 was a big day for False Claims Act attorneys. Just in time for Thanksgiving, we received:

 (1) A draft of the Centers for Medicare & Medicaid Services’ (CMS) final rule regarding Stark Law, the more common name for Medicare’s physician self-referral law; 

(2) A press release and fact sheet explaining how the new Rule affects the Stark Law; and 

(3) A draft of the final revisions to safe harbors under the Anti-Kickback Statute (AKS). 

In all, we were gifted with 1,627 pages to read and digest. This blog continues our review of these materials by addressing the draft of the final revisions to safe harbors under the Anti-Kickback Statute that was published by the Office of Inspector General for the Department of Health and Human Services (OIG). 

Background: The Anti-Kickback Statute

The Anti-Kickback Statute prohibits knowingly and willfully paying or receiving remuneration in exchange for federal healthcare program referrals. Let’s break those elements down. To be a violation of the AKS, a situation would have to be a “yes” on each of these questions:

  • Did one health care provider pay another “remuneration”? As with “financial relationship” under the Stark Law, “remuneration” is broadly defined. It can include cash but also reduced rent, reduced contract pricing, gift cards, fancy dinners, trips, etc. 
  • Was the purpose of the remuneration to induce or reward referrals? Key to this would be whether the remuneration is “volume-based,” because if you are paying someone on a per-referral basis, that is pretty strong evidence that the remuneration is “in exchange for referrals.”
  • Were those referrals for patients covered by federal healthcare programs?
  • Did the health care provider do this “knowingly and willfully”? This describes the state of mind required for a violation of the AKS. Note that this is different from Stark, which has no “mental state” requirement. 

The AKS is a criminal statute as well, so violators may be subject to criminal penalties, civil monetary penalties, and administrative actions like exclusion from federal healthcare programs. 

Like the Stark Law, the AKS has exceptions known as “safe harbors,” which allow for payments and business practices that would otherwise violate the AKS to pass muster.

Under the Patient Protection and Affordable Care Act, Congress memorialized that violations of the Anti-Kickback Statute taint the resulting claims for reimbursement so that their submission violates the False Claims Act.

How is the Anti-Kickback Statute different from the Stark Law?

Many times, people talk about these two laws together because they both prohibit referrals by physicians in certain circumstances. However, there are differences. Here are some of the key differences between the two:

  • The AKS includes civil and criminal penalties, while the Stark Law is exclusively a civil enforcement statute.
  • Stark is narrower: it is limited only to certain “Designated Health Services.” By contrast, the AKS applies to any federal healthcare program.
  • As discussed in our last installment, Stark is a strict liability statute. This means that while a health care provider has to intend to violate the AKS, it is not required to intend to violate Stark.
  • Violation of Stark must involve a referral relationship between a physician and an entity. By contrast, the AKS applies to any referral source, not just physicians. In fact, AKS violations often include kickbacks to patients themselves for agreeing to come in for services.

The New Anti-Kickback Statute Rules

Even more than the new Stark Law Rule, the new Anti-Kickback Statute Rule is focused on “value-based arrangements.” A value-based arrangement is “an arrangement for the provision of at least one value-based activity for a target patient population to which the only parties are: (1) a value-based enterprise [“VBE”] and one or more of its VBE participants; or (2) VBE participants in the same value-based enterprise.” 

The new AKS Rule implements three new safe harbors for remuneration exchanged between or among participants in value-based arrangements in order to foster “better coordinated and managed patient care.”

In general, these AKS value-based safe harbors are stricter than the value-based Stark Law exceptions. Pharmacy benefit managers, laboratory companies, compounding pharmacies, medical device and supply distributors/wholesalers, and pharmaceutical manufacturers, distributors, and wholesalers are excluded from the AKS value-based safe harbors. 

The protections associated with the value-based safe harbors vary depending on many factors, including the level of risk assumed, eligible entities, and the amount of remuneration at issue. Only value-based arrangements with substantial risk protect monetary remuneration.

Some examples provided by HHS are: 

  • To improve patient transitions from one care delivery point to the next, a hospital may wish to provide physician offices with care coordinators that furnish individually tailored case management services for patients requiring post-acute care.
  • A hospital may wish to provide support and to reward institutional post-acute providers for achieving outcome measures that effectively and efficiently coordinate care across care settings and reduce hospital readmissions. Such measures would be aligned with a patient’s successful recovery and return to living in the community. 
  • A primary care physician or other provider may wish to furnish a smart tablet that is capable of two-way, real-time interactive communication between the patient and his or her physician. The patient’s access to a smart tablet could facilitate communication through telehealth and the provision of in-home services.
  • A health system furnishes cybersecurity technology to physician practices to reduce harm from cyber threats to all their systems.

In addition to value-based safe harbors, the new Rule also includes safe harbors for Cybersecurity Technology and Services, along with new exceptions for outcome-based activities and Point-of-Sale Price Reductions that might otherwise be considered improper remunerations. 

Contact Bracker & Marcus LLC to Learn More

Of course, unlike the Thanksgiving turkey, these new Rules will take a while to digest, but we hope that this has been a helpful overview of what we know so far. And as always, if you suspect you are witness to a violation of the Anti-Kickback Statute or Stark Law, we urge you to call Bracker & Marcus LLC for a free consultation.