Jeffrey Wade
The Anti-Kickback Statute (AKS) is a federal law that prohibits offering or accepting kickbacks intended to generate healthcare business. It covers remuneration to doctors, patients, procurement staff, and marketing/advertising/sales personnel. While the AKS has historically focused on federal funds, recent developments indicate an expansion in scope to include private insurance claims. For example, in United States v. Beauchamp, the Department of Justice used the Travel Act to convict healthcare professionals for offering kickbacks to physicians who directed commercially insured patients to their hospital. Additionally, the Eliminating Kickbacks in Recovery Act (EKRA) prohibits kickbacks for referrals to recovery homes, clinical treatment facilities, or laboratories, covering both commercial and government payors. These developments suggest that the anti-kickback statute's application is broadening to encompass commercial insurance.
| Characteristics | Values |
|---|---|
| What is the Anti-Kickback Statute? | A federal criminal law that prohibits offering or accepting kickbacks intended to generate healthcare business. |
| What does it prohibit? | Paying remuneration to doctors, patients, procurement staff/management, and marketing/advertising/sales staff. |
| What is remuneration? | Anything of value, including cash, free rent, expensive hotel stays, meals, excessive compensation, gifts, free or discounted supplies or services, and travel. |
| What is the penalty for violating the Anti-Kickback Statute? | A felony, punishable by up to ten years in jail and fines of up to $100,000 per violation, as well as additional fines under the Civil Monetary Penalties Law (CMPL). |
| What is the intent element? | The Anti-Kickback Statute only applies when the purpose of the kickback is to reward or induce the referring, buying, etc. |
| What are some examples of violations? | GlaxoSmithKline, TAP Pharmaceuticals, DaVita Healthcare Partners, Amgen, MedNet, and more. |
| Does it apply to private insurance claims? | Historically, the Anti-Kickback Statute has been used for enforcement actions involving federal funds. However, the U.S. Department of Justice has recently used the Travel Act and EKRA to prosecute kickbacks involving private insurance payors. |
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What You'll Learn
The Anti-Kickback Statute and commercial insurance
The Anti-Kickback Statute (AKS) is a federal criminal law that prohibits the offering or accepting of kickbacks intended to generate healthcare business involving federal healthcare programs. This includes Medicare and Medicaid, as well as other federally funded healthcare programs. The AKS covers both the payers and recipients of kickbacks, with the intent to induce or reward patient referrals or the generation of business.
Violations of the AKS can occur when a person or entity knowingly and willfully offers, pays, solicits, or receives any form of remuneration, including cash, gifts, free or discounted services, and travel. These kickbacks create financial incentives for healthcare providers to prescribe certain drugs or use specific services, resulting in higher costs for patients and insurance programs.
While the AKS has historically been applied to cases involving federal funds, recent developments indicate an expansion in its enforcement. The U.S. Department of Justice has started investigating and prosecuting referral-based arrangements for private insurance claims under the Travel Act and the Eliminating Kickbacks in Recovery Act (EKRA). EKRA, passed in 2018, specifically addresses kickbacks involving commercial and government payors in the context of substance abuse treatment facilities.
Healthcare companies and providers should be mindful of these evolving trends in the enforcement of anti-kickback regulations. It is crucial to assess and mitigate the risk of their financial arrangements being construed as inducements for healthcare items or services, regardless of whether federal or private insurance funds are involved.
The Anti-Kickback Statute, in conjunction with other laws such as the Stark Law and the Civil Monetary Penalties Law, plays a vital role in combating healthcare fraud and protecting patients, commercial insurance providers, and government healthcare programs from abusive practices.
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Violations and penalties
The Anti-Kickback Statute (AKS) is a federal criminal law that prohibits offering or accepting kickbacks to generate healthcare business. Violating the AKS is a felony, punishable by up to 10 years in jail and fines of $100,000 per violation. It also results in liability under the False Claims Act (FCA), which imposes additional penalties of up to three times the value of the tainted claims caused to the government by the fraud, plus a penalty of up to $27,894 per violation as of February 2024. The FCA also contains a whistleblower provision that allows individuals to file lawsuits on behalf of the government and claim a percentage of any recoveries.
The AKS covers a range of individuals, including doctors, patients, procurement staff, marketing and sales representatives, and anyone in a position to influence the purchasing decisions of things paid for by health insurance. Violations of the AKS can take many forms, including offering or accepting kickbacks, bribes, or other forms of remuneration to induce patient referrals or the generation of healthcare business. Remuneration can include anything of value, such as cash, free rent, expensive hotel stays, meals, or excessive compensation for medical directorships or consultancies.
In addition to the AKS, there are other laws and statutes that impose penalties for similar violations. The Physician Self-Referral Law, commonly referred to as the Stark Law, prohibits physicians from referring patients to entities with which they or their immediate family members have a financial relationship. Violations of the Stark Law can result in civil monetary penalties and exclusion from participation in Federal Healthcare programs. The Eliminating Kickbacks in Recovery Act (EKRA) prohibits the soliciting, receiving, paying, or offering of any remuneration, including kickbacks, bribes, or rebates, to induce referrals to recovery homes, clinical treatment facilities, or laboratories, covering both commercial and government payors.
The federal government has also used the Travel Act to prosecute kickbacks involving private insurance payors. Under the Travel Act, the use of any facility in interstate commerce to promote or facilitate any unlawful activity, including bribery as defined by state law, is criminalized. This has been applied in cases where healthcare professionals have offered kickbacks to physicians who refer their commercially insured patients to a specific hospital.
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The False Claims Act and whistleblowing
The False Claims Act (FCA) is America's first whistleblower law and one of the strongest whistleblower laws in the United States. It was enacted in 1863 by President Abraham Lincoln during the Civil War to combat widespread contracting fraud. The FCA allows ordinary citizens to sue on behalf of the government and receive a portion of the government's recovery ranging between 15 and 30 percent. The FCA holds individuals liable in several scenarios, including when they deliberately dodge their financial responsibilities to the government. This law allows ordinary private citizens (also known as "relators") to file whistleblower cases (known as "qui tam" suits) on behalf of the government.
The FCA is a federal whistleblower law that was enacted to combat widespread contracting fraud. The FCA provides that any person who knowingly submits or causes to submit false claims to the government is liable for three times the government's damages plus a penalty. Under the civil FCA, each instance of an item or service billed to Medicare or Medicaid counts as a claim, so fines can add up quickly. The fact that a claim results from a kickback or is made in violation of the Stark law may also render it false or fraudulent, creating liability under the civil FCA as well as the AKS or Stark law.
The FCA has been highly successful as a public-private partnership. As of the end of 2018, government recoveries have exceeded $59 billion following 1986 amendments that strengthened the False Claims Act, with rewards to whistleblowers totaling billions of dollars. The FCA is written broadly, with the aim of reaching all types of fraud that might result in financial loss to the United States. The FCA whistleblower program also rewards individuals who provide original information about violations of the Bank Secrecy Act (BSA), FinCEN regulations, or OFAC sanctions.
The FCA was written to be expansive, and it is applicable to conduct outside the U.S. as long as there is federal spending, procurement, or contracting. It is suitable for building criminal cases as well as civil cases, and anyone can serve as a whistleblower, including non-U.S. citizens and NGOs. FCA whistleblowers are also eligible for protection against retaliation from their employer, which might include being discharged, demoted, or otherwise harassed for taking action to report or stop fraudulent activity that violates the FCA.
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The Eliminating Kickbacks in Recovery Act
The purpose of EKRA is to combat patient brokering and recovery profiteering. Patient brokers recruit patients and refer them to the highest bidder, often defrauding patients and offering them bribes. To fund the kickbacks, facilities and brokers push patients towards expensive private insurance, often government-subsidized.
EKRA's safe harbors include exceptions for properly disclosed discounts or reductions under a healthcare benefit program, payments made to bona fide employees or independent contractors unaffected by patient referral volume, Medicare coverage gap discounts, and personal services and management contracts that meet the requirements of the safe harbor to the Anti-Kickback Statute.
EKRA is codified in 18 U.S.C. § 220 and establishes criminal penalties for violations, including fines, prison terms of up to 10 years, or both. In the criminal case US v. Schena, the California district court found that the defendant's scheme to influence marketers by paying them illegal kickbacks to induce patient referrals was unlawful under EKRA. Mr. Schena was sentenced to 8 years in federal prison and ordered to pay more than $24 million in restitution.
The Anti-Kickback Statute (AKS), a federal criminal law, prohibits offering or accepting kickbacks intended to generate healthcare business involving federal healthcare programs such as Medicare and Medicaid. AKS violations are felonies punishable by up to 10 years in jail and fines of $100,000 per violation. AKS also prohibits paying remuneration to doctors when referring patients to items or services paid for by health insurance, patients when choosing items paid for by health insurance, procurement staff when choosing supplies, and marketing or sales personnel.
While AKS has historically been the basis for enforcement actions in the healthcare industry for alleged kickbacks involving federal funds, the federal government has expanded its reach by investigating and prosecuting referral-based arrangements for private insurance claims under EKRA and the Travel Act. Healthcare companies should reassess their referral-based arrangements for private insurance claims to ensure compliance with these laws.
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The Physician Self-Referral Law
Financial relationships include both ownership/investment interests and compensation arrangements. For example, if a physician invests in an imaging centre, the Stark Law requires the resulting financial relationship to fit within an exception, or the physician may not refer patients to the facility and the entity may not bill for the referred imaging services. The statute establishes a number of specific exceptions and grants the Secretary of the Department of Health and Human Services (HHS) the authority to create regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse.
The Stark Law is a strict liability statute, which means proof of specific intent to violate the law is not required. The law prohibits the submission, or causing the submission, of claims in violation of the law's restrictions on referrals. Criminal penalties for submitting false claims include imprisonment and criminal fines. Physicians have gone to prison for submitting false health care claims. OIG may also impose administrative civil monetary penalties for false or fraudulent claims.
The Anti-Kickback Statute (AKS) is a federal criminal law that prohibits the knowing and willful payment of "remuneration" to induce or reward patient referrals or the generation of business involving any item or service payable by the Federal health care programs. Remuneration includes anything of value and can take many forms besides cash, such as free rent, expensive hotel stays and meals, and excessive compensation for medical directorships or consultancies. The AKS has historically been the basis for enforcement actions in the healthcare industry for alleged kickbacks where only federal funds were involved. However, the federal government has started investigating and prosecuting referral-based arrangements for private insurance claims under the Travel Act and the Eliminating Kickbacks in Recovery Act (EKRA).
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Frequently asked questions
The Anti-Kickback Statute (AKS) is a federal criminal law that prohibits offering or accepting kickbacks intended to generate healthcare business. Violation of the AKS is a felony and can lead to serious penalties, including jail time and fines.
The AKS prohibits paying remuneration to doctors when referring patients to things paid for by health insurance, such as drugs, tests, equipment, and supplies. It also prohibits paying remuneration to patients when choosing to buy or lease things paid for by health insurance.
While the AKS has historically been applied to enforcement actions in the healthcare industry involving federal funds, the U.S. Department of Justice has expanded its reach by prosecuting kickbacks involving private insurance payors. In the United States v. Beauchamp case, the Department of Justice used the Travel Act to convict surgeons and healthcare professionals who offered kickbacks to physicians for steering commercially insured patients to their hospital.
Examples of AKS violations include:
- GlaxoSmithKline paid $3 billion in a settlement involving charges of kickbacks and off-label marketing.
- TAP Pharmaceuticals paid $875 million in a settlement for providing illegal kickbacks, such as free televisions and seminars at resorts, to doctors to prescribe their drug.
- DaVita Healthcare Partners paid $400 million in a settlement for paying doctors kickbacks in exchange for patient referrals to its dialysis clinics.
