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By Spodek Law Group
July 27, 2023Understanding Stark Law, Anti-Kickback Statute, and Healthcare Fraud & Abuse
Healthcare providers like doctors, hospitals, clinics, etc. have to follow many complicated laws and regulations. Some of the most important ones are Stark Law, the Anti-Kickback Statute, and other fraud and abuse laws. These laws are meant to prevent fraud and abuse in federal healthcare programs like Medicare and Medicaid. But they are very complex and providers can easily make mistakes and violations without meaning to. This can lead to huge fines, being banned from Medicare/Medicaid, and even criminal charges. So it’s very important for healthcare providers to understand these laws and comply with them.
What is the Stark Law?
The Stark Law, also called the physician self-referral law, prohibits doctors from referring Medicare/Medicaid patients to get certain designated health services (like lab tests, imaging, etc.) from companies that the doctor or their family has a financial relationship with. For example, a doctor can’t refer patients to a lab company that the doctor owns or invests in, unless they meet one of the exceptions.
There are some exceptions where a financial relationship is allowed, but they have very specific requirements. For example, if a doctor refers patients to a hospital where they work, there is an exception – but only if the doctor is a bona fide employee of the hospital meeting certain criteria[1].
The Stark Law is extremely strict – even just one violation can lead to fines of up to $15,000 per referral, having to repay all money earned from the referrals, and being banned from Medicare/Medicaid[2]. Doctors can face penalties even if they didn’t know they were violating the law. So it’s crucial for doctors to be very careful about any financial relationships and get expert legal advice to make sure they comply with Stark Law.
What is the Anti-Kickback Statute?
The Anti-Kickback Statute makes it illegal to pay or receive money or anything else of value to reward referrals for services paid for by Medicare/Medicaid. For example, it would be illegal for a doctor to receive cash, gifts, or other benefits from a healthcare company for referring patients to them. This law applies to both sides of the transaction – it’s illegal to pay and receive kickbacks[3].
Violating the Anti-Kickback Statute is a felony and can lead to fines up to $25,000, jail time up to 5 years, being banned from Medicare/Medicaid, and civil money penalties up to $50,000[4]. Unlike the Stark Law, prosecutors have to prove the doctor or healthcare company knowingly and willfully violated the law – but even just one purpose related to referrals is enough.
There are some exceptions known as “safe harbors” – like payments to bona fide employees and discounts given to customers – that are allowed. But any arrangements not meeting a safe harbor need careful legal review to make sure they comply with the law[3].
How Do These Laws Work Together?
The Stark Law and Anti-Kickback Statute often overlap. An arrangement that violates one law will often violate the other too. And violating these laws can also lead to violations of the False Claims Act – another law that imposes penalties for overbilling federal healthcare programs.
So it’s very important for healthcare companies and doctors to get experienced legal counsel to review their arrangements – things like compensation, contracts, joint ventures, etc. – to identify any potential issues. Lawyers can help structure arrangements to comply with exceptions or get advisory opinions from the government when needed[5].
What are the Penalties?
As mentioned above, violating Stark, Anti-Kickback, or other healthcare fraud laws can lead to:
- Repayment of all money earned from illegal referrals/kickbacks
- Civil monetary penalties up to $15,000-$50,000 per violation
- False Claims Act penalties up to triple damages
- Criminal fines up to $25,000 per violation
- Exclusion or debarment from Medicare/Medicaid
- Up to 5 years in prison for criminal violations
These penalties can essentially shut down a healthcare provider or company. And with whistleblower provisions that allow employees to report violations, doctors and companies face substantial risk if they don’t comply.
Common Problem Areas
Some common areas that often lead to violations include[6]:
- Improper compensation arrangements – Agreements that pay doctors above fair market value for services can be seen as kickbacks in disguise.
- Joint ventures – Ownership interests between referring providers and companies providing designated health services can violate Stark without an exception.
- Office/equipment leases – Leasing space or equipment below fair market value to induce referrals is illegal.
- Physician-owned distributorships (PODs) – PODs that benefit referring surgeons have frequently led to Stark and Anti-Kickback violations.
- Waiving patient copays – Routine waiver of Medicare copays to induce patient referrals may be an illegal kickback.
- Gifts and entertainment – Gifts, meals, travel, etc. given to reward referrals can violate Anti-Kickback.
Tips for Staying Compliant
Here are some tips for healthcare providers to stay compliant with fraud and abuse laws:
- Get advice on arrangements – Have lawyers review compensation, leases, joint ventures, and other arrangements for compliance.
- Document fair market value – Pay doctors and purchase items at fair market rates with documentation to justify amounts.
- Adopt compliance program – Have formal policies, training, and auditing to detect and prevent violations.
- Know your billing – Make sure billing staff are carefully trained and supervised to avoid overbilling or false claims.
- No free gifts/meals – Don’t provide free gifts, meals, travel, etc. to referral sources.
- Carefully structure incentives – Make sure incentives for doctors align with value and quality, not just volume.
- Ask questions – Encourage employees to ask questions if they suspect potential violations.
Finding the Right Lawyer
Healthcare laws like Stark and Anti-Kickback are extremely complex, but also carry huge penalties for non-compliance. So having an experienced healthcare lawyer is crucial both for reviewing arrangements proactively and defending any alleged violations. Here are some tips for finding the right lawyer:
- Look for lawyers with extensive experience in healthcare law, especially Stark Law, Anti-Kickback Statute, and False Claims Act cases.
- Find someone with experience advising all sides – hospitals, clinics, doctors, etc. That breadth shows deeper expertise.
- Ask about experience defending clients in government audits and investigations related to these laws.
- Look for lawyers that take time to explain the laws and risks in plain language. This shows teacher-like experience.
- Seek out lawyers known for a collaborative approach working with clients. These laws require close cooperation.
- Make sure they have experience with the full lifecycle – compliance planning, defending investigations, settlements, hearings, appeals if needed.
- Ask for references from past clients to understand the lawyer’s track record and client service.
- Look for membership in key professional associations for healthcare lawyers indicating leadership in the field.
- Consider larger law firms with teams of healthcare lawyers that can provide depth of expertise.
- Discuss options for fee structures – hourly, flat fee, contingency – to find the optimal approach.
The potential penalties for violating healthcare fraud laws are massive. But the laws are technical and complex. So having the right legal guidance can help healthcare providers navigate these laws and avoid violations that could seriously damage their practice or business. With the tips above and the right lawyer, healthcare providers can structure compliant arrangements and defend themselves if allegations ever arise.
References
[1] https://www.wachler.com/stark-law-anti-kickback-fraud-abuse-lawyers.html
[2] https://pubmed.ncbi.nlm.nih.gov/23614270/
[3] https://oig.hhs.gov/compliance/physician-education/fraud-abuse-laws/
[5] https://nicholsoneastin.com/practice-areas/healthcare-compliance/anti-kickback-and-stark-law-issues/
