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Federal Anti-Kickback Statute Provides for 'Safe Harbors'

Federal Anti-Kickback Statute Provides for 'Safe Harbors'

Part 1 of this three-part series on the Medicare fraud and
abuse laws reviewed the laws prohibiting self-referrals (ONI,
Jan, 1995, ). Part 2 (Feb, 1995) looked at the false claims laws
and how to avoid exposure to such claims. This final article discusses
the Medicare and Medicaid anti-kickback statute.

The Medicare and Medicaid anti-kickback statute prohibits a physician
or other entity from knowingly and willfully offering or paying
remuneration (anything of economic value) to induce a referral
for which payment may be made under Medicare/Medicaid. The statute
is also violated when a physician or entity demands or receives
payment for referrals for a good, facility, service, or item covered
under Medicare or Medicaid.

Payment for referrals is prohibited, even if disguised as a legitimate
payment. For example, if a laboratory pays excessive rent (beyond
fair market value) to a physician for use of space, the Office
of the Inspector General (OIG) will infer that part of the payment
is for referrals.

Similarly, if a physician accepts payments for serving as an entity's
medical director--and the pay is high and the responsibilities
minimal--the OIG may believe that the arrangement constitutes
a kickback for the physician's referrals.

The OIG has published certain "safe harbors," ie, arrangements
that will not be pursued as kickbacks. Safe harbors exist for
rental of space and equipment, payments under personal service
and management contracts, payments to bona fide employees, and
certain medical practice purchases. Each safe harbor includes
conditions that must be met for the arrangement to be protected
(see table), and arrangements that do not meet these conditions
may present significant risks.

Although the anti-kickback law dates back to 1972, new health-care
arrangements may result in new legal concerns. Payments to management
service organizations (MSOs), through which physicians purchase
administrative services, may be based on a percentage of the physician's
revenue. If the MSO owners have the ability to refer patients
to a physician under contract with the MSO, then the anti-kickback
statute might be violated.

For example, if one of the MSO owners was an oncologist who referred
a patient to a surgical group that was paying the MSO 40% of its
gross revenues for management services, and the group collected
$1,000 for the procedure, then the owners of the MSO would indirectly
obtain $400 as a result of the referral, potentially violating
the anti-kickback law.

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