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.