Written by the AIHC Education Department
About the AKS
The Anti-Kickback Statute [42 U.S.C. § 1320a-7b(b)]
The AKS is a 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 (e.g., drugs, supplies, or health care services for Medicare or Medicaid patients). 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.
In some industries, it is acceptable to reward those who refer business to you or your organization. However, in the Federal health care programs, paying for referrals is a crime.
The statute covers the payers of kickbacks, those who offer or pay remuneration, as well as the recipients of kickbacks. Yes, the law applies to those who solicit or receive remuneration. Each party's intent is a key element of their liability under the AKS.
The Department of Justice (DOJ), the Department of Health and Human Services Office of Inspector General (OIG), and the Centers for Medicaid and Medicare Services (CMS) are all charged with enforcing these laws. Filing claims to any Federal healthcare program related to an AKS violation may also violate the False Claims Act (FCA). From there, it just gets more complicated because kickbacks in health care can lead to:
- Overutilization
- Increased program costs
- Corruption of medical decision making
- Patient steering
- Unfair competition
The kickback prohibition applies to all sources of referrals, even patients. For example, where the Medicare and Medicaid programs require patients to pay copays for services, you are generally required to collect that money from your patients. Routinely waiving these copays could implicate the AKS and you may not advertise that you will forgive copayments. It can be used to induce patients to choose a specific provider's services or to prescribe their products instead of cheaper alternatives. However, you are free to waive a copayment if you make an individual determination that the patient cannot afford to pay or if your reasonable collection efforts fail. It is also legal to provide free or discounted services to uninsured people.
The Government does not need to prove patient harm or financial loss to the programs to show that a physician violated the AKS. A physician can be guilty of violating the AKS even if the physician actually rendered the service and the service was medically necessary. Taking money or gifts from a drug or device company or a durable medical equipment (DME) supplier is not justified by the argument that you would have prescribed that drug or ordered that wheelchair even without a kickback.
Consequences for Violating the AKS
AKS Criminal penalties and administrative sanctions for violating the AKS include fines, jail terms, and exclusion from participation in the Federal health care programs as follows:
- Civil penalties: The CMPL allows the Office of Inspector General (OIG) to impose civil penalties for violations of the Anti-Kickback Statute. These penalties include a fine of up to $50,000 per violation plus three times the value of the illegal kickback (treble damages).
- Criminal penalties: Violating the Anti-Kickback Statute is a felony and can also lead to criminal penalties, including fines of up to $100,000 and imprisonment for up to 10 years.
- Other consequences: In addition to financial and criminal penalties, individuals found guilty of kickback violations can be excluded from participation in federal health care programs. The Office of Inspector General (OIG) has the authority to exclude both individuals and entities. Claims that include items or services resulting from a violation are not payable and may constitute false or fraudulent claims under the False Claims Act.
Criminals Target Healthcare Providers
Physicians make an attractive target for kickback schemes because you can be a source of referrals for fellow physicians or other health care providers and suppliers. As a provider, you decide what drugs your patients use, which specialists they see, and what health care services and supplies they receive. And criminals count on providers not understanding the law. This point stresses the need to audit for potential AKS violations and to have a healthcare attorney familiar with the AKS to review any agreements in advance to avoid an unlawful situation.
There are still handshake deals made, where there is no written agreement, where remuneration is made in exchange for some form of kickback. Even these “unwritten” arrangements should be audited for potential issues.
Auditors are typically not attorneys, but an internal auditor can receive training to review for potential violations, then refer questionable situations to the Compliance Officer who will forward to outside legal counsel for further investigation and corrective action. Why outside legal counsel? In-house legal counsel is likely to have reviewed or written the agreement in question, creating a conflict of interest in being involved in any aspect of the audit process.
Common targeting methods
- Payments disguised as legitimate compensation:
- Paying providers for patient referrals disguised as "bonuses" or "referral fees".
- Offering or paying for patient information that is used to market to potential enrollees.
- Paying providers for "consulting," "advising," or "research" when the primary purpose is to secure referrals.
- Overpaying doctors for speaking engagements.
- Payments for office space, phlebotomy, or other services that are inflated or not legitimate, intended to be a form of compensation for referrals.
- In-kind or indirect benefits:
- Providing free or below-market rent, equipment, supplies, or staff.
- Offering gifts or tokens of appreciation that could be perceived as a reward for referrals.
- Giving practice subsidies or covering expenses that are not otherwise required.
- Free or discounted office space or supplies.
- Gifts, meals, or tickets to events.
- Compensation based on referral volume or status:
- Offering payments or bonuses that are based on the number of patients a provider refers to a particular plan or service.
- Providing remuneration that is contingent on the health status or demographics of the patients referred.
- Exploiting "safe harbors":
- Structuring arrangements that appear to be compliant (e.g., professional courtesy programs or recruitment benefits) but have the primary purpose of inducing referrals.
Safe Harbor Considerations
Safe harbors are specific, pre-approved exceptions to the AKS that provide immunity from prosecution if followed precisely. They are voluntary, and not all financial arrangements have a safe harbor. An arrangement must meet all conditions of a specific safe harbor to be protected; partial compliance is not enough.
To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor and satisfy all of its requirements. Some safe harbors address personal services and rental agreements, investments in ambulatory surgical centers, and payments to bona fide employees.
Congress set forth a number of factors to consider when developing safe harbors; while not binding with respect to any assessment of an arrangement that implicates the Federal anti-kickback statute (other than in the establishment or modification of safe harbors (see section 1128D(a)(2) of the Act, 42 U.S.C. 1320a–7d(a)(2)), they are instructive for assessing risk under the Federal anti-kickback statute.
For example, OIG’s advisory opinions frequently consider factors such as overutilization, increased costs to Federal health care programs, corruption of medical decision making, patient steering, and unfair competition.
One of OIG’s Compliance Program Guidance documents reiterates these factors by highlighting the following questions to help guide an assessment of any problematic arrangements or practices identified as a red flag:
- Does the arrangement or practice have the potential to interfere with, or skew, clinical decision making?
- Does the arrangement or practice have the potential to increase costs to Federal health care programs or beneficiaries?
- Does the arrangement or practice have the potential to increase the risk of overutilization or inappropriate utilization?
- Does the arrangement or practice raise patient safety or quality of care concerns?
- Does the arrangement or practice raise concerns related to steering patients or providers to a particular item or service?
The health care community and its partners must be mindful of these types of factors and question arrangements that implicate the Federal anti-kickback statute. An affirmative answer to one or more of these questions is a red flag signaling an arrangement or practice may be particularly susceptible to the harm caused by fraud and abuse.
AKS Audit Checklist
To audit for Anti-Kickback Statute (AKS) violations, create a comprehensive inventory of financial relationships, assess existing contracts against AKS safe harbors, conduct internal reviews of transactions and billing, and implement a robust compliance program that includes regular monitoring and staff training. Key steps include analyzing payments to ensure they are for fair market value, are not tied to referrals, and that arrangements are documented properly with signed agreements and legal review.
- Build an inventory of all financial relationships
- List all transactions -
- Document all financial relationships and transactions with potential AKS implications, including those with physicians, vendors, and other healthcare entities.
- Categorize relationships –
- Group arrangements by type, such as physician recruitment, medical directorships, lease agreements, and professional service agreements.
- Work with legal counsel –
- Involve legal counsel to ensure no relevant relationships with government health care programs are missed.
- List all transactions -
- Review and assess existing arrangements
- Check against safe harbors –
- Compare each financial arrangement against the requirements of relevant AKS safe harbors. For example, safe harbor requirements often include a written agreement, specifies the services, is for at least one year, and compensation is at fair market value and not tied to the volume or value of referrals.
- Verify compensation –
- Ensure compensation is set in advance and is not changed retroactively, especially within the first year of a new contract. Compensation should not be based on referrals or revenue generated from referrals.
- Examine billing practices –
- Review billing and payment practices to confirm they align with contractual terms and are at fair market value.
- Check against safe harbors –
- Conduct data analysis and transaction-level audits
- Obtain relevant data –
- Gather data from general ledgers, vendor files, payroll, and payment records.
- Select a sample –
- Randomly select a sample of payments for a detailed audit.
- Validate transactions –
- Cross-reference payments against supporting documentation, such as invoices, timesheets, and contracts.
- Use data analytics –
- Employ data analytics to identify patterns and trends that might indicate improper conduct. This is an area where implementing Artificial Intelligence programs can provide speed and accuracy.
- Obtain relevant data –
- Audit Results Can Strengthen the Compliance Program
- Implement policies –
- Audit results can help the Compliance Department establish written policies and procedures for compliance with the AKS.
- Provide training –
- Regularly train staff and key stakeholders on the AKS and how to identify and report potential violations. This includes discussion with all providers during on-boarding and at least annually as part of compliance training.
- Ensure due diligence –
- Conduct due diligence on new and existing business partners and perform background checks, such as checking the OIG's exclusion list.
- Monitor and report –
- Create a system for ongoing monitoring and auditing and establish a confidential way for employees to report suspected violations.
- Implement policies –
Conclusion
Audits proactively uncover compliance gaps and vulnerabilities before they become a problem, allowing for corrective action to be taken.
Auditing for AKS (Anti-Kickback Statute) compliance is crucial for mitigating risk because it identifies and addresses vulnerabilities that could lead to severe legal penalties, financial fines, and reputational damage. Regular audits help ensure adherence to laws and regulations, protect company assets, and maintain the trust of stakeholders by demonstrating a commitment to ethical practices.
Monitoring for AKS violations helps to prove a commitment to ethical and legal conduct. These types of audits help maintain a positive brand image and public trust.
Remember, regular auditing fosters a company-wide culture of accountability and continuous improvement, where employees are more aware of and committed to compliance requirements.
About the AIHC Education Department
The American Institute of Healthcare Compliance (AIHC) Education Department provides classroom and web-based training and certification for healthcare administrators and professionals. It includes an enrollment department that processes registrations, and a research and development arm focused on creating new educational products. Learn more about short course and certification offerings in addition to free and low-priced Continuing Education Unit (CEU) certification renewal single short courses or CEU packages. Visit our website https://aihc-assn.org/
References
- Centers for Medicare and Medicaid Services - WPS Government Services on Waivers of Deductibles and Co-Insurance
- Department of Justice Enforcement Activities
- Office of Inspector General Fraud & Abuse Laws, Physician Roadmap
- American Institute of Healthcare Compliance, Healthcare Compliance certification program
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