What is the Anti-Kickback Statute?

The anti-kickback statute is a US law prohibiting a business or person from offering money to medical personnel in return for the recommendation of products or services to patients on certain federally covered medical programs, including Medicare/Medicaid. While designed to promote fair marketing, it also gives protection to Medicare/Medicaid patients, who are typically elderly or disabled. In most cases, to prosecute a statute violation, there must be evidence that the funding offer was made specifically with the intent to break the law.

When the statute is violated and intent is discovered, everybody involved can be prosecuted. Medical suppliers, doctors, nurses, pharmacists, or anyone else that benefited from the kickback face stiff fines and possible incarceration. Because it is a federal statute, violators are prosecuted in federal court.

Clarification of the law was detailed in 1991 under the Safe Harbor Rule. The Safe Harbor Rule protects specific activities from prosecution under the anti-kickback law. Examples of protected activities include publicly traded company investments as well as fair market discounts on products, drugs, and services. An enrollment incentive in the managed-care field is also exempt from the anti-kickback statute.

Investigations of abuse of the anti-kickback statute are handled by the US Department of Justice. Violating the law carries a possible federal prison sentence of no more than five years and fines up to $25,000 for each conviction. In addition, convicted medical professionals receive a lifetime ban with regard to government program participation. In 1997, the government introduced civil fines for violators of the act. The fines are under the 1997 Balanced Budget Act and can be as high as $50,000 per conviction.

Examples of kickbacks include hospitals overcharging radiologists for transcription copies, then getting reimbursed through Medicare Part A. The radiologist is then faced with either paying the higher amount, beyond what Medicare will cover for the services, or having the hospital terminate the contract for the company to provide radiology services. If investigated, the radiologist would not be in trouble for refusing to pay, but the hospital would be in trouble for its actions.

Failing to attempt a collection of Medicare's mandated patient co-pay is also a violation of the law. Failing to collect co-payments, or at least failing to make a good-faith effort to collect, puts the provider in a position to benefit because patients will flock to that provider for care to save co-pay money. This gives the provider an unfair advantage over the competition, which violates the anti-kickback statute's premise.

Under the spirit of the law, one referral for services in return for financial remuneration is enough to violate the statute. Providing professional courtesy care to coworkers, friends, and family members may be done with the best intentions, but if a government medical program is attached to the care, it is a violation not to collect co-pays. Referring patients to friends and family members for services or treatment in return for a fee is also a violation of the law.

In addition to the federal law, many US states have state-implemented anti-kickback laws. Medical professionals can protect themselves from federal and state prosecution by carefully examining their practices, policies, and procedures regarding patients on Medicare or Medicaid programs. Violations can occur during purchase of supplies, referrals for care, equipment leasing referrals, and service provisions. If events occur that have potential to slant clinical decisions or cause excessive ordering of a service, and such events will increase the cost to the federally funded medical program, the situation could be viewed as a violation.