42 United States Code section 1395nn contains what is commonly called the physician self-referral law, otherwise known as the Stark law. It prohibits doctors from directly or indirectly referring patients for a broad range of designated health care services that are to be paid by Medicare or Medicaid when the entity that the patient is referred to has an immediate financial relationship with the referring doctor or an immediate family member. It also prohibits the entity to which the patient was referred from billing Medicare or Medicaid for those services.
Proof of intent to violate the physician self-referral law is not required. It is a strict liability offense, punishable by fines of up to $15,000 for each service that a person knew or should have known was contrary to statute. Violators also face exclusion from participation in federal health care programs. Additional fines of up to $100,000 can be assessed for attempting to circumvent the law and each attempt to do so. There are exceptions to the statute, but they are detailed and highly specific.
Critics of self-referral argue that it creates a conflict of interest because the doctor derives a benefit from his or her own referral which can result in overutilization of services and limit competition by other providers of the same health care services at lower rates.
The federal anti-kickback statute is found at 42 United States Code section 1320a-7b. It forbids the offer of an exchange or the actual exchange of anything in value for referring federal health care business. Pursuant to applicable case law, if one purpose of a payment, offer of exchange or exchange of anything of value is for purposes of inducing future referrals, the anti-kickback statute has been violated. A first conviction of the anti-kickback statute can result in five years in prison and a fine not to exceed $25,000 along with being mandatorily excluded from federal health care programs. Even without a conviction, one might face discretionary exclusions from the programs. Civil treble damages plus $50,000 for each violation of the statute can also be assessed. Under the Affordable Care Act, actual knowledge of a violation of the anti-kickback statute or the specific intent to violate it is not necessary to support a conviction. Prosecutors need only prove that a person intended to violate the law, but not the anti-kickback statute itself.
Our health care attorneys are knowledgeable and experienced in both Stark and anti-kickback law. If you own a medical practice or health care business, talk with us and we’ll help you navigate through these two complex statutes. If there’s an exception available to you, we’ll find it, and we’ll advise you accordingly, and then we’ll help keep you in compliance too. The Centers for Medicare and Medicaid Services (CMS) has defined and published certain “safe harbor” regulations that discuss conduct and business relationships that are not contemplated by the anti-kickback statute. Assuming that all conditions are met, nobody gets prosecuted for the business relationship.
Our health care practice attorneys assist hospitals, clinics, physicians and other health care providers with proposed transactions in efforts to eliminate the risk of lawsuits or prosecutions. All contracts with service providers who might be a source of referrals must be analyzed accordingly. Due care and caution should be exercised in working within these statutes as enforcement by government agencies at all levels has shifted gears, and penalties are severe. Even innocent technical oversight involving either one of the laws can be determined to be violations.
Don’t hesitate to arrange for an appointment with us to discuss your Stark or anti-kickback law questions. We’re primarily litigators, but we would far rather help keep you in compliance than defend you in federal court. We have three offices in New York City, so just call 888-533-5686 to arrange for that consultation.