Anti-Kickback Statute & Stark Law: What Health Care Professionals Need to Know

The Anti-Kickback Statute (AKS) and Stark Law are two powerful federal laws designed to prevent fraud and abuse in the healthcare system, but they can also pose significant risks to your professional license if you’re not careful.

The AKS prohibits offering, paying, soliciting, or receiving any form of remuneration in exchange for referrals of patients or services covered by federal healthcare programs, such as Medicare and Medicaid. Meanwhile, the Stark Law restricts physician self-referrals for certain designated health services when the physician has a financial relationship with the entity providing those services.

Violating either of these laws can result in severe penalties, including substantial fines, exclusion from federal healthcare programs, and even criminal charges. But perhaps most importantly for you as a healthcare professional, a violation can also put your hard-earned license at risk.

In this blog post, we’ll take a closer look at the Anti-Kickback Statute and Stark Law, exploring their key provisions, potential pitfalls, and strategies for ensuring compliance.

California’s Anti-Kickback Laws

California has two primary statutes that address kickbacks in the healthcare industry.

Business and Professions Code Section 650

This law prohibits licensed healthcare providers from “offering, delivering, receiving, or accepting” any rebate, refund, commission, preference, patronage dividend, discount, or other consideration as compensation or inducement for referring patients, clients, or customers to any person or entity.

Chiropractic Initiative Act

These laws, codified in Cal. Bus. & Prof. Code §§ 1000-1057, focus on defining the scope of practice for chiropractors and prohibits them from offering or receiving any consideration for the referral of patients.

Violating California’s anti-kickback laws can result in criminal penalties, fines, and disciplinary action against a provider’s professional license.

The Federal Anti-Kickback Statute

The federal Anti-Kickback Statute (42 USC § 1320a-7b(b)) is a criminal law prohibiting acts that directly or indirectly induce or reward business referral reimbursable under any US healthcare program.

Crime Elements

The following acts may bring federal Anti-Kickback charges:

• Offering, paying, soliciting, or receiving remuneration for referring business to another healthcare provider.
• Public healthcare programs such as Medicare and Medicaid must have reimbursed the provider for services rendered.

Penalties and Fines

The penalties for violating the Anti-Kickback Statute are severe:

• Includes fines of up to $100,000 per violation and imprisonment of up to 10 years.
• Civil penalties include fines of up to $50,000 per violation and three times the amount of the kickback.
• Exclusion from participation in federal healthcare programs.

Stark Law: Physician Self-Referral Prohibitions

The Stark Law (42 USC § 1395nn), or the Physician Self-Referral statute, is a federal rule prohibiting physicians from referring patients to “designated health services” payable by Medicare or Medicaid.

It specifically applies when a doctor or an immediate family member has a financial relationship with the recipient provider unless an exception applies.

Stark Law Exceptions

There are several exceptions to the Stark Law, such as:

• In-office ancillary services exception: Allows physicians to refer patients for specific services performed within their own practices.
• Personal services arrangements exception: Permits doctors to enter into written contracts for personal services with entities to which they refer patients, as long as they meet certain requirements.

Differences Between the Anti-Kickback Statute and Stark Law

While both laws aim to prevent fraud and abuse in the public healthcare system, several key differences exist between the Anti-Kickback Statute and the Stark Law.

Scope of Application

Anti-Kickback rules apply to all federal healthcare programs, including Medicare, Medicaid, and TRICARE. The Stark Law applies only to Medicare and Medicaid.

Intent Requirement

Anti-Kickback requires proof of knowing and willful intent to violate the law, while Stark is a strict liability statute, meaning that no intent is necessary to violate the law.

Referral Requirements

The Anti-Kickback Statute applies to any referral of federal healthcare program business. The latter applies only to referrals for designated health services.

Exceptions

Anti-kickback has safe harbors that protect certain arrangements from prosecution. The Stark Law has specific exceptions that providers must meet to avoid violation.

Strategies for Ensuring Compliance with the Anti-Kickback Statute & Stark Law

Dealing with the Anti-Kickback Statute (AKS) and Stark Law can be tricky, but there are several strategies you can use to stay compliant and protect your professional license:

1. Educate yourself and your staff: Ensure you and your team have a thorough understanding of the AKS and Stark Law, including their key provisions, exceptions, and safe harbors.
2. Develop and implement compliance policies: Establish clear, written policies and procedures that address the AKS and Stark Law and other relevant healthcare regulations.
3. Monitor and audit your financial relationships: Regularly review and audit your financial relationships with referral sources to ensure compliance with the AKS and Stark Law.
4. Maintain accurate and complete records: Keep detailed records of all financial arrangements, contracts, and transactions related to referrals and designated health services.
5. Seek guidance from experienced attorneys: Consult with knowledgeable business law attorneys and professional license defense attorneys for tailored advice, compliant arrangements, and license defense.
6. Stay informed about changes and updates: Stay informed about the constantly evolving healthcare legal landscape and consult with legal professionals to ensure your compliance strategies remain effective.

By implementing these compliance strategies and working closely with experienced attorneys, you can proactively address the risks posed by the Anti-Kickback Statute and Stark Law, safeguarding your professional license and ensuring the long-term success of your healthcare practice.

California False Claims Act and its Impact on Anti-Kickback and Stark Rules

The California False Claims Act (CFCA), codified in the Cali. Gov. Code § 12650-12656 is a powerful tool in the state’s arsenal to combat healthcare fraud and abuse.
The CFCA allows the state to recover damages and penalties from individuals or entities that knowingly submit false claims to the state’s Medicaid program (Medi-Cal).

CFCA Elements

Key points about the California False Claims Act include:

• Imposes liability on individuals or entities that knowingly present (or cause to be presented) a false or fraudulent claim for payment or approval.
• Allows for qui tam actions, empowering private citizens to file suits on behalf of a government entity against someone who obtained government money through fraud.
• Provides for treble damages and civil penalties for each false claim submitted.

Anti-kickback and Stark Relationship

The CFCA relates to the Anti-Kickback Statute and Stark Law in several ways.

Define Liability

Violations of the Anti-Kickback Statute or Stark Law can often form the basis for liability under the CFCA.

FOR EXAMPLE – If a healthcare provider submits a claim to Medi-Cal for services provided to a patient referred through an illegal kickback arrangement, prosecutors can transfer the intent drawn from the first act to bring false claim charges under the CFCA.

Whistleblower Initiatives

The CFCA’s qui tam provisions encourage any interested party with knowledge of healthcare fraud, such as violations of the Anti-Kickback Statute or Stark Law, to come forward and report the misconduct. This incentive helps uncover and deter fraudulent practices in the healthcare system.

Includes Treble Damages

The financial penalties available under the CFCA include treble damages and other severe civil penalties, which are a strong deterrent against healthcare abuse and complement the Anti-Kickback Statute and Stark Law enforcement mechanisms.

By working in tandem with federal Anti-Kickback and Stark Laws, the California False Claims Act strengthens the state’s efforts to combat healthcare fraud and preserve the integrity of the Medi-Cal program.

Interplay Between the Anti-Kickback Statute, Stark Law, and EKRA

California healthcare providers should also be aware of the Eliminating Kickbacks in Recovery Act (EKRA) in addition to the Anti-Kickback Statute and Stark Rules.

EKRA is a federal law that prohibits soliciting, receiving, paying, or offering any remuneration in exchange for referring a patient to a recovery home, clinical treatment facility, or laboratory.

Key Differences

While EKRA shares similarities with the Anti-Kickback Statute, there are some distinctions:

• EKRA applies to all payers, not just federal healthcare programs.
• EKRA has fewer safe harbors and exceptions compared to the Anti-Kickback Statute.
• Violations of EKRA result in significant criminal penalties, including fines and imprisonment.

Therefore, California healthcare providers must understand the complex interplay between the Anti-Kickback Statute, Stark Law, and EKRA to ensure compliance with all applicable rules.

Compliance often requires a comprehensive understanding of each law and the guidance of experienced professional license defense attorneys who can help providers develop and implement effective compliance strategies.

How Businesses Law and Professional License Defense Attorneys Help

Healthcare providers facing investigations or allegations related to the Anti-Kickback Statute or Stark Law should seek the assistance of experienced medical license defense attorneys at TONG LAW.

Our Northern California business law firm:

• Assists providers in understanding and complying with complex healthcare laws and regulations.
• Represents providers in investigations and enforcement actions brought by state and federal agencies.
• Advises on developing and implementing effective compliance programs to mitigate the risk of future violations.

Your Guide to Compliance and Protection

The Anti-Kickback Statute and Stark Law are two critical legal frameworks that compel healthcare provider compliance to protect professional licenses.

While both laws aim to prevent fraud and abuse, they differ in scope, intent requirements, referral requirements, and exceptions.

TONG LAW professional license defense attorneys provide comprehensive business advising services to healthcare providers throughout California.

If your license is at risk or you have questions about how these laws apply to your business, schedule an evaluation with our team today.