By Russell Paul
There is much confusion between the Federal Anti-Kickback Statute and the Stark Law because both laws deal with remuneration related to improper referrals. But there are fundamental distinctions between the two laws.
Anti-Kickback Statute [42 U.S §1320a-7b(b)]
The federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), (“AKS”) arose out of congressional concern that remuneration provided to those who can influence healthcare decisions would result in goods and services being provided that are medically unnecessary, of poor quality, or harmful to a vulnerable patient population. To protect the integrity of the Medicare and Medicaid programs from these harms, Congress enacted a prohibition against the payment of kickbacks in any form.
First enacted in 1972, Congress strengthened the statute in 1977 and 1987 to ensure that kickbacks masquerading as legitimate transactions did not evade its reach. See Social Security Amendments of 1972, Pub. L. No. 92-603, §§ 242(b) and (c); 42 U.S.C. § 1320a-7b, Medicare-Medicaid Antifraud and Abuse Amendments, Pub. L. No. 95-142; Medicare and Medicaid Patient and Program Protection Act of 1987, Pub. L. No. 100-93.
The AKS prohibits any person or entity from offering, making, soliciting, or accepting remuneration, in cash or in kind, directly or indirectly, to induce or reward any person for purchasing, ordering, or recommending or arranging for the purchasing or ordering of federally-funded medical goods or services.
The AKS was amended to expressly state that a violation of the AKS constitutes a “false or fraudulent” claim under the False Claims Act. 42 U.S.C. § 1320(a)-7b(g).
Physician Self-Referral Law [42 U.S.C. § 1395nn]
The Stark Law prohibits physicians from referring patients to receive designated health services (“DHS”) payable by Medicare or Medicaid from entities with which the physician or an immediate family member has a financial relationship, unless an exception applies. Immediate family members of the physician are defined as spouse, natural or adoptive parents, children, siblings, step- siblings, in-laws, grandparents, and grandchildren.
Specifically, the Stark Law does the following:
- It prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership, investment, or compensation), unless an exception applies.
- It prohibits the entity described above from presenting or causing to be presented claims to Medicare (or billing another individual, entity, or third party payer) for those referred services.
- It establishes a number of specific exceptions for financial relationships between a physician and an entity that do not pose a risk of program or patient abuse.
The following items or services are considered designated health services under the Stark Law:
- Clinical laboratory services
- Physical therapy services
- Occupational therapy services
- Outpatient speech-language pathology services
- Radiology and certain other imaging services
- Radiation therapy services and supplies
- Durable medical equipment and supplies
- Parenteral and enteral nutrients, equipment, and supplies
- Prosthetics, orthotics, and prosthetic devices and supplies
- Home health services
- Outpatient prescription drugs
- Inpatient and outpatient hospital services
Civil penalties for physicians who violate the Stark Law include fines as well as exclusion from participation in Federal healthcare programs. There are certain codified exceptions, with detailed criteria that must be met.
In addition, if claims are submitted to government payers as a result of a self-referral arrangement that violates the Stark Law, those claims are considered false claims, and the parties to the arrangement may be liable under the False Claims Act.
While these statutes both aim to eliminate malfeasance in the healthcare sector, they each have important differences.
Prohibited Physician Behavior
Under the AKS, the physician cannot pay, offer, solicit, or receive anything of value aimed at awarding the referral of patients to, or generating business for, a federal healthcare program. This contrasts with the Stark Law, which prohibits a physician from referring a patient to a healthcare entity in which he or she has a financial interest, unless he or she falls under one of the exceptions set out in the statute.
Prohibited Items or Services
The AKS prohibits referrals for any kind of item or service where a kickback is involved, while the Stark Laws prohibits only the referral of designated health services where a financial interest is involved.
The AKS prohibits any kind of referral, while the Stark Law only prohibits a referral from a physician.
Penalties under the AKS include criminal and civil and administrative penalties, whereas violations under the Stark Law are civil only.
The AKS requires proof of actual unlawful intent. The Stark Law is a strict liability statute – no intent is required to be shown.
Exceptions to the Statutes
The AKS contains voluntary safe harbors, while the Stark Law contains mandatory exceptions.
Implicated Government Healthcare Programs
The AKS applies to all federal healthcare programs, and the Stark Law applies only to Medicare and Medicaid.
Below is a comparison chart made available by the Department of Health and Human Services:
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