Anti-Kickback Statute Safe Harbor: Personal Services and Management Contracts

The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) (“AKS”), prohibits anyone from knowingly and willfully offering, paying, soliciting, or receiving remuneration in order to induce reimbursable business under federal or state healthcare programs.

The Department of Health and Human Services has enacted safe harbor regulations that define practices that are not subject to the AKS. See 42 C.F.R. § 1001.952. These payment and business practices, although they potentially implicate the AKS, are not treated as offenses under the statute.

The safe harbors set forth specific conditions that, if met, assure entities involved of not being prosecuted or sanctioned for the arrangement qualifying for the safe harbor. However, safe harbor protection is afforded only to those arrangements that precisely meet all of the conditions set forth in the safe harbor.

Personal Services and Management Contracts

One such AKS safe harbor is for personal services and management contracts. 42 C.F.R § 1001.952(d) The seven requirements of that safe harbor are:

  • Written agreement signed by parties.
  • Term of at least one year.
    • -This provision is intended to ensure that the terms of an agreement cannot be adjusted periodically to take into account referrals or other business between the parties simply by scrapping one agreement and entering into a new agreement with different compensation terms. Thus a short term contract which may be necessary or desirable for business purposes will not qualify for anti-kickback safe harbor protection.
  • Agreement must specify aggregate payment, and such payment must be set in advance.
    • -The term “set in advance” is not defined in the safe harbor regulations. However, the OIG interprets the “set in advance” requirement to mean that the total aggregate compensation to be paid over the term of the contract must be determined at the outset of the arrangement. Thus, compensation arrangements based on an hourly rate, where the hours of service can vary, will not qualify for safe harbor protection.
    • -This rule is intended to prevent a disguised kickback that could occur if an otherwise legitimate payment for the provision of goods or services were adjusted periodically to reward a party for referring patients or generating other federal healthcare program business.
  • Compensation must be fair market reasonable, fair market value and determined through arm’s length negotiations.
  • Agreement must set forth the exact services required to be performed.
  • Compensation must not be determined in a manner that takes into account volume or value of referrals.
  • All arrangements must be in ONE contract. There cannot be multiple overlapping contracts to circumvent the one-year rule.
  • The arrangement must serve a commercially reasonable business purpose.

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By | 2019-05-15T10:57:09+00:00 August 16th, 2018|Healthcare Fraud|