The U.S. Department of Health and Human Services Office of Inspector General (“OIG”) recently updated its General Questions Regarding Certain Fraud and Abuse Authorities FAQ page—a resource which offers the healthcare industry important insight into the OIG’s enforcement perspective on the Federal anti-kickback statute (“AKS Law”) and related fraud and abuse laws. In its updated guidance, the OIG added a new FAQ 17 articulating the OIG’s position that fair market value arrangements can violate the AKS Law and revised FAQ 4 indicating that arrangements that comply with the physician self-referral law (“Stark Law”) can also violate the AKS Law.
New FAQ 17: Fair Market Value Alone Does Not Prevent AKS Law Liability. In this FAQ the OIG observed that some healthcare industry stakeholders take a position that fair market value remuneration cannot give rise to liability under the AKS Law. Disagreeing with such position, the OIG opined that an arrangement may violate the AKS Law even though the remuneration in the arrangement is consistent with fair market value. While it is a best practice to ensure that remuneration in an arrangement is fair market value, the OIG indicated that fair market value remuneration alone will not protect an arrangement from liability under the AKS law. Consistent with its historical guidance, the OIG reiterated that to assess liability under the AKS Law it is necessary to perform a facts and circumstances analysis including the intent of the parties. The OIG also noted that the interpretation regarding fair market value saving an arrangement from liability under the AKS Law is inconsistent with the text of the AKS Law and OIG’s prior guidance. While certain safe harbors to the AKS Law include a fair market value requirement, such a requirement is only one of several requirements that must be met to receive the applicable safe harbor’s protection. The FAQ explained that the “OIG’s guidance has been consistent and unwavering that fair market value is not a dispositive defense” under the AKS Law.
Updated FAQ 4: Stark Law Compliance Does Not Guarantee AKS Law Compliance. In the updated FAQ 4, the OIG stated that although an arrangement may satisfy a Stark Law exception, such arrangement may still violate the AKS Law if the required knowing and willful intent is present. The OIG emphasized that satisfying the requirements of an applicable exception to the Stark Law alone does not provide protection from sanctions under the AKS Law as these laws “exist for different purposes, differ in what they prohibit,” and “are subject to separate legal and regulatory frameworks and analyses.” As an example, the OIG explained that hospitals, laboratories and other providers and suppliers providing benefits such as tickets to sporting or entertainment events to referral sources could violate the AKS Law if the purpose is to induce or reward referrals, even if the financial relationship otherwise satisfies a Stark Law exception.
Key Takeaways and Practical Guidance. The OIG FAQs do not create new law but they do provide important insights into the OIG’s views and remind the healthcare industry that unless an arrangement is protected from Antikickback scrutiny by complying with a safe harbor to the AKA, liability under the AKS Law turns on the analysis of the parties’ intent and the facts and circumstances behind the arrangement. These FAQs are reminders to the healthcare industry that:
- While fair market value remuneration is a necessary element of many safe harbors to the AKS Law, for arrangements that do not meet all the safe harbor requirements, relying on fair market value alone does not protect the arrangement from liability under the AKS Law.
- It is necessary to evaluate all financial arrangements with referral sources under both the Stark Law and the AKS Law independently. Satisfaction of a Stark Law exception does not automatically grant protection from liability under the AKS Law.
- Because the AKS Law is an intent-based statute, it is a prudent practice to maintain contemporaneous documentation demonstrating the legitimate business purposes of any arrangement that involves remuneration and potential referral relationships.
Given the significant penalties associated with noncompliance with the AKS Law, it is important to review each arrangement subject to the AKS Law to ensure that the arrangement either meets all requirements of a safe harbor to this law or based, on the review of facts and circumstances and documented legitimate business purpose of the arrangement, is structured consistent with the AKS Law.
