Anti-Kickback Statute: OIG Eyes Changes to Safe Harbor Rules

As it does every year, the OIG is reviewing the federal Anti-Kickback Statute (AKS) current safe harbor rules. The deadline to comment: end of business, Feb. 26. Here's a quick rundown of what's at stake.

The AKS
The AKS makes it a criminal offense for labs and other providers to offer or pay "remuneration" to physicians for Medicare/Medicaid/TRICARE and other federal health program referrals. The term "remuneration" is interpreted broadly to include not just money but also non-cash benefits such as gifts, supplies and services offered for free or at less than their fair market value. Penalties for AKS violations include fines of up to $25K + three times the remuneration amount, civil monetary penalties and imprisonment of up to five years. AKS violations can also result in liability under other federal laws including the False Claims Act and Stark Law.

The Safe Harbors
Because the AKS is so broad, many of the common business arrangements that labs make with their referring physicians raise potential AKS liability concerns to the extent the value physicians derive from the deal is deemed illegal "remuneration." The good news is that the AKS and its regulations carve out "safe harbors" allowing for otherwise problematic transactions provided that the anti-abuse precautions prescribed by the safe harbor are met. Although safe harbors are not mandatory, following them provides the parties a degree of comfort that they won't get into trouble for doing the deal.

In fact, without safe harbors, it would be almost impossible for labs, hospitals and other providers to conduct business with referral sources. Key safe harbors affecting labs and referring physicians include provisions making allowances for:

• Bona fide employment relationships;

• Personal services and management contracts;

• Discounts; and

• Fair market value space or equipment rentals.

The OIG Review
The OIG is required to review the safe harbor rules each year to ensure that they are in line with current legislation, technology and business practices. The law also lists specific criteria for adopting new safe harbors or revising old ones, including the extent to which the proposed change would affect:

• Access to health care services;

• Quality of care;

• Patient freedom of choice in selecting providers;

• Competition among providers;

• Costs to federal health care programs;

• Potential overutilization; and

• The ability of health care facilities to serve medically underserved areas or populations.

The OIG also considers whether arrangements provide potential financial benefits that may affect a provider's treatment decision—in the lab context, e.g., what lab tests to order and from which lab to order them.

Special Fraud Alerts
The current OIG review also addresses when and how the agency should issue new Special Fraud Alerts to warn providers of business practices it considers suspicious and explaining what providers should do to allay those concerns. OIG Special Fraud Alerts, which are published in the Federal Register, have become fewer and farther between in recent years.

Takeaway: Based on recent OIG safe harbor activity and the current administration's pronounced proclivity for cutting regulation, it is a pretty good bet that the current review will result in changes that expand safe harbor protection and economic leeway for deal making between labs, hospitals and other providers and their referral sources.