What are the HHS OIG Anti-Kickback Regulations?
The HHS OIG anti-kickback regulations prohibit the remuneration of individuals or organizations in Federal healthcare programs when the purpose of the remuneration is to induce referrals – or is in return for referrals – for items or services reimbursable by a Federal healthcare program. Individuals and organizations that violate the regulations can be fined, imprisoned, and/or excluded from all federal healthcare programs.
The HHS OIG anti-kickback regulations were introduced in 1972 as a safeguard against fraud and abuse in federal healthcare programs such as Medicare and Medicaid. Originally only relating to financial transactions, the HHS OIG anti-kickback regulations have been subsequently extended to include any form of monetary or “in-kind” remuneration offered, solicited, paid, or received in exchange for items or services billable to a federal healthcare program.
According to its November 2023 interpretation of remuneration, HHS OIG states “remuneration includes anything of value, whether in cash, in kind, or other form. […] Remuneration may take the form of cash, cash equivalents, cost-sharing waivers or subsidies, an opportunity to earn a fee, items, space, equipment, and services […] and in some circumstances, where the remuneration has been determined to be fair market value in an arm’s-length transaction.”
Penalties for Violating the HHS OIG Anti-Kickback Regulations
Under §1128B of the Social Security Act, a criminal violation of the HHS OIG anti-kickback regulations is a felony punishable by a maximum fine of $100,000, imprisonment of up to ten years, or both. In addition, being convicted of a criminal violation automatically results in exclusion from Federal healthcare programs. The civil penalties for violating the HHS OIG Anti-Kickback Regulations are $27,894 per violation, and – depending on the nature of the violation – could lead to further charges being brought against the perpetrators under the Stark Law and/or the False Claims Act.
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It is important to be aware that violations of the Stark Law attract penalties of up to $15,000 per item or service charged to a Federal healthcare program plus up to $100,000 per arrangement considered a deliberate attempt to circumnavigate the Anti-Kickback Statute. Violations of the False Claims Act carry penalties of up to $27,894 per violation (February 2024) plus the government can recover three times the amount unlawfully charged to a Federal healthcare program.
As a result it is not unusual to see enforcement actions combined – resulting in multi-million dollar settlements for HHS OIG anti-kickback violations. For example:
- In January 2024, a New Jersey Clinic settled allegations of illegal kickbacks and unnecessary laboratory tests for $13 million.
- In December 2023, a Pennsylvania medical equipment manufacturer agree to an anti-kickback violation settlement of $2.4 million.
- In November 2023, the owner of six California skilled nursing facilities agreed to pay $45.6 million to settle allegations of kickbacks to referring physicians.
- Also in November 2023, a Florida laboratory agreed to pay more than $1.1 million to settle claims it paid kickbacks to induce laboratory testing referrals.
It is also important to be aware that all parties involved in an unlawful transaction could be found liable for violating the HHS OIG anti-kickback regulations. In the final settlement listed above, the Florida laboratory is not only paying $1.1 million, but – as a condition of the settlement – is also cooperating in enforcement actions against the three marketing companies used to facilitate kickbacks, and against the healthcare professionals who benefitted from the kickbacks.
How to Avoid Accidental Violations of the Regulations
Although it is necessary for HHS OIG to prove intent when taking enforcement action against an individual or organization, there are circumstances in which intent can be accidentally implied. Such circumstances usually result in enforcement action being dropped after an investigation; however, an investigation into alleged fraud can be disruptive to healthcare operations and potentially damage the professional reputation of the individual or organization.
In order to avoid accidental violations of the HHS OIG anti-kickback regulations, individuals and organizations are advised to familiarize themselves with the HHS OIG “Safe Harbor” Regulations and follow advice provided by HHS OIG to consider:
- The nature of the relationship between the parties and the degree of influence one has over another to generate business in a Federal healthcare program.
- Whether remuneration is conditioned in whole or in part by the volume or value of Federal healthcare program business generated.
- Whether the value of remuneration is fair market value or whether it is tied to reimbursement from one or more Federal healthcare programs.
- If the nature of items and services provided are commercially reasonable and necessary to achieve a legitimate business purpose.
- If the remuneration generated by the relationship has the potential to increase the cost of operating any Federal healthcare programs.
- Whether remuneration generated by the relationship could lead to the overutilization or inappropriate utilization of an item or service.
- If a relationship, arrangement, or practice has the potential to interfere with, or skew, clinical decision making and/or patient safety.
- Whether a remunerated arrangement could result in cherry-picking healthy patients or lemon-dropping patients with chronic conditions.
- Whether a potential conflict of interest could diminish – or appear to diminish – the professional judgement of either party.
- That the arrangement – and the items and services provided under the arrangement – is properly and fully documented in writing.
HHS OIG acknowledges that these considerations are illustrative and not exhaustive. Individuals and organizations who require further advice on how to avoid accidental violations of the regulations can contact HHS OIG directly. Alternatively, individuals and organizations who are concerned about an existing business relationship and the potential for it to be viewed as violating the HHS OIG anti-kickback regulations are advised to seek compliance advice from a legal professional.
