The Anti-Kickback Statute During the COVID-19 Pandemic: What Healthcare Professionals Should Know
Amidst the COVID-19 outbreak, OIG has released guidance on how it will evaluate certain types of arrangements between healthcare providers under the Anti-Kickback Statute. But note: OIG has not issued a blanket waiver of the law.
With much of the country sheltering in place, healthcare providers are devising quick and creative strategies to ready themselves for mass influxes of COVID-19 patients. In normal circumstances, many of these measures would undergo stricter due diligence and compliance assessment, including scrutiny under the federal Anti-Kickback Statute (AKS).
With patient and healthcare worker safety top of mind, however, many practices dispensed with their usual review processes and forged ahead to procure goods, services, and infrastructure to blunt the impact of the pandemic.
Fortunately for some providers, they can rest assured knowing that those arrangements related to COVID-19 will not invite enforcement action. On April 3, 2020, the HHS Office of Inspector General (OIG) issued a policy statement explaining how it would use its enforcement discretion to not pursue administrative sanctions under the AKS with respect to certain types of arrangements related to COVID-19.
OIG’s policy statement follows a previous determination by the HHS Secretary on March 30, 2020 to issue blanket waivers of the sanctions the Centers for Medicare and Medicaid Services may impose under the federal Stark Law. Given the many overlapping features of the AKS and Stark Law, OIG’s enforcement policy regarding COVID-19 incorporates much of the Stark Law blanket waivers. But as there are key distinctions between the two laws, OIG’s policy also differs in some important respects from the blanket waivers.
The Anti-Kickback Statute
The AKS makes it a criminal felony to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services payable by a federal healthcare program, such as Medicare and Medicaid. “Remuneration” means the transfer of anything of value, including any kickback, bribe, or rebate, directly or indirectly, overtly or covertly, in cash or kind. Parties on either side of a kickback transaction are subject to liability.
Anti-Kickback Statute Penalties
A violation of the AKS is punishable by a maximum fine of $100,000, imprisonment up to 10 years, or both. Additionally, conviction will lead to automatic exclusion from Medicare, Medicaid, and other federal healthcare programs. Even if no criminal conviction occurs but a violation of an impermissible kickback transaction can be established, a party may be liable for a civil monetary penalty of up to $100,000 per violation and an additional amount equivalent to three times the illegal remuneration. OIG may also initiate administrative proceedings to exclude a violator from participating in any federal healthcare programs.
Differences between the Anti-Kickback Statute and Stark Law
The AKS is often evaluated together with the Stark Law, another federal statute that regulates the financial ties between healthcare providers with referral relationships. Both laws are structured similarly, broadly prohibiting financial arrangements between referral sources, subject to myriad exemptions for permissible arrangements (referred to as “safe harbors” under the AKS and as “exceptions” under the Stark Law).
The AKS and Stark Law, however, do have some significant differences. The AKS is broader in scope insofar as it applies to all remunerative arrangements involving referrals for items or services payable by any federal healthcare program. By contrast, the Stark Law applies only to financial relationships between physicians and entities that provide “designated health services” (DHS), such as clinical laboratory, physical therapy, and hospital services. Moreover, only physician referrals for DHS payable by Medicare are subject to the Stark Law.
Yet, the AKS is narrower than the Stark Law in that the AKS is a criminal law. As such, the AKS imposes penalties only where a party has the requisite mental state and has acted in violation of the statute knowingly and willfully. The Stark Law, on the other hand, is a civil law and is often characterized as imposing “strict liability.” In other words, it requires strict technical compliance; a party’s state of mind is irrelevant as to whether a violation occurred.
In light of the different features of the AKS and Stark Law, a party could potentially violate one law without violating the other. That’s why a careful analysis of each law is critical, particularly for financial arrangements between physicians and other healthcare providers that meet the criteria of a “DHS entity” under the Stark Law.
The OIG’s Policy Statement Regarding COVID-19
Understanding some of the major similarities and differences between the AKS and Stark Law helps unpack OIG’s guidance in its April 3, 2020 policy statement. In that statement, OIG announced it would decline to impose administrative sanctions under the AKS for “remuneration related to COVID-19 covered by the Blanket Waivers” promulgated by the HHS Secretary on March 30, 2020.
To Which Arrangements Does Enforcement Policy Apply?
A remunerative arrangement must meet all the criteria of a blanket waiver of the sanctions under the Stark Law to fall within the scope of OIG’s COVID-19 enforcement policy. That, in turn, means the arrangement must be one that triggers the Stark Law in the first place – namely, a financial relationship between a physician and a DHS entity that bills Medicare for DHS referred by the physician.
As we discussed in an earlier blog post on the Stark Law blanket waivers, an arrangement must be “solely related to COVID-19 Purposes” to be protected under a blanket waiver. This phrase is broadly construed, applying not only to arrangements directly related to pandemic response measures but also to those that are indirectly related to or impacted by the outbreak. An arrangement may be related to COVID-19 purposes, for example, if it “address[es ] medical practice or business interruption due to the COVID-19 outbreak in the United States to maintain the availability of medical care and related services for patients and the community.”
Additionally, an arrangement must meet the criteria of one of 18 waiver categories. The HHS Secretary’s declaration includes several examples of arrangements that fall within these categories and meet the standard of being “solely related to COVID-19 Purposes.”
Effective Date of the Enforcement Policy vs. Stark Law Blanket Waivers
OIG’s COVID-19 enforcement policy differs from the blanket waivers of the Stark Law in one material respect: its effective date. According to the statement, OIG will exercise its enforcement discretion as applied to “conduct occurring on or after April 3, 2020.” By contrast, the HHS Secretary issued the Stark Law blanket waivers on March 30, 2020 with retroactive effect as of March 1, 2020.
This creates the possibility that an arrangement could satisfy a blanket waiver of the Stark Law but not be shielded from exposure under the AKS because the arrangement commenced sometime between March 1 and April 2, 2020. Whether OIG would actually initiate an enforcement action with respect to an arrangement solely because it predates the effectiveness of the policy statement remains to be seen, however.
Despite their different effectiveness dates, both OIG’s COVID-19 enforcement policy and the Stark Law blanket waivers will terminate at the same time. The blanket waivers are set to expire on the earlier of May 29, 2020, or termination of one of the emergency declarations on which the blanket waivers are based. OIG’s policy will terminate on the same date the Stark Law blanket waivers terminate.
What Happens When the National Emergency Ends?
The temporary nature of OIG’s COVID-19 enforcement policy and the blanket waivers of the Stark Law raises the question of how parties will “unwind” arrangements in the future. The blanket waivers state: “Parties may not use the blanket waivers after the expiration of the Secretary’s authority to grant waivers for the COVID-19 outbreak in the United States.” OIG’s policy statement advises: “Parties may not rely on the Policy Statement for conduct that occurs after the expiration of the Blanket Waivers and this Policy Statement.”
The differences in these statements are subtle, but OIG’s policy suggests parties might have some period of time after formal termination to continue an arrangement related to COVID-19, so long as the parties’ “conduct” started while the policy was still in effect. The blanket waivers appear to take a different posture: Even if an arrangement satisfied a blanket waiver while it was in effect, the arrangement would not continue to be shielded under the blanket waiver after termination.
Additional Guidance from OIG Regarding the Anti-Kickback Statute
In addition to the enforcement posture it has communicated in its COVID-19 policy statement, OIG is making itself more accessible to stakeholders, who may submit questions relating to AKS enforcement during the COVID-19 pandemic to OIG by email at OIGComplianceSuggestions@oig.hhs.gov. The agency is providing guidance in response to these inquiries in an FAQ on its website. Meanwhile, OIG continues to respond to stakeholders through its formal advisory opinion process.
Through the FAQ, OIG concluded there would be a “low risk of fraud and abuse” under the AKS to challenge a hospital’s provision of access to its telehealth platform to non-employed physicians on its medical staff while the HHS Secretary’s declaration of a public health emergency remains in effect, provided the following conditions are satisfied:
- The hospital provides the telehealth platform access for free to the physicians to furnish medically necessary telehealth services;
- The physicians have access to the platform only when necessary as a result of the COVID-19 outbreak and during the period subject to the COVID-19 declaration of a public health emergency;
- The hospital does not condition access to the telehealth platform on a physician’s past or anticipated volume or value of referrals to, or other business generated for, the hospital for any items or services reimbursable by a federal healthcare program;
- The hospital offers access to the telehealth platform to all physicians on its medical staff on an equal basis.
Citing similar conditions that must be in place, OIG has also advised through the FAQ that the provision of free or reduced-rate services by healthcare providers to patients at skilled nursing facilities experiencing staffing shortages would pose a low risk of fraud and abuse under the AKS.
While this guidance will be welcomed by stakeholders, OIG cautions that the FAQ guidance is informal in nature, and as such, “any favorable answer will not result in prospective immunity or protection from OIG administrative sanctions or prospective immunity or protection under Federal criminal law.”
An Informal OIG Position Doesn’t Bind the Department of Justice
In the FAQ, OIG also notes that its informal feedback does not bind the U.S. Department of Justice (DOJ). As the primary federal law enforcement agency, DOJ retains the statutory authority to prosecute violations of the AKS, even though OIG has decided to de-prioritize its focus in this area.
In a memo dated March 18, 2020, the Deputy Attorney General informed attorneys within the DOJ that “[n]o category of federal criminal investigation or prosecution has been suspended.” In a subsequent memo dated March 24, 2020 regarding the legal authorities that DOJ has at its disposal to challenge fraudulent and criminal behavior related to the COVID-19 pandemic, the Deputy Attorney General specifically cited its authority to prosecute healthcare fraud under 18 U.S.C. § 1347 – a statute frequently relied on by DOJ to challenge kickback transactions that violate the AKS. Since its publication of these memos, DOJ has not released any policy positions specific to the AKS.
If you have any questions about how OIG’s AKS enforcement policy and the Stark Law blanket waivers may affect your practice or business amid the COVID-19 pandemic, reach out to the experienced attorneys at Jackson LLP: Healthcare Lawyers.
The COVID-19 pandemic is a dynamic and evolving public health emergency. The laws and situation are fluid, and this article may not reflect the most current situation.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.