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On the books since 1972, the federal anti-kickback statute's main purpose is to protect patients and the federal health care programs from fraud and abuse by curtailing the corrupting influence of money on health care decisions.

Straightforward but broad, the statute states that anyone who knowingly and willfully receives or pays anything of value to influence the referral of federal health care program business, including Medicare and Medicaid, can be held accountable for a felony. Violations are punishable by up to five years in prison, criminal fines up to $25,000, administrative civil money penalties up to $50,000, and exclusion from participation in federal health care programs.

Because the statute is broad on its face, concerns arose among health care providers that some relatively innocuous, and in some cases even beneficial, commercial arrangements are prohibited by the anti-kickback statute. Responding to these concerns, Congress in 1987 authorized the Department of Health and Human Services (HHS), Office of Inspector General (OIG), to issue regulations designating specific "safe harbors" for various payment and business practices that, while potentially prohibited by the law, would not be prosecuted.


Safe harbors “immunize” certain payment and business practices that are implicated by the anti-kickback statute from criminal and civil prosecution under the statute. To be protected by a safe harbor, an arrangement must fit squarely in the safe harbor. Failure to comply with a safe harbor provision does not mean that an arrangement is per se illegal.

Compliance with safe harbors is voluntary, and arrangements that do not comply with a safe harbor must be analyzed on a case-by-case basis for compliance with the anti-kickback statute. Parties who are uncertain whether their arrangements qualify for safe harbor protection may request an advisory opinion from the Office of Inspector General, HHS.

The 1991 safe harbors addressed the following types of business or payment practices: investments in large publicly held health care companies; investments in small health care joint ventures; space rental; equipment rental; personal services and management contracts; sales of retiring physicians' practices to other physicians; referral services; warranties; discounts; employee compensation; group purchasing organizations; and waivers of Medicare Part A inpatient cost-sharing amounts.

The 1992 interim final safe harbors, which were finalized in 1996, addressed the following practices in managed care settings: increased coverage, reduced cost-sharing amounts, or reduced premium amounts offered by health plans to beneficiaries; and price reductions offered to health plans by providers.

The preamble to the final rule from 1993 and 1994, included new safe harbors addressing the following areas: investments in underserved areas; practitioner recruitment in underserved areas; obstetrical malpractice insurance subsidies for underserved areas; sales of practices to hospitals in underserved areas; investments in ambulatory surgical centers; investments in group practices; referral arrangements for specialty services; and cooperative hospital service organizations.



Most situations that potentially implicate the Stark laws must also be analyzed under the anti-kickback statute and other health care regulations. There are many other laws, both federal and state, which create potential liability for providers and other health care businesses including state anti-kickback statutes, state self-referral prohibitions (similar to the federal Stark regulations, but often applicable to all forms of payors).

Health care businesses and providers also must be aware of the corporate practice of medicine prohibitions that exist in many states and specific Medicare rules that apply to different types of providers. Some examples of Medicare rules that can cause problems for health care businesses include the Anti-Markup Rule, conditions of participation for various entities and performance, licensure or certification standards.



OIG has developed a series of voluntary compliance program guidance documents directed at various segments of the health care industry, such as hospitals, nursing homes, third-party billers, and durable medical equipment suppliers, to encourage the development and use of internal controls to monitor adherence to applicable statutes, regulations, and program requirements.

The Compliance Program Guidance documents can be found here.



In an October 30, 2013 letter to Representative Jim McDermott (D-Wash.), HHS Secretary Kathleen Sebelius’s announced that insurance offered through the Affordable Care Act’s new health insurance exchanges do not constitute “Federal health care programs” and thus are not within the scope of the federal anti-kickback statute.

Articles that appeared in the New York Times and the Wall Street Journal after the release of Secretary Sebelius’s letter focus on the fact that the administration’s decision will allow pharmaceutical companies to provide co-payment assistance to Affordable Care Act beneficiaries who cannot afford the co-payments for expensive brand name drugs.

Although the practice of providing payment assistance for those who purchase particular medications has been considered an illegal kickback under federal programs such as Medicare and Medicaid, the conclusion that Affordable Care Act plans are not “Federal health care programs” appears to mean that pharmaceutical companies can provide such assistance to beneficiaries who purchase their insurance on the government exchanges.



Anti-Kickback Statute

i. Health Law Resources - Anti-Kickback Statute: https://www.healthlawyers.org/hlresources/Health
ii. Anti-Kickback Statute - Legal and Regulatory Information: http://www.antikickbackstatute.com
iii. Comparison of the Anti-Kickback Statute and Stark Law https://oig.hhs.gov/compliance/provider-compliance
iv. 20 things to know about the Anti-Kickback Statute: http://www.beckershospitalreview.com/legal-regulatory
v. 42 U.S. Code § 1320a–7b - Criminal penalties for acts involving Federal health care programs: https://www.law.cornell.edu/uscode/text/42/1320a
vi. Federal Fraud and Abuse: Anti-Kickback Statute