Wachler & Associates Health Law BlogHealthcare Fraud, Waste, and Abuse Laws
Entities operating in the healthcare industry, especially those that submit claims to government-funded programs like Medicare or Medicaid, must navigate a complex landscape of laws designed to prevent fraud, waste, and abuse. The most critical federal statutes in this area include the Physician Self-Referral Law (commonly known as the “Stark Law”), the Anti-Kickback Statute (AKS), and the Eliminating Kickbacks in Recovery Act (EKRA). Even seemingly straightforward business relationships can demand intricate legal analysis when these laws are involved.
The Stark Law (42 U.S.C. § 1395nn) restricts physicians from referring patients for certain healthcare services, referred to as “designated health services,” to entities with which they or their immediate family members have a financial relationship, unless a specific exception applies. These financial ties can take various forms, including employment arrangements, compensation agreements, or investment interests. Notably, the Stark Law doesn’t cover all services under Medicare or Medicaid, only those specifically listed as designated health services. Although the law includes a number of exceptions, such as those for in-office ancillary services or arrangements based on fair market value, each exception has detailed criteria that must be satisfied fully for it to be valid.
Similarly, the Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) prohibits the offer, payment, solicitation, or receipt of anything of value in exchange for referrals or to induce business for services reimbursable by federal healthcare programs. The AKS has a broader scope than the Stark Law, covering any service billed to these federal programs, and defines “remuneration” broadly to include cash, gifts, discounts, or anything else of value. The statute is accompanied by a set of “safe harbors,” regulatory provisions that protect certain arrangements from enforcement actions if all specified conditions are met.
The Eliminating Kickbacks in Recovery Act (18 U.S.C. § 220) is a more recent federal statute aimed originally at curbing kickbacks in addiction treatment and recovery programs. However, the inclusion of the term “clinical laboratory” before the bill’s passage significantly broadened its reach to include a wider range of laboratory services. Unlike the Stark Law and AKS, EKRA is newer and lacks an extensive regulatory framework or case law history, although it does contain its own list of statutory exceptions.
In addition to federal regulations, many states have enacted their own laws targeting improper referral and payment practices. These may resemble the federal Stark Law, AKS, or EKRA but often vary in their definitions, applications, or permitted exceptions. Other state laws, such as those addressing fee-splitting, anti-markup practices, and inducements to beneficiaries, may also come into play depending on the specifics of a given arrangement.
Given the complex and highly regulated nature of healthcare, even a routine agreement between healthcare providers or organizations can trigger multiple overlapping legal obligations. Ensuring compliance requires a thorough understanding of both federal and state laws governing healthcare transactions and referrals.
For over 40 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation. If you or your healthcare entity has any questions pertaining to healthcare fraud, waste, and abuse or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.