The federal Anti-Kickback Statute (AKS) is one of the best-known federal fraud and abuse statutes due largely to its wide-ranging effects on business relationships in the healthcare, pharmaceutical, and medical device sectors.
The AKS is a criminal statute that prohibits transactions intended to induce or reward referrals for items or services reimbursed by federal health care programs. At its heart, it is an anti-corruption statute designed to protect federal healthcare program beneficiaries from the influence of money on referral decisions and thus is intended to guard against overutilization, increased costs, and poor quality services. Although the AKS is a criminal statute, some courts have found that its purposes are remedial.
The AKS prohibits anyone from knowingly and willfully offering, making, soliciting, or receiving any payment in return for (1) referring an individual to another person or entity for the furnishing of any item or service reimbursed by a federal health care program, or (2) recommending or arranging for the ordering of any service reimbursed by a federal health care program. In other words, soliciting or accepting payments for referrals or for otherwise generating Medicare or Medicaid business is as illegal as offering or making such payments.
Because the AKS is so broad and thus can be read to encompass well-accepted and beneficial health care industry business practices, Congress included a number of exceptions and also directed the Secretary of the Department of Health and Human Services (HHS) to promulgate regulations specifying business arrangements that would be immune from enforcement activities, which are known as “safe harbors.” If a business practice falls squarely within a safe harbor, it is not subject to AKS liability, but failure to comply with each element of a safe harbor does not necessarily render the activity illegal.
Congress established the Medicare and Medicaid programs in 1965. Soon thereafter certain unethical provider practices began to develop. Physicians began profiting from the federal government by making unnecessary patient referrals (in exchange for kickbacks) to particular facilities for medical services reimbursed by the federal health care programs, which resulted in rising costs. Problematic arrangements took various forms, including percentage lease agreements and payment of test interpretation fees to physicians who referred testing without performing the interpretation themselves.