When structuring healthcare arrangements, three major compliance challenges frequently emerge: the Stark Law (officially the Physician Self-Referral Law), the Anti-Kickback Statute (AKS), and the Eliminating Kickbacks in Recovery Act (EKRA). These laws govern referrals to or from a healthcare provider or supplier and carry the risk of severe, sometimes criminal, penalties. Yet, each also offers several exceptions or safe harbors that certain business models might meet. Even a simple arrangement with a healthcare entity can involve complex analysis regarding these three statutes.
The Stark Law (42 U.S.C. 1395nn) prohibits doctors from referring patients to entities providing “designated health services” covered by Medicare or Medicaid if there is a financial relationship between the physician (or their immediate family) and the entity, except under specific exceptions. Financial relationships subject to the Stark Law encompass both compensation and investment interests. Covered services range from clinical labs to physical and occupational therapy, durable medical equipment, certain imaging services, and more. Common exceptions include provisions for in-office ancillary services, fair market value compensation, and legitimate employment relationships. Recently, CMS introduced additional exceptions for value-based arrangements to accommodate evolving healthcare delivery models.
Similarly, the AKS (42 U.S.C. 1320a-7b(b)) criminalizes the exchange of “remuneration” to influence patient referrals or generate business for services billed to federal healthcare programs. “Remuneration” is broadly defined to include any item of value, not just cash. Nonetheless, where conduct implicates the AKS, it may still be lawful if the conduct fits within one of the statute’s “safe harbors,” which cover certain investments, rental agreements, and personal service contracts, among others. Recent updates have also added safe harbors for value-based healthcare arrangements, reflecting the industry’s shift towards this model.
EKRA, a more recent addition to healthcare law, targets the improper exchange of remuneration for referrals to recovery homes, clinical treatment facilities, and clinical laboratories. Although originally aimed at substance abuse services, its broad wording suggests a broader application to all clinical laboratory services, irrespective of the payor. Further, while Stark and AKS generally apply only to claims billed to federal healthcare programs, such as Medicare and Medicaid, EKRA applies to claims billed to all payors, including commercial insurance. EKRA’s exceptions are also limited and more stringent compared to those in the Stark Law and AKS, with regulatory guidance still developing.
In essence, even straightforward agreements between healthcare providers necessitate a detailed legal review to navigate these statutes’ complexities and strengthen compliance, highlighting the intricate balance between fostering beneficial healthcare arrangements and reducing the risk of enforcement under these fraud, waste, and abuse laws.
For over 35 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 these statutes or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.