The Basics of Healthcare Fraud, Waste, and Abuse Laws

Healthcare fraud, waste, and abuse laws apply to any entity doing business in the healthcare space and especially those submitting claims to government healthcare plans or programs, such as Medicare and Medicaid. The three most important and influential healthcare fraud, waste, and abuse laws are the federal laws: the Physician Self-Referral Statute (commonly called the “Stark Law”), the Anti-Kickback Statute (the “AKS”) and the Eliminating Kickbacks in Recovery Act (“EKRA”). Even a simple business arrangement can require a complex analysis where one or more of these statutes is implicated.

The Stark Law (42 U.S.C. 1395nn) prohibits physicians 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. The financial relationships can cover employment, direct compensation, investment, and others. The Stark Law is somewhat unique because it does not apply to all Medicare or Medicaid services, but only to specific “designated health services” that are listed in statute and regulations. The Stark Law includes several exceptions, such as in-office ancillary services and fair market value compensation, but each element of the exception must be met for it to apply.

Similarly, the AKS (42 U.S.C. 1320a-7b(b)) prohibits the exchange of “remuneration” to influence patient referrals or generate business for services billed to federal healthcare programs. The AKS applies to all services billed to federal healthcare programs, and “remuneration” is broadly defined to include anything of value. The AKS includes several exceptions and “safe harbors.” A safe harbor refers to a set of circumstances defined by regulations where conduct that would otherwise implicate the AKS is nonetheless permissible if it meets all the requirements of the safe harbor.

EKRA was a recent similar attempt by Congress to address kickbacks particularly in the substance abuse and recovery space. However, the words “clinical laboratory” were added to the statute shortly before it passed, so it now applies to all clinical laboratory services. EKRA is very broadly worded and does not have the regulatory or enforcement history that the two older statutes have. EKRA has its own set of statutory exceptions to consider.

Further, many states have laws against payment for referrals that echo the federal Stark Law, AKS, and EKRA, but that often apply in different ways or that have different rules or exceptions. Fee-splitting laws, anti-markup laws, beneficiary inducement laws, and others may also apply depending on the specifics of an arrangement. Healthcare is one of the most heavily regulated industries and even a seemingly simple arrangement between healthcare entities can quickly implicate multiple complex laws and regulations.

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 healthcare fraud, waste, and abuse or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or wapc@wachler.com.