Referral Arrangements Under the AKS and Stark Law

Referral Arrangements Under the AKS and Stark Law at a Glance

Referral arrangements in the healthcare industry are subject to two major legal frameworks: the Anti-Kickback Statute (AKS) and the Stark Law. The AKS, a criminal statute, prohibits the offer, payment, solicitation, or receipt of remuneration to induce or reward referrals of items or services payable by federal health care programs. The Stark Law, a civil statute, prohibits physician self-referrals for designated health services to entities with which the physician has a financial relationship, unless an exception applies. Both laws have exceptions and safe harbors that may protect certain arrangements, but violations can lead to significant legal and financial consequences.

The Legal Framework

The Anti-Kickback Statute, codified at 42 U.S.C. § 1320a-7b(b), criminalizes the knowing and willful offer, payment, solicitation, or receipt of remuneration to induce or reward referrals of items or services payable by a federal health care program. Violations can result in fines of up to $100,000 or imprisonment for up to 10 years, or both. The statute applies broadly and is not limited to specific types of remuneration or referral relationships.

The Stark Law, found at 42 U.S.C. § 1395nn, is a strict-liability statute administered by the Centers for Medicare & Medicaid Services (CMS). It prohibits physician self-referrals for designated health services to entities with which the physician has a financial relationship, unless an exception applies. Unlike the AKS, the Stark Law is specifically focused on physician referrals and is enforced through civil penalties rather than criminal prosecution.

The safe harbor regulations under the AKS, found at 42 C.F.R. § 1001.952, provide specific protections for certain types of arrangements, including investment interests, space rental, equipment rental, personal services and management contracts, referral services, group purchasing organizations, and electronic health records items and services. These safe harbors must be strictly followed to qualify for protection.

The HHS Office of Inspector General (OIG) issues advisory opinions under 42 C.F.R. § 1008.5(a)(1) to explain whether specific arrangements violate the Anti-Kickback Statute or other fraud and abuse laws. These opinions can provide clarity on whether a particular type of remuneration constitutes prohibited conduct under the AKS.

Enforcement and Cases

In United States v. Greber, 760 F.2d 68 (3d Cir. 1985), the Third Circuit held that the AKS is violated if payments are intended to induce a physician to use a payor's services, even if the payments also serve to compensate for legitimate professional services. This case illustrates the strict intent-based standard of the AKS, known as the one-purpose test. It is also important to note that an arrangement may satisfy a Stark exception but still fail under the AKS’s broader intent-based standard.

The Federal Overlay

The federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), makes it a felony to knowingly and willfully offer, pay, solicit, or receive remuneration to induce or reward referrals of items or services payable by a federal health care program. The Stark Law, 42 U.S.C. § 1395nn, separately prohibits physician self-referrals for designated health services payable by Medicare or Medicaid, on strict-liability terms. Both regimes carry safe harbors and exceptions published at 42 C.F.R. § 1001.952. State referral and fee-splitting statutes operate alongside these federal prohibitions and can apply even where no federal program payment is involved.

Reading the Research Desk

For further reading on anti-kickback and referral law, explore related research topics and analyses: Practice Areas, The Anti-Kickback Statute Explained, Safe Harbors Under the Anti-Kickback Statute, AKS and Stark Law Overlap, Recent Anti-Kickback Statute Decisions, and FAQ.