Durable Medical Equipment Referrals Under the AKS and Stark Law

Durable Medical Equipment Referrals Under the AKS and Stark Law at a Glance

Durable Medical Equipment (DME) referrals are subject to scrutiny under both the Anti-Kickback Statute (AKS) and the Stark Law. These legal regimes impose strict prohibitions on improper financial relationships that may influence referrals of DME payable by federal health care programs. Compliance requires understanding both the criminal penalties under the AKS and the civil liability under Stark Law, as well as the available exceptions and safe harbors that may apply.

The Legal Framework

The Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b), criminalizes the offer, payment, solicitation, or receipt of remuneration intended to induce or reward referrals of items or services payable by a federal health care program. This includes DME referrals when they involve federal program reimbursement. Violations can result in criminal penalties, including fines of up to $100,000 or imprisonment of up to 10 years, or both.

The Stark Law, 42 U.S.C. § 1395nn, prohibits physician self-referrals for designated health services, including DME, to entities with which the physician has a financial relationship. Unlike the AKS, the Stark Law is a civil statute with strict liability, meaning that intent is not required for liability. It is administered by the Centers for Medicare & Medicaid Services (CMS) and includes a set of exceptions that may permit certain financial arrangements.

The AKS includes safe harbors that may protect certain arrangements from liability, including those involving investment interests, space rental, equipment rental, and referral services, as outlined in 42 C.F.R. § 1001.952. These safe harbors are detailed and require strict adherence to qualify for protection.

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 analysis and context, explore related research topics and legal explanations on this site, including practice areas, explanations of the AKS, safe harbors, AKS and Stark Law overlap, recent decisions, and FAQs.