In today’s video, we’ll talk about how anti-kickback and fee splitting concerns permeate healthcare arrangements, and some ways to spot arrangements that potentially violate these laws, vs. those that are more likely to survive enforcement.

Hi, I’m Michael H. Cohen, founding attorney of the Cohen Healthcare Law Group. We help healthcare industry clients just like you navigate healthcare and FDA legal issues so you can launch, or continue to grow and scale, your health and wellness business.

Consider a group medical or psychology practices that offers initial assessments, exams, clinical interviews, or evaluations. They then refers the patient for more detailed clinical services within the group, whether this would be a medical service or a type of longer-term therapy.  The question is whether this violates federal Stark law, federal Anti-Kickback law, or some state version of Stark or AKS, the federal Anti-Kickback Statute.

State laws vary by State, obviously, yet the gist of these laws is usually the same.

First there is the prohibition against a referral that involves self-interest.  This is the essence of the federal Stark law: the law prohibits referring the patients for a so-called “designated health service” or DHS in which the medical or other clinical provider has a financial interest.  For example, a referral to a clinical laboratory that the doctor owns.  Or a referral for physical or occupational therapy where the physician has a financial self-interest.

Sometimes the self-referral statute will limit the prohibition to certain types of clinicians, such as a doctor of medicine or osteopathy, a doctor of dental surgery or dental medicine, a doctor of podiatric medicine, a doctor of optometry, and a chiropractor, and only those.

Next, there is a basic prohibition against accepting commissions, discounts, rebates or any type of fees in exchange for referring the patient to the doctor, psychologist, or other provider.  Sometimes the statute will just call this as a “kickback” or “bribe.”  There are many variations on this key statutory prohibition like a prohibition against leasing in exchange for a referral fee.

So, does your state have such a law? Probably.

The federal anti-kickback statute applies to all practitioners, not just physicians, where federal reimbursement monies are involved.

There are several important exceptions and safe harbors in each case.

Under Stark, for example, there is a complicated exception for IOAS, in-office ancillary services, which in a nutshell are services performed by the referring physician, or a doctor within the same practice group, in certain locations designated by this exception. There are many parts to it.

Key exceptions and safe harbors also include a situation where the physician or clinical provider is employed by the referring physician.  That is called, “bona fide employment.”

For bona fide employment, compensation also has to be reasonable, at fair market value, calculated in arms-length negotiations, and not based on the number or value of patients referred.

Yet another important carveout is for what is called, “personal services and management contracts.”  We cover this at much greater length on our Blog, it’s the basis for MSO arrangement.

If you’re interested in an early read on your healthcare model, you would probably benefit from having a Legal Strategy Session with a member of our Legal Team.

Thanks for watching. If you have any questions, click on the link below, cohenhealthcarelaw.com/contact, to send us a message or book an appointment. Here’s to the success of your healthcare venture, we look forward to speaking with you soon.