Stark and Anti-kickback (Part 2): Exceptions and Safe Harbors

Look at whether you’ve got bonafide employment. If you do, you’ll probably meet the Stark exception and you’ll probably meet the Anti-kickback Safe Harbor. If you don’t have an employment situation, look to see whether you meet all those elements of the personal services and management contracts, exception on the Stark side, Safe Harbor on the Anti-kickback side. Or, if you’ve got equipment in space leases, look to make sure that those again meet the exception and the Safe Harbor. Look to see that there are fair market value, that they’re commercially reasonable, and in general, that those arrangements would make sense whether or not you had patients flowing through the door. You’re going to see that emphasis on fair market value all throughout the Stark exceptions and the Anti-kickback rule.

Something can’t be paid for nothing. If you’re getting paid extra for nothing, the logic goes it’s probably for a referral that’s prohibited. So, the way to make sure that everything lines up with the purpose of the exception is that the amount paid is fair market value for what the doc should get as an employee, and it should not be determined in a manner that takes into account directly or indirectly the volume of referrals made by the physician or other business generated by the parties.

So, you can’t say, you know, every time you bring a patient in, we’re going to give you an extra dollar amount because that would take into account the volume of referrals made between the parties. Commercially reasonable like fair market value is another one of those objective benchmarks to be sure that the transaction makes sense. That it’s not trying to create a conflict of interest. It’s not trying to incentivize physicians to make money off of their patients. That’s really the bottom line concern here because that’s where it begins to suck out money in a way that’s either fraudulent or abusive, and is not in the best interest of the patient.

Now, note, even with this exception, physicians can and do get paid productivity bonuses.