Anti-Kickback Leniency During COVID-19 Pandemic
- April 17, 2020
- Erin M. Eiselein , Brownstein Hyatt Farber Schreck LLP
- Anna-Liisa Mullis , Brownstein Hyatt Farber Schreck LLP
- Amanda Hutson , Brownstein Hyatt Farber Schreck LLP
Among the onslaught of waivers and policy statements on enforcement discretion coming out of the federal agencies over the past month to provide flexibility in the fight against coronavirus disease 2019 (COVID-19), the Department of Health and Human Services Office of Inspector General (OIG) has announced[1] a policy to exercise its enforcement discretion to not impose administrative sanctions under the federal Anti-Kickback Statute (AKS)[2] when certain conditions are met. Importantly, this enforcement discretion does not apply carte blanche to all conduct that otherwise would violate AKS. OIG is limiting this enforcement discretion to only 11 of the 18 blanket waivers for the Stark Law that the Centers for Medicare & Medicaid Services (CMS) published on March 30, 2020.[3] And, perhaps most importantly, OIG is retaining the right to enforce the AKS with respect to any relationship that creates fraud and abuse concerns.
The 11 Stark Law blanket waivers that are covered by the OIG policy are as follows:
- Remuneration from an entity to a physician that is above or below the fair market value for services personally performed by the physician to the entity;
- Rental charges paid by an entity to a physician that are below fair market value for the entity’s lease of office space from the physician;
- Rental charges paid by an entity to a physician that are below fair market value for the entity’s lease of equipment from the physician;
- Remuneration from an entity to a physician that is below fair market value for items or services purchased by the entity from the physician;
- Rental charges paid by a physician to an entity that are below fair market value for the physician’s lease of office space from the entity;
- Rental charges paid by a physician to an entity that are below fair market value for the physician’s lease of equipment from the entity;
- Remuneration from a physician to an entity that is below fair market value for the use of the entity’s premises or for items or services purchased by the physician from the entity;
- Remuneration from a hospital to a physician in the form of medical staff incidental benefits that exceeds the limit set forth in 42 CFR 411.357(m)(5);
- Remuneration from an entity to a physician in the form of nonmonetary compensation that exceeds the limit set forth in 42 CFR 411.357(k)(1);
- Remuneration from an entity to a physician resulting from a loan to the physician: (i) with an interest rate below fair market value; or (ii) on terms that are unavailable from a lender that is not a recipient of the physician’s referrals or business generated by the physician; and
- Remuneration from a physician to an entity resulting from a loan to the entity: (i) with an interest rate below fair market value; or (ii) on terms that are unavailable from a lender that is not in a position to generate business for the physician.[4]
However, OIG declined to offer enforcement discretion to other conduct even though CMS is providing enforcement discretion under the Stark Law for the same conduct. Hence, OIG is offering no leniency to improper referral relationships involving the following situations: hospitals that have expanded capacity in excess of that which it was licensed on March 23, 2020; hospitals that converted from a physician-owned ambulatory surgical center to a hospital on or after March 1, 2020; certain referrals to home health agencies, assisted and independent living facilities; referrals in rural areas; referrals to group practices not located in the same or centralized building; and referrals to physicians having a compensation arrangement without the arrangement being properly documented.[5]
Additionally, to receive enforcement discretion in the 11 scenarios covered by the OIG policy, OIG is requiring providers to satisfy all conditions and definitions applicable to the Stark Law blanket waivers.[6] These conditions include: (i) the providers are acting in good faith to provide care in response to the COVID-19 pandemic, (ii) the government does not determine that the financial relationship creates fraud and abuse concerns, and (iii) providers seeking protection under this policy statement maintain sufficient documentation.[7]
OIG has also limited the time frame in which it will exercise enforcement discretion, stating that its policy applies to conduct occurring on or after April 3, 2020. By contrast, the Stark Law blanket waivers applied retroactively effective March 1, 2020. Thus, there will be about 30 days in which an arrangement could be legal under Stark but potentially violate the AKS. The OIG policy will terminate on the same date as the Stark blanket waivers terminate—which will stay effective during the COVID-19 public health emergency. Of note, neither CMS nor OIG has explained how providers should plan to unwind arrangements that fall under the blanket waivers when the COVID-19 public health emergency ends.
Finally, unlike the Stark Law, which is a strict liability law that does not require intent to violate the law, AKS is an intent-based statute. It seems clear that OIG will apply its enforcement discretion and show leniency toward good faith relationships designed to support the COVID-19 public health emergency. However, given the admonition that enforcement discretion will apply only to situations not raising fraud or abuse concerns, there should be no assumption that the OIG will extend any leniency to conduct outright intended to induce referrals.
This is especially so in light of the recent reports of fraudulent behavior associated with the COVID-19 public health emergency. Numerous federal agencies and state attorneys general have issued guidance on fraud prevention and have made it clear that fraud prevention is a priority during the current crisis. Enterprising health care providers who view the current regulatory environment as an opportunity to engage in business relationships that otherwise would not pass regulatory muster—and that are not designed in good faith to address COVID-19-related issues—are cautioned that such behavior will not be viewed favorably by either OIG or the Department of Justice.
About the Authors
Erin M. Eiselein, Anna-Liisa Mullis, and Amanda Hutson are attorneys in Brownstein Hyatt Farber Schreck’s health care group in Denver, Colorado.