You feel it is only right to thank your colleagues for sending new business your way, so paying out $20 for a referral does not seem all that bad. You may have heard that in 2019, an owner of an Indiana hospital had to pay $3.6 million because of paying kickbacks to referring physicians. 

Does this apply to you as well? Is any referral reward too much? How does the anti-kickback statute work? 

The Anti-Kickback Statute 

The Anti-Kickback Statute, or AKS, is a federal criminal law, but civil suits are also may apply. 42 U.S.C. 1320a-7ba prohibits offering or receiving rewards for referrals to generate Federal health care business. “Business” can include drugs, supplies, or health care services for Medicare or Medicaid patients. The compensation, or “remuneration,” can come in the form of cash, free rent, hotel stays and meals. The statute covers those who pay the reward and those who accept the reward. Penalties for violating the AKS are the following: 

Criminal penalties 

  • Fines up to $25,000 per violation 
  • A possible five-year prison term per violation 

Civil penalties 

  • Liability under the False Claims Act 
  • Civil monetary penalties (CMP) and exclusion from programs 
  • $50,000 per violation 
  • CMP fees for up to three times the kickback violation 

A safe harbor 

Safe harbors may come into play at times. So even though the reward may trigger the AKS, an individual or business may be safe from criminal and civil prosecution. Some safe harbors include: 

  • Lease or rental of office space or equipment 
  • Referral services 
  • Personal service arrangements 
  • Bona fide employment relationships 

Each safe harbor has conditions and exemptions. Currently, the Office of Inspector General for the Department of Health and Human Services is seeking to implement new safe harbors while modifying others. The proposed rules would pertain to electronic health record items and services, warranties and an extended local transportation radius for discharged patients.