The federal government is stepping up enforcement of anti-kickback and other statutes with respect to health-care providers, say Blank Rome attorneys Nicholas Harbist and Lauren O’Donnell. Providers should develop compliance programs consistent with guidance and advisories from the Department of Health and Human Services’ Office of the Inspector General to avoid being subject to an enforcement action, they say.

The federal government is increasingly levying enforcement actions against health-care providers. For example, in fiscal year 2010, the federal government initiated 378 civil actions and 647 criminal actions, as compared to 695 civil actions and 809 criminal actions in in fiscal year 2019. And in fiscal year 2019, the federal government issued 163 audit reports, as compared to 178 audit reports in the following fiscal year.

Enforcement actions can result in civil and/or criminal liability for violations of the False Claims Act (FCA), Civil Monetary Penalties Law, Stark Law, and/or the federal Anti-Kickback Statute (AKS), triggering monetary fines, suspension or exclusion from federal health-care programs, and even imprisonment.

Because the occasional provision of certain free medical services—such as preventive care screenings or free transportation—can lead to enforcement actions as they can be viewed as illegal payments made to encourage future business and referrals, health-care providers who provide such services should consider the following analysis and recommendations.

The Anti-Kickback Statute

The AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a federal health-care program. “Remuneration” includes the transfer of anything of value, directly or indirectly, overtly or covertly, in cash or in kind.

Given the broad definition of remuneration, enforcement actions can result from the provision of free transportation services, preventative care screenings, or otherwise.

Similarly, Section 1128A(a)(5) of the Social Security Act (CMP) imposes civil monetary penalties against any person who gives something of value to a Medicare or state health-care program (including Medicaid) beneficiary that the person knows, or should know, is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or a state health-care program. Again, “remuneration” under the CMP includes “transfers of items or services for free or for other than fair market value.”

A health-care provider can violate the AKS or CMP by providing free services to induce referrals for items or services reimbursable by a federal health-care program, or by knowing (or having reason to suspect) that giving free services to state health-care program beneficiaries would likely influence their choices regarding providers who supply items or services payable through a state health-care program.

Certain exemptions exist, however. For example, the CMP excludes from the definition of “remuneration” the provision of incentives aimed at promoting the delivery of preventive care, where delivery of the preventive care is not tied to the provision of other services reimbursed by Medicare or an applicable state health-care program.

Recommendations and Guidelines

Many Department of Health and Human Services Office of Inspector General (OIG) advisory opinions have addressed the provision of free services, providing helpful recommendations and guidelines for health-care providers. These opinions instruct providers to avoid recommending patients return to their offices for future services related to the free service provided, and instead direct patients to their primary care physicians for follow-up.

Providers should also consider directly advising patients that their provision of free services is not intended to promote any certain provider or service. Providers should avoid advertising for-cost services in relation to the free services offered, collecting information about patients’ need for federally reimbursable services in the process of administering free services, and billing health-care programs for free services.

It is also best to provide free services only within one’s own office (as opposed to at external locations or events) and limit any advertising of free services.

Free Services Lead to Enforcement Actions

Regardless of whether providers view offering free services as a norm in certain health-care practices, doing so can lead to enforcement actions.

For example, in March, the Department of Justice announced that Oglethorpe Inc., an organization operating behavioral health facilities across the U.S., agreed to pay $10.25 million to settle False Claims Act allegations in relation to its practice of providing free, long-distance transportation services to patients in Ohio. The DOJ charged that these offerings were intended to induce patients to seek treatment at Oglethorpe centers, which sought payment for treatments purportedly stemming from the free-ride program.

Another example is United States ex rel. Gohil v. Sanofi U.S. Services Inc., an FCA case currently pending in the U.S. District Court for the Eastern District of Pennsylvania. In that case, relator Yoash Gohil brought a lawsuit against Aventis, a pharmaceutical company and his former employer, alleging that Aventis violated the FCA by engaging in kickback schemes to induce doctors to prescribe its “buy and bill” cancer drug, Taxotere, and then requesting government reimbursement in connection therewith. One of the alleged schemes involved Aventis’ “Providing Access to Cancer Therapy Program,” which provided free services to doctors, such as helping doctors submit reimbursement claims for Taxotere, handling administrative appeals when those claims were denied, and providing free replacement vials of the drug when appeals were unsuccessful.

These cases are only two examples of the recent crackdown on physician antikickback violations, which the federal government “is committed to pursuing . . . in whatever form they occur,” according to Acting Assistant Attorney General Brian M. Boynton of the DOJ’s Civil Division. Such enforcement actions could be initiated by a whistleblower, the OIG hotline, or an OIG audit.

Providers should, therefore, develop compliance programs consistent with these recommendations, as well as the U.S. Sentencing Guidelines and guidance materials issued by the OIG for health-care providers, to avoid federal enforcement actions.