Passed by Congress in 1972, the federal anti-kickback law’s main purpose is to protect patients and federal health-care programs from fraud and abuse by eliminating the corrupting influence of money. Straightforward but broad, the law states that anyone who knowingly and willfully receives or pays anything of value to influence the referral of federal health-care program business, including Medicare and Medicaid, can be held accountable for a felony. Violations of the law are punishable by up to five years in prison, fines up to $25,000, administrative civil money penalties up to $50,000, and exclusion from participation in federal health programs.

Safe harbors

In response to concerns surrounding the prohibition of some relatively harmless commercial arrangements, Congress issued regulations designating the following specific “safe harbors” for various payment and business practices:

  • Investments in large publicly-held health-care companies
  • Investments in small health-care joint ventures
  • Space rental
  • Equipment rental
  • Personal services and management contracts
  • Sales of retiring clinicians’ practices to other clinicians
  • Referral services
  • Warranties
  • Discounts
  • Employee compensation
  • Group purchasing organizations
  • Waivers of Medicare Part A in-patient cost-sharing amount
  • Increased coverage
  • Reduced cost-sharing amounts or reduced premium amounts offered by health plans to beneficiaries
  • Price reductions offered to health plans by providers
  • Investments in ambulatory surgical centers (ASCs)
  • Joint ventures in underserved areas
  • Practitioner recruitment in underserved areas
  • Sales of physician practices to hospitals in underserved areas
  • Subsidies for obstetrical malpractice insurance in underserved areas
  • Investments in group practices;
  • Specialty referral arrangements between providers
  • Cooperative hospital services organizations

There are two safe harbors that sometimes come up when discussing nurse practitioner and physician assistant employment.

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  • Employee compensation: It is completely appropriate for compensation to be based on productivity or a bonus schedule based on collections. Referrals are required to be clinically appropriate rather than based on arbitrary dates or time frames.
  • Specialty referral: It is important to protect yourself by always making sure any referral is based on medical necessity and standard level of care.

Any doubts? Seek legal opinion

If you are worried that your behaviors or contract could potentially be in violation of the anti-kickback rules, immediately seek the advice of a health-care attorney.

For more information, see these fact sheets from the Department of Health and Human Services and the American Academy of Family Physicians (accessed July 20, 2010).

Ms. Jacobson practices dermatology in Lancaster, Pa. She is also the owner of Strategic Medical Consulting, LLC and