Health Law Monitor

OIG Issues Enforcement Guidance on Anti-Kickback Law during COVID-19 Emergency

April 8, 2020

By: James W. Thomas

On April 3, 2020, the United States Department of Health and Human Services’ Office of Inspector General (“OIG”) issued a Policy Statement announcing that it would exercise its discretion not to impose administrative sanctions under the federal Anti-Kickback Law (42 U.S.C. § 1320a-7b(b)) for certain types of conduct. 

The federal Anti-Kickback Law typically prohibits the solicitation, offer, payment, or receipt of any remuneration, direct or indirect, in cash or in kind, in exchange for the referral of services that are payable under a federal health care program such as Medicare and Medicaid. The Anti-Kickback Law may be enforced criminally by the Department of Justice, or administratively by the OIG. Administrative sanctions available to the OIG include civil monetary penalties of up to $15,000 per violation, up to three times the amount of any overpayment, and exclusion from participation in federal health care programs.

The importance to health care providers of this new Policy Statement from the OIG is how it builds upon the Blanket Waivers issued just a week ago by the Centers for Medicare and Medicaid Services (“CMS”) under the Physician Anti-Referral Law or Stark Law (42 U.S.C. § 1395nn). As reported to you by Jackson Kelly in an earlier update found here, CMS issued 18 Blanket Waivers covering a variety of potential financial relationships between physicians and providers of “designated health services” under the Stark Law, provided that the financial relationship is entered into for a COVID-19 purpose.

Now the OIG Policy Statement clarifies that any remuneration paid pursuant to a valid Blanket Waiver under the Stark Law for a COVID-19 purpose shall not be subjected to administrative sanctions under the Anti-Kickback Law. This is significant because many arrangements that may implicate the Stark Law (and the Blanket Waivers thereunder) may also potentially violate the Anti-Kickback law.

Let’s consider how this could work in the COVID-19 health care environment. In direct response to the epidemic, a hospital may determine an urgent need to loan money to a physician (or an immediate family member of the physician): (1) with an interest rate below fair market value; or (2) on terms that are unavailable from a lender that is not a recipient of the physician's referrals or business generated by the physician. Normally, this type of transaction might be viewed as a potential violation of both the Stark Law and the Anti-Kickback Law. However, with the Blanket Waivers issued by CMS, Stark Law compliance may realistically be achieved for such a transaction during the COVID-19 emergency. And now, with the issuance of the OIG Policy Statement, a hospital may also gain comfort from knowing that the OIG will not seek to impose administrative sanctions for such an arrangement.

There are some important limitations imposed by the OIG Policy Statement that providers should understand. The Policy Statement applies only to conduct occurring on or after April 3, 2020, and shall terminate on the same date as the Blanket Waivers under the Stark Law terminate. If the conduct in question does not fall squarely under a Blanket Waiver (such as when a physician is not involved), then the Policy Statement does not apply. Finally, the underlying transaction must be undertaken for a COVID-19 purpose, and must not otherwise involve a fraudulent or abusive purpose.

Jackson Kelly will continue to evaluate and provide you with timely information on the continuously changing health care regulatory environment due to COVID-19. Should you have any questions about the OIG Policy Statement, please contact a member of the Jackson Kelly Health Care Industry Group.