A recent settlement involving a Medicare Advantage plan should serve as a reminder that the federal Anti-Kickback Statute (AKS) is broad and far-reaching, both on its face and in practice.
On July 1, 2022, the U.S. Department of Justice (DOJ) and U.S. Department of Health and Human Services Office of Inspector General (OIG) announced that a Medicare Advantage plan (Plan) agreed to pay $4.2 million to resolve False Claims Act allegations that the Plan violated the AKS by offering kickbacks to healthcare professionals (Settlement). 1
Specifically, according to the Settlement announcement, the Plan allegedly distributed gift cards over the course of a little more than a year to administrative assistants of providers to induce the assistants to refer, recommend or arrange for enrollment of Medicare beneficiaries into the Plan. As such, the government contends that the Plan submitted or caused to be submitted claims to the Medicare Program tainted by this AKS violation.
The Settlement highlights the breadth of the AKS, as well as the flexibility that enforcement authorities have in utilizing the AKS as a vehicle to deter behavior deemed to be problematic. The AKS, in relevant parts, prohibits the knowing and willful offer or payment of any remuneration, either directly or indirectly, in return for referring, recommending or arranging for an item or service that is reimbursable, in whole or in part, under a federal healthcare program.
More common allegations involving violations of the AKS typically involve remuneration paid to induce referrals or recommendations of particular healthcare items or services – such as prescription drugs, medical devices or medical services – or of specific providers of such items or services, such as physicians, pharmacies or other suppliers. However, the Settlement illustrates that referrals for “items or services … reimbursable … under a federal health care program” may be read broadly to include recommending Medicare beneficiary enrollment in particular federal healthcare program plans, including Medicare Advantage, Medicare Part D, and state Medicaid managed care plans. That is, even when the alleged remuneration is not to induce the referral of a specific healthcare item or service, referrals of beneficiaries to specific federal healthcare program plans may also be within the confines of the AKS.
Additionally, it is not clear precisely what the “claim” would be under this theory of liability for purposes of AKS enforcement through the False Claims Act, which requires identifying the “presentment” of a “false or fraudulent claim” for payment. For instance, it is not clear whether the “false or fraudulent claim” would be for the per-member capitation payments made by Medicare to the Medicare Advantage plans for each member enrolled as a result of the Plan’s incentive program, or the underlying claims for payment for healthcare items or services rendered to such members.
It is further unclear how similar theories of liability under the AKS may be applied to different marketing or brokering arrangements into which Medicare Advantage plans enter. For instance, there are specific Medicare rules pertaining to structuring compensation (including commissions, bonuses and gifts) paid to licensed agents, brokers or other third parties that contract with plans to sell specific products, including federal healthcare program plans. See, e.g., 42 CFR § 422.2274. Although these regulations would not, as a matter of law, necessarily protect an arrangement from AKS enforcement, it is unclear, though unlikely, whether the DOJ or OIG would view arrangements that otherwise meet the Medicare rules with equal skepticism and scrutiny under the AKS.
Finally, Medicare Advantage Plans often rely on specific safe harbors to the AKS to protect certain common arrangements between plans and downstream contractors. Whether the scope of these safe harbors could protect other similar incentive arrangements still remains to be seen and would be subject to a facts-and-circumstances analysis that depends on the specific details of a particular arrangement.
In light of the Settlement, stakeholders, including providers and other downstream vendors that contract with federal healthcare plans to conduct any delegated services, should monitor any developments involving similar theories of liability and internally review any incentive programs or marketing initiatives utilized to promote enrollment in federal healthcare program plans.