Do the Anti-Kickback and Stark Laws Apply to Private Payors?

Good question.

Anti-Kickback statutes (AKS) and Stark law are extremely important issues in health care. Violations of these laws yield harsh penalties. Yet, many healthcare professionals have little to no knowledge on the details of these two legal beasts.

The most common question I get regarding AKS and Stark is: Do AKS and Stark apply to private payers? Health care professionals believe, if I don’t accept Medicare or Medicaid, then I don’t need to worry about AKS and Stark. Are they correct??

The general and overly broad response is that the Stark Law, 42 USC § 1395nn, only applies to Medicare and Medicaid. The AKS, 42 USC § 1320a-7b(b)),applies to any federal healthcare program.

Is there a difference between AKS and Stark?

Answer: Yes. As discussed above, the first difference is that AKS applies to all federal healthcare programs. This stark difference (pun intended) makes the simple decision to not accept Medicare and Medicaid, thus allowing you to never worry about AKS, infinitely more difficult.

Let’s take a step back… What are AKS and Stark laws and what do these laws prohibit? When you Google AKS and Stark, a bunch of legal blogs pop up and attempt to explain, in legalese, what two, extremely esoteric laws purport to say, using words like “renumeration,” “knowing and willful,” and “federal healthcare program.” You need a law license to decipher the deciphering of AKS and Stark. The truth is – it ain’t rocket science.

The AKS is a criminal law; if you violate the AKS, you can be prosecuted as a criminal. The criminal offense is getting something of value for referrals. You cannot refer patients to other health care professionals in exchange for money, reduced rent, use of laboratory equipment, referrals to you, health services for your mother, marketing, weekly meals at Ruth’s Chris, weekly meals at McDonalds, oil changes, discounted theater tickets, Uber rides, Costco coupons, cooking lessons, or…anything of value, regardless the value. 

Safe harbors (exceptions to AKS) exist. But those exceptions better fit squarely into the definition of the exceptions. Because there are no exceptions beyond the enumerated exceptions.

AKS is much more broad in scope than Stark. Other than Medicare and Medicaid, AKS applies to any health care plan that utilizes any amount of federal funds. For example, AKS applies to Veterans Health Care, State Children’s Health Programs (CHIP), Federal Employees Health Benefit Program, and many other programs with federal funding. Even if you opt to not accept Medicare and Medicaid, you may still be liable under AKS.

Stark law, on the other hand, is more narrow and only applies to Medicare and Medicaid. I find the following “cheat sheet” created by a subdivision of the Office of Inspector General to be helpful in understanding AKS and Stark and the differences between the two:

One other important aspect of Stark is that is considered “strict liability,” whereas AKS requires a proving of a “knowing and willful” action.

Feel free to print off the above chart for your reference. However, see that little asterisk at the bottom of the chart? It applies here as well.

About kemanuel

Medicare and Medicaid Regulatory Compliance Litigator

Posted on January 23, 2017, in Anti-Kickback and Stark law, Federal Government, Federal Law, Health Care Providers and Services, HHS, HMS, Hospice, Hospitals, Knicole Emanuel, Laboratory Services, Legal Analysis, Legislation, Medicaid, Medicaid Advocate, Medicaid Attorney, Medicaid Audits, Medicaid Providers, Medicaid Recipients, Medicaid Reimbursements, Medicaid Spending, Medicare, Medicare and Medicaid Provider Audits, Medicare Attorney, Medicare Audits, Office of Inspector General, Pharmacy, Physicians, Prescription Drugs, Primary Care, Primary Care Physicians, Secretary of Health and Human Services, Stark Law and tagged , , , , , , , , , , , , , . Bookmark the permalink. 10 Comments.

  1. great article thank you – but does this then imply that if a patient is paying for their service in cash then neither law applies? Also say if a patient is being seen by a dermatologist and is paying with insurance for an unrelated matter but is offered a treatment/product (where treating physician has a financial markup interest) and pays cash for that separately – would that trigger the above statues?

    • Leo,

      Cash won’t trigger either law. But I think you’re thinking about the trees instead of the forest. Individual clients who pay cash really isn’t the question. The question is does the physician or practice group accept Medicare or Medicaid? If the answer is yes, then the laws apply. If a client pays cash, but was improperly referred, then the violation still exists, even though he/she paid cash.

      • Thank you for quick response and perhaps I was unclear in my statement – the situation I meant to describe was if the patient while being seen in a practice which accepts Medicaid for reason A was referred by a doctor during that visit to say a service that the doctor owns financial interest in to get service B for which the patient then paid in cash (the cost of that service not being paid for by any insurance funds) – does that recommendation fall under the above? Much appreciated.

      • Leo,

        If you need advice, please feel free to contact me. Your situation is extremely fact specific.

  2. Hi KNICOLE,

    Thanks for this great piece! what I’m not clear on, though, is whether a commercial medical entity may accept and pay referrals if it excludes any kind of federal medical program? and if so, is it enough that it notifies the patient that he may not utilize federal programs for reimbursement?



  3. Hello, Does the Health Exchange fall under “Any federal health care program” being that the federal government subsidizes those plans? Also do state employ plans fall under this category?
    Thank you

  4. Would either law apply if the patient is paying privately in a skilled nursing setting, (Not medicare, medicaid or insurance of any kind) AND the referring party is a senior referral professional, rather than a health care provider?

  5. Question: If a doctor (PCP) refers his/hers non Medicare/Medicaid patient to a specific sleep lab for a study, then that PCP gets paid by that sleep lab to read the study, does that flag either AKS or Stark? Specifically if the PCP is careful not to refer his/her Medicare/Medicaid patients to that sleep lab. But rather private health insurance companies.

    • Also curious about that non addressed Question: If a doctor (PCP) refers his/hers non Medicare/Medicaid patient to a specific sleep lab for a study, then that PCP gets paid by that sleep lab to read the study, does that flag either AKS or Stark? Specifically if the PCP is careful not to refer his/her Medicare/Medicaid patients to that sleep lab. But rather private health insurance companies.

  6. I own and run a small clinic (Hormone replacement, Botox, joint injections, medical weight loss, etc.). ALL CASH! No Medicare, Medicaid, BCBS, VA, Food stamps, NOTHING but plastic or check. My friend is a personal trainer. He is also ALL CASH. Another friend is a chiropractor. He is also ALL CASH. Can I pay them referral fees for sending me patients without violating Stark or kickback laws? Thanx

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