Anti-Kickback and Stark Law: Pitfalls and Problems
When you think your life is tough in the FCPA compliance arena, just remember you could be head of compliance for a pharmaceutical company or hospital responsible for domestic anti-kickback and Stark law compliance. The frequency of risky interactions between companies and physicians is mind-boggling and riddled with pitfalls.
The breadth of the AKS and Stark law prohibitions has been cut by regulatory safe harbors that reflect real world complications created by the laws. At the heart of both of these prohibitions is the intent to protect medical decision markers from improper influences when recommending a course of care for patients.
The AKS prohibition prevents doctors from being “bribed” to prescribe drugs, devices or services, and the Stark law prevents physicians from steering patients to services in which they (the doctors) have an economic interest. While these purposes are laudable, fine tuning the intent to the circumstances can be difficult.
AKS violations carry significant penalties – criminal and potential trebling of civil penalties under the False Claims Act. AKS is a major driver of False Claims Act liability.
The most significant AKS case this year was settled with Omnicare for $124 million. According to the government, Omnicare was providing discounts on Medicare Part A prescriptions in exchange for guarantees of nursing home contracts for Medicare and Medicaid prescriptions. Under this arrangement, Omnicare’s guaranteed business far exceeded the costs of the discounts on Medicare Part A drugs.
Another significant risk in the AKS area is providing gift cards to patients. At the end of last year, Rite Aid Corporation paid $3 million to resolve claims that providing patients with gift cards for transferring prescriptions to their stores was an AKS violation.
Another area of significant risk for AKS violations is interactions between physicians and laboratories. HHS-OIG issued an alert citing laboratories for certain types of compensation arrangements with physicians for using a laboratory to collect and analyze specimens from patients.
HHS-OIG is concerned whether laboratories are paying physicians at above market rates to collect, package and ship patient specimens to laboratories for analysis. For Medicare patients, physicians are allowed to charge for such services but HHS-OIG is also concerned that physicians may be double billing for such services.
For compliance professionals, there is no limit to the variety of compensation arrangements that can violate AKS or Stark law prohibitions. AKS compliance requires exacting diligence to interactions and any “arrangements” between physicians and related services. Compliance professionals have to assert themselves in this process to make sure such arrangements comply with the law.
Just as important, compliance professionals have to provide comprehensive training on AKS and Stark law issues. With the potential for criminal and treble penalties under the False Claims Act, the stakes are high. Drug and device companies, along with hospitals, clinics and laboratories, have to devote significant time to train sales staff and physicians on basic AKS and Stark issues and the permissible safe harbors.
The legal and compliance staffs have to work closely in these areas to ensure that legal nuances are not ignored and that the compliance message is heard throughout the organization.