Safe Harbor Act: What Are Anti-kickback Laws in Healthcare?

You became a healthcare professional to spend your life helping people. Unfortunately, the job also comes with a ton of regulations, legal jargon, and fine print you need to read and understand in order to do your job.

Safe harbor regulations are just one of the many things you need to know. Keep reading to find out what are safe harbor laws in healthcare, and how they affect you.

What Are Safe Harbor Laws in Healthcare?

In most cases, safe harbor laws in healthcare refer to the regulations that exempt certain payments and business practices from being considered illegal kickbacks or bribes. In other words, they're exceptions to the Anti-Kickback Statute (AKS).

However, the phrase "safe harbor for nurses" usually refers to a different kind of law altogether. See the appropriate section below.

What Is the Anti-Kickback Statute?

The Anti-Kickback Statute was introduced to reduce Medicare and Medicaid fraud.

Say a doctor writes a referral for a product or service so that their patient can benefit from it and charge it to a federally funded healthcare program. You'd hope that the doctor writes the referral because they truly believe that the medication or treatment is in the best interest of their patient.

Unfortunately, this isn't always the case. Sometimes the doctor is getting something out of it, like a payment or gift for each person they refer. The concern is that doctors in this situation won't recommend the best course of treatment for the patient and instead go with the most lucrative course of treatment for them.

And that's considered a very big problem when the government's footing the bill.

These situations are what the Anti-Kickback Statute is designed to prevent. The law doesn't just prohibit direct payments that incentivize referrals, but the exchange of "anything of value." That could include anything from free tickets to a sporting event, consulting/speaking arrangements, compensation that goes above fair market value, and other sneaky workarounds meant to dodge the law.

Examples of Antikickback Law Violations

Common violations of antikickback laws involve arrangements where individuals or organizations offer, pay, solicit, or receive something of value in return for referrals or business related to healthcare services. Here are some examples:

1. Cash Payments for Referrals: This is a straightforward and illegal exchange of money for patient referrals, where providers, such as doctors, receive financial incentives for sending patients to specific facilities, labs, or services.
2. Improper Compensation for Medical Directors: Some organizations compensate doctors beyond fair market value for medical director roles that may be unnecessary or involve minimal duties, disguising kickbacks as legitimate compensation.
3. Free or Discounted Services: Offering services, such as free office space or discounted rental rates, to providers in return for referrals or continued business is a common violation.
4. Rebates and Discounts Tied to Referrals: Manufacturers or suppliers offering rebates, discounts, or bonuses that are contingent upon a provider choosing a specific service or product can also constitute illegal kickbacks.
5. Excessive Gifts or Entertainment: Providing high-value gifts, entertainment, or trips to healthcare providers with the aim of securing their loyalty or influencing them to refer patients can violate antikickback laws.
6. Fee-Splitting Arrangements: Fee-splitting arrangements occur when providers or clinics agree to share a portion of fees with others in exchange for patient referrals, violating the laws meant to prevent financial incentives influencing referrals.
7. Waiving Copayments or Deductibles: Some providers waive copayments or deductibles to increase patient volume, but if this practice is linked to federal healthcare programs, it can be considered a kickback since it incentivizes patients to choose one provider over another.

Each of these scenarios demonstrates ways that financial incentives can compromise medical decision-making and increase healthcare costs, which are the main concerns antikickback laws aim to address. Violations can result in fines, exclusion from federal programs, or even criminal charges for involved parties.

Consequences to Violating Antikickback Laws

Violating the Anti-Kickback Statute is classified as a felony, carrying the possibility of imprisonment and hefty fines. Those convicted can face fines of up to $25,000 per violation, a prison sentence of up to five years, or both. Beyond these criminal penalties, there are also significant civil and administrative consequences for kickback violations. Violations often trigger liability under the False Claims Act, a civil statute that allows the government to seek recovery through lawsuits in federal court when false or fraudulent claims have been submitted. Under this law, providers can be penalized with fines up to three times the government’s losses on a program, plus an additional $11,000 per false claim.

In addition to these financial penalties, violators may be excluded from federal healthcare programs, such as Medicare and Medicaid, a sanction that can be devastating for healthcare providers who rely on reimbursements from these programs.

Beyond legal repercussions, violators may face professional sanctions such as loss of licensure or accreditation; professional boards or healthcare accrediting agencies may impose disciplinary actions, including suspension or revocation of medical licenses for individuals or accreditation for organizations involved in antikickback schemes.

What Is the Safe Harbor Act and Why Does It Exist?

After the Anti-Kickback Statute was instituted, there were concerns that certain innocuous commercial arrangements could be prohibited under the Anti-Kickback Statute.

Basically, companies and healthcare professionals were worried that payments made for legitimate reasons could be misconstrued as a kickback, and the liability of potential prosecution made them nervous. They wanted to know the exact conditions they needed to meet for a payment to be considered above board.

The resulting regulations are sometimes referred to as the Safe Harbor Act, but no such law was passed by Congress. Instead, safe harbor "laws" in healthcare are actually regulations created by the Department of Health and Human Services (HHS)'s Office of the Inspector General (OIG). The HHS's OIG is responsible for enforcing the Anti-Kickback Statute and the safe harbors from it.

What Are the Anti-Kickback Statute's Safe Harbors?

There are 28 different payment practices and business arrangements that are exempt from AKS liability under the safe harbor regulations.

Some of the most common safe harbors include:

• Investment interests in publicly-held companies
• Commercially-reasonable discounts
• Bona-fide employment relationships
• Lease/rental of office space or equipment

Each safe harbor has very specific conditions that must all be met to qualify for the exception. This is to prevent people from getting creative in disguising kickbacks as something else. If you don't meet all of the safe harbor provisions, you could still be criminally or civilly liable under the Anti-Kickback Statute.

For most safe harbors, one of the provisions is proper disclosure. In other words, there's paperwork or documentation involved. For the discount safe harbor, for example, you'd need invoices and a record of your negotiations.

Other common provisions relate to making sure that the healthcare professional in a position to make a referral doesn't get a deeper discount or better deal than what would be available to someone else. For example, to qualify for the small investor safe harbor, a referring doctor can't buy at a lower share price than a member of the general public.

What Is Safe Harbor in Nursing?

Although nurses need to be aware of the Anti-Kickback Statute and its safe harbors, the phrase "safe harbor for nurses" usually means something completely unrelated.

Recently, states like New Mexico and Texas have passed safe harbor laws for nurses. These laws allow licensed nurses to reject certain assignments without fear of retaliation from their employers.

These laws are designed to help nurses protect their license to practice when it's jeopardized by an employer's assignment or orders.

Details may vary, but generally, nurses can invoke the safe harbor law when accepting the assignment or order wouldn't be in the best interest of their patient. This might mean that the nurse doesn't have the skills required to do the job, or it could be that they're questioning the medical soundness of the order.

Invoking safe harbor typically involves a paper trail, but Texas has made it possible to invoke "oral safe harbor" during an emergency to prevent a delay of care (with the paperwork coming later).

Once safe harbor laws in nursing are properly invoked, the nurse is protected against retaliation like suspension, termination, discipline, and licensure sanctions.

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