Structure agreements that meet requirements

Meeting federal anti-kickback law requirements is an important consideration in designing management agreements.

The Department of Health and Human Services Office of the Inspector General (OIG) looks closely at arrangements that have no safeguards against overutilization or include financial incentives to increase patient referrals or abusive billing practices, according to John Gilliland, a health care attorney based in Crestview Hills, KY.

"The federal anti-kickback law, s. 1128B(b) of the Social Security Act, makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind, one purpose of which is to induce the referral of business covered by either the Medicare or Medicaid Programs," he says.

Violations carry a $25,000 maximum fine and possible imprisonment up to five years, or both, along with Medicare and Medicaid program exclusions.

In 1991, the OIG established six safe harbors that outline practices that do not violate the anti-kickback statute. Providers who do not meet safe harbors are not necessarily breaking the law, but they are at risk of OIG scrutiny, according to Gilliland.

Management agreements meet the six safe harbor requirements if they:

• are in writing and signed by the parties;

• specify the services to be performed;

• specify the schedule of any periodic, sporadic or part-time services, and their precise length and exact charge;

• are less than one year in length;

• predetermine compensation on a fair market value, arms-length transaction basis, and exclude volume- or referral-based compensation on any Medicare or Medicaid-related business;

• Do not promote any business that violates any federal or state law.