Update: In an October 30, 2013 letter to Congressman Jim McDermott, the Secretary of HHS concluded that QHPs are not federal healthcare programs for purposes of the federal anti-kickback law. This opinion opens the door for providers to offer financial assistance programs to exchange patients. Before implementing any such program providers should consider whether any state anti-kickback laws may come into play. A copy of the letter can be found here.
Under the Patient Protection and Affordable Care Act, several new statutory provisions are coming together to expand the reach of the federal Anti-Kickback Law, and the consequence for an AKL violation are now more severe.
This perfect storm of AKL risk comes from the following three components of PPACA that are on a collision course in 2014:
1. The expansion of federal healthcare programs as the federal government begins to subsidize healthcare coverage for individual policy holders who qualify,
2. A PPACA provision that makes violations of the anti-kickback laws a per se violation of the False Claims Act, and
3. Another PPACA provision that eases the burden of proving an anti-kickback violation.
This perfect storm of anti-kickback risk is quietly brewing now, and providers should take steps to be prepared before the storm becomes active in 2014. Understanding how these changes will impact anti-kickback liability is the first step in being prepared.
Marketplace plans likely subject to the AKL
Generally, the AKL broadly prohibits paying remuneration to any person to induce such person to: (1) Refer patients for items of services which are paid in whole or in part under a federal healthcare program, or (2) To purchase or order goods or services which are paid in whole or in part under a federal healthcare program.
Under the PPACA, more patients are likely to be covered by federal healthcare programs for purposes of the AKL. A "Federal Health Care Program" is defined by the AKL as any "plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government." For many patients, the marketplace plans are subsidized by the federal government through payment of premium and cost-sharing subsidies. The federal government's payment of these subsidies likely means many marketplace plans qualify as Federal Health Care Programs and are subject to the AKL.
As marketplace membership population increases, the risk of anti-kickback liability will also increase. Some forecasts project that the number of people participating in marketplace plans is likely to increase to 24 million in 2016, which is roughly half the number of Medicare subscribers. Consequently, in the coming years providers should expect to see an influx of patients who could potentially trigger federal anti-kickback liability.
Proving an AKL violation has become easier
Not only is the number of patients subject to the anti-kickback law likely to rise, but also the PPACA made proving a violation easier. Prior to PPACA, the anti-kickback law required evidence that the alleged violator knew of the law or specifically intended to violate the statute. The knowledge or intent requirement was relaxed by PPACA, making it easier to prove a violation and harder for providers to defend against AKL claims.
Violations have become more costly
Additionally, the PPACA changed the language of the AKL to provide that a violation of the AKL is a per se false claim under the False Claims Act. This change increases exposure to whistleblower lawsuits and costly civil penalties. By making violations of the AKL a per se false claim, the consequences of a violation are now more severe.
Take the time to educate your organization
Marketplace plans become effective Jan. 1, 2014. Before these patients begin presenting for treatment, providers should review their business practices to ensure they are complying with the AKL. There are many free resources available for compliance review. The HHS Office of the Inspector General publishes compliance program guidance and posts training podcasts and webcasts on its website. In addition to these free resources, providers should consider having an experienced healthcare attorneys assist with compliance review.
Douglas A. Wolfe, JD, is an attorney with the Miami law firm of Kozyak Tropin & Throckmorton, P.A., where he practices in the areas of healthcare provider business litigation.