Quarterly Compliance Newsletter 3-24-2023

Anti-Kickback Statute
This federal criminal statute prohibits the exchange of anything of value to induce the referral of business reimbursable by federal health care programs. Examples of prohibited kickbacks include receiving financial incentives for referrals, free or very low rent for office space, or excessive compensation for medical directorships. In 2022, the Department of Justice’s (DOJ) enforcement matters heavily concentrated on Anti-Kickback violations and new trends in enforcement have appeared. Below is a quick synopsis of some of those cases, and a good reminder to providers of what a violation of this statute looks like in practice.

• An electronic health record (EHR) technology vendor, ModMed, settled False Claims Act allegations for $45 million. The premise of the violations were that ModMed accepted and provided kickbacks by causing its users to report inaccurate information in connection with federal EHR incentive payments. It was alleged that ModMed was paid a kickback by a pathology laboratory in exchange for an exclusive agreement to develop “enhanced features” into its EHR platform that would drive physician pathology orders to that specific pathology lab.
• The DOJ’s use of the Anti-Kickback Statute continues to be a key enforcement tool in an increasingly broad array of contexts. For example, in September, a manufacturer of durable
medical equipment resolved allegations that it violated the AKS by giving physician prescribing data to DME suppliers free of charge to assist their marketing efforts to physicians.
• An MSO organization and two of its officers agreed to resolve False Claims Act allegations for $24.5 million. The DOJ alleged that the MSO violated the Stark law and caused the
submission of claims for medically unnecessary urine drug testing by, among other things, paying physicians affiliated with the MSO 40% of the profits from UDS tests referred to
the laboratory owned by the MSO.
• Focusing on services rendered by offshore personnel, a cardiac monitoring company paid $44.8 million to resolve False Claims Act allegations. The government alleged CardioNet entered into an agreement with a company located in India pursuant to which the offshore company provided diagnostic and analytic services of heart monitoring data. While a workflow was designed to route the tests of Medicare patients to technicians associated with a domestic entity for review, many tests were diverted to the Indian company when domestic workflows became backlogged. Moreover, the government alleged that many of the technicians were not licensed or certified to perform the subject monitoring.
• Genetic testing remains a hot target, as two multi-million-dollar settlements were announced by the DOJ related to medically unnecessary genetic testing. The University of California paid $2.98 million to resolve allegations that it ordered medically unnecessary genetic testing performed by a third-party laboratory. In addition, Metric Lab Services and two of its owners paid $5.7 million to resolve allegations that they paid kickbacks in return for genetic testing samples. In order to conceal the nature of the kickback arrangement, the companies entered into sham agreements with marketers to provide various consulting and marketing services.

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