7 Things to Know About the Anti-Kickback Statute for Health Tech Companies

The AKS is intended to prevent fraud and abuse, but has historically hindered progress toward value-based care. New changes open the door for telehealth companies to advance coordinated care and improve patient outcomes.

In November of 2020, the Department of Health and Human Services published new complementary rules to long-standing healthcare regulations that protect against healthcare fraud and abuse, but the laws have also stymied progress towards value-based care in digital health.

These new rules clarified interpretations and made significant changes to the Anti-Kickback Statute in order to protect enforcement of certain non-abusive and beneficial arrangements for healthcare providers.

Here, we break down everything you need to know about the statute — including changes that go into effect January of 2021 — and how this will positively impact the digital health industry.

What is the Anti-Kickback Statute (AKS)?

The AKS makes it illegal for healthcare providers to exchange anything of value for healthcare services that are payable by a federal healthcare program, including Medicaid and Medicare.

The goal of the statute is to protect against healthcare fraud and abuse, while also addressing potential increased costs and lower quality healthcare services.

“Anything of value” is a broad term, so if a healthcare provider gives or accepts anything of value in return for referrals, that could be subject to prosecution.

For example, if a physician paid another physician for Medicare referrals, that would be considered a kickback. Or if that same physician exchanged a free dinner for a referral, that would also be considered a kickback.

The statute is very broad. It covers both the person and organization that offers or pays the kickback as well as the person or organization that solicits or receives the kickback.

How serious is it to violate the Anti-Kickback Statute?

It’s serious. If a person or organization violates the statute, they could face both criminal and civil penalties.

At the same time, if a person or organization is involved in an arrangement that could potentially violate the statute, they have the option to comply with “safe harbors” that can protect a person or organization from sanctions.

What is a safe harbor?

A safe harbor is a legal provision to avoid legal or regulatory liability in certain situations, assuming certain conditions are met.

Recognizing the Anti-Kickback Statute is broad, regulators allow for certain “safe harbors” that protect people or organizations from liability, regardless of the intent. Although something can potentially violate the AKS, safe harbors are not treated as offenses. However, for parties to comply with these safe harbors, they need to meet every requirement under an applicable safe harbor.

New safe harbors include value-based arrangements that foster better coordinated and managed care — like donations of cybersecurity technology, or services, tools, and support for patients to improve quality and health outcomes (like drug adherence or disease/condition management). Find more information on AKS safe harbors in the HHS fact sheet.

Ok, so what recently changed?

Both the Centers for Medicare and Medicaid Services (CMS) as well as the Department of Health and Human Services (HHS) Office of Inspector General made significant changes in order to promote value-based care and care coordination, especially as the industry has shifted to focus more on value-based payment models.

These new changes implement seven new safe harbors, modify four existing safe harbors, and clarify a new exception. Specifically, the new safe harbors open the door to business arrangements created through “value-based enterprises” where two or more value-based participants identify a specific target population and work together to coordinate care. The goal is to improve quality of care, reduce costs, and potentially transition from a fee-for-services model to a value-based model of care.

This transition provides digital health companies with the opportunity to enter into business arrangements that incentivize care coordination and patient engagement.

What is Wheel’s take on these changes?

The updates to the AKS are a welcome change that will ultimately encourage innovation in patient care. Prior to these updates, federal regulations created a roadblock for those in the telehealth industry to advance value-based care. Now, these types of arrangements are eligible for protection. For example, telehealth companies can now participate in arrangements where they are incentivized to improve patient outcomes.

What is the industry’s take on these regulatory changes?

The American Telemedicine Association (ATA) recently issued a statement affirming Wheel’s welcome reaction to these modifications.

“We applaud HHS and CMS for taking an important and urgently needed step towards modernizing the laws that are critical to the success of the regulatory sprint to coordinated care. These new rulings move us closer to a value-based care model that will allow our healthcare system to reimagine how care is delivered and integrate telehealth with in-person care" - ATA CEO Ann Mond Johnson.

Where can I go to learn more information?

The HHS Office of Inspector General published a chart reflecting the types of organizations that are eligible for the new safe harbors, which includes health tech companies. While certain provider types are ineligible, including medical equipment suppliers and laboratories, the OIG has indicated that ineligible organizations may also be able to leverage other safe harbors. The OIG has also published a fact sheet outlining all of these regulatory changes.

While the value-based safe harbors are welcome news for health companies, it’s important to be mindful of ongoing compliance and necessary oversight. We strongly recommend working with your in-house or outside counsel before structuring any business arrangements under the new or modified safe harbors.

Did you know Wheel was co-founded by an expert in healthcare law? We take regulatory issues very seriously and provide our clients with virtual care compliance solutions that help untangle the federal and state-by-state telehealth delivery laws.

Contact us to learn more about launching, growing, or sustaining a compliant virtual care service and learn more about Wheel’s solution for virtual care companies.