Ketamine clinics and federal anti-kickback regulations: watch out!

In the previous post, we discussed some of the various federal laws that apply when the ketamine clinic is a health insurance provider (or receives reimbursement from another federal program, such as Medicaid, Virginia, etc.). click here Review the post.Although other federal laws apply to these situations (for example, the Stark Act, the Federal False Declaration Act, etc.), the Federal Anti-Kickback Regulations (“AKS”) are criminal decree. Therefore, additional review is required in these cases. Although many states have AKS inferences based on state laws, they vary widely. However, anyone planning to purchase a ketamine clinic must review all applicable health care laws to ensure previous and future compliance. This is no small matter.

AKS overview

So, what does the AKS say? In the relevant part, AKS stipulates as follows:

(1) Any person knowingly and intentionally directly or indirectly, openly or secretly, in cash or in kind, solicits or receives any remuneration (including any kickbacks, bribes or kickbacks)—

(A) In return for referring an individual to someone to provide or arrange to provide any item or service that can be paid in full or in part under the federal health care plan, or

(B) In return for purchasing, leasing, ordering, arranging or recommending the purchase, leasing, or ordering of any goods, facilities, services or items that can be paid in full or in part under the federal health care plan, upon conviction, will be punished not to exceed $100,000 Fine or imprisonment not exceeding 10 years, or both.

42 USC § 1320a–7b(b)(1).

The sections immediately following provide the same content, but focus on those “providing[] Or pay[] Any remuneration for “providing or arranging” or “purchasing, leasing, ordering, arranging or recommending the purchase, leasing, or ordering” of goods or services paid by the federal health care plan. 42 United States Code § 1320a–7b(b)(2).

Additional penalties for violation of AKS and AKS purposes

In addition to the penalties outlined in the AKS, there may be other penalties under the Civil Monetary Penalty Act. 42 USC 1320a-7a(a)(7). In addition, when there is an AKS violation, the federal government can also file a claim under the Federal False Declaration Act. Providers convicted of violating the AKS also face exclusion from Medicare, Medicaid, and other federally funded health care programs.

Therefore, the golden rule is “You should not pay for a referral”-unless you like spending time in prison and paying a hefty fine.

Why do we have AKS? The basic purpose behind many federal fraud and abuse laws is focused on overuse and unnecessary medical services, which in turn drives up the cost of health care. Providers who are motivated to provide more services may sacrifice high-quality patient care in pursuit of money. Any time profit drives medical decisions, people can see the dangers in these situations. In addition, we already have an extremely expensive healthcare system. According to data from the Center for Medicare and Medicaid Services, “Health care expenditures in the United States increased by 4.6% in 2019 to 3.8 trillion US dollars or 11,582 US dollars per person. As a part of GDP, medical expenditures accounted for 17.7%. “

AKS Safe Harbor

Although the scope of AKS is very broad, there is a “safe harbor” under AKS. In order to avoid prosecution under the AKS, the arrangement must satisfy every element of the safe harbor. Otherwise, individuals or entities cannot be exempt from prosecution.

Given that the corporate medical practice principle is a state-based law, many ketamine clinics are owned by suppliers but managed by a managed service organization (“MSO”). The executive file is usually a management service agreement (“MSA”) to achieve this relationship.

MSA has a regulatory safe harbor to ensure that clinics will not have any problems under AKS. The regulations stipulate:

As in [the AKS], “Remuneration” does not include any payment paid by the principal to the agent as compensation for the agent’s services, as long as the following seven criteria are met-

  • The agency agreement is listed in writing and signed by both parties.
  • The agency agreement covers all services provided by the agency to the principal within the term of the agreement, and specifies the services provided by the agency.
  • If the agency agreement is designed to provide agents with regular, sporadic or part-time services, rather than full-time services during the term of the agreement, the agreement clearly specifies the timetable for such intervals, their precise lengths, and the precise charge of these intervals.
  • The term of the agreement is not less than one year.
  • The total remuneration paid to the agent during the agreement period is set in advance, consistent with the fair market value in a fair transaction, and will not be determined between the two parties by other means considering the number or value of any recommendation or business. Pay in whole or in part under Medicare, Medicaid, or other federal health care plans.
  • The services provided under the agreement do not involve consultation or promotion of business arrangements or other activities that violate any state or federal law.
  • The total services contracted shall not exceed the services reasonably necessary for the realization of the commercially reasonable business purpose of the service.

42 CFR § 1001.952(d)

Similarly, to enjoy the protection under the MSA Safe Harbor, all elements must be met. While some elements are easy to understand and apply—such as the requirement that the MSA has a period of at least one year—other elements are trickier. Perhaps the most difficult element to satisfy is the requirement of payment “consistent with fair market value.” To meet this element, we usually recommend retaining a health care assessor to help determine the compensation between the provider and the MSO. Evaluation is the “gold standard” for people who join MSA, and one of the few ways to truly protect all parties from AKS claims.

AKS is a complex regulation with many nuances. In addition, there are opinions from the Office of the Inspector (“OIG”), OIG fraud alerts, regulatory preambles, case law, and other sources to review AKS-related issues. In the final analysis, AKS is a fact-oriented investigation. However, for those who want to enter the U.S. healthcare industry, understanding federal fraud and abuse laws is crucial and can affect how relationships are structured.

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