‘Referral’ Gets a Revision Under the Anti-Kickback Act

The Anti-Kickback Act (AKA) has always been a concern for healthcare professionals. Under the act, a “gift” that in any other industry would be considered a normal business practice can be considered a crime. 

The intent of the AKA is to prevent such “gifts,” rebates, discounts or remuneration of any kind from influencing the care of patients. I like to think of it as a rule that requires my primary care doc to refer me to the best specialist, not the specialist who paid for his last golf trip. When you think of the intent of the AKA in those terms, then maybe the result of the decision in U.S. v. Patel (7th Cir. 2015) isn’t such a surprise.

Dr. Kamal Patel was a physician who prescribed home healthcare services to a small percentage of his patients. He did not recommend any particular agency, but instead gave his patients brochures from 10–20 different providers from which they could choose. One of those agencies was Grand Home Health Care. To increase business, Grand offered to pay physicians for their referral of patients to their home health agency. The government showed that Patel took these payments, but it never accused him of telling his patients to pick Grand. So why is he going to federal prison?

The court discussed at length what the definition of referral should be under the AKA. Under the language of the act, “whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe or rebate) directly or indirectly, overtly or covertly, in cash or in kind in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a federal healthcare program is guilty of a felony.”

The court decided that referral is a doctor’s recommendation or a doctor’s authorization of care by a particular provider. The distinction there is huge! While a cursory reading of the statute might seem to make it a crime only to directly refer a patient to another provider in return for money, the court also found that certifying a patient for care, even after the patient had already freely chosen a provider, is also a crime. 

The court pointed out that Patel acted as a gatekeeper to federally funded care, and that without his permission his patients’ individual choices had no meaning. Therefore it found Patel’s accepting payments for certifying patients who were already patients of Grand was still a “referral” in violation of the statute.

The implications of this ruling are obviously far-reaching. Any healthcare provider who certifies or authorizes a patient for care by another provider or service has to be concerned with how that will be viewed. But keep in mind that payments made for legitimate services cannot be considered an illegal kickback. What caused Patel his real problem was not the “referral” but receiving the money in return. 

G. Christopher Kelly is an attorney who focuses on federal laws and regulations as they relate to the healthcare industry.