OIG Clarifies That Stark Law Compliance and Fair Market Value Alone Do Not Resolve Anti-Kickback Statute Risk

In revisions released earlier this year to its General Questions Regarding Certain Fraud and Abuse Authorities, the Office of Inspector General (“OIG”) emphasized that compliance with the physician self-referral law (“Stark Law”) does not automatically resolve risk under the federal Anti-Kickback Statute (“AKS”). Furthermore, OIG clarified that fair market value (“FMV”) compensation, by itself, does not preclude potential AKS liability.

Hospitals, physician groups, labs and other provider entities should note this guidance to ensure AKS compliance when entering into or examining existing arrangements with current or potential referral sources.

Stark Law Compliance Does Not Equal AKS Compliance

In Revised FAQ 4, OIG clarified that a financial arrangement’s compliance with an applicable Stark Law exception does not by itself protect the arrangement from AKS liability. OIG emphasized the longstanding distinction between the Stark Law and the AKS, including that they serve different purposes, apply distinct penalties for violations and define and interpret similar terms differently.

OIG cautioned in Revised FAQ 4 that an arrangement satisfying a Stark Law exception may still violate the AKS if one purpose of the arrangement is to induce or reward referrals for items or services reimbursable by federal health care programs. OIG reinforced that the Stark Law is a strict liability statute while intent is a key component of an AKS violation. Accordingly, an arrangement may satisfy a Stark Law exception’s requirements but still incur AKS liability if it involves the knowing and willful offer and payment of remuneration to induce, solicit or receive remuneration in return for federal health care program referrals.

Revised FAQ 4 discusses an example involving hospitals, labs and other providers or suppliers offering sporting event and other entertainment tickets to physician referral sources. Such an arrangement could implicate both the Stark Law and the AKS. OIG provides that while the arrangement might meet a Stark Law exception’s requirements depending on the facts and circumstances (such as the Non-Monetary Compensation Exception), it is unlikely to receive AKS safe harbor protection. OIG has repeatedly cautioned against offering remuneration to referral sources, such as providing sporting and other entertainment event tickets, to induce or reward referral sources when paired with the requisite intent. This example underscores the importance of conducting distinct analyses and that Stark Law compliance does not automatically confer AKS protection.

Fair Market Value Alone Does Not Prevent AKS Liability

In New FAQ 17, OIG provided that while FMV compensation remains a best practice to reduce AKS risk, an arrangement may still violate the AKS even where the remuneration is consistent with FMV. OIG rejected the position taken by some stakeholders that as long as the compensation in an arrangement is fair market value, it does not constitute unlawful remuneration under the AKS and therefore does not impose any AKS liability. OIG reiterated that the parties’ intent and the facts and circumstances remain central to determining whether an arrangement violates the AKS. The FAQ further remarks that the AKS does not address the term “fair market value” and that no safe harbors exist to protect an arrangement solely on this basis. OIG further identified FMV as just one of several criteria to receive safe harbor protection and emphasized that an arrangement must satisfy every applicable condition of that safe harbor, including—but not limited to—any FMV requirement. As a result, compensation that is consistent with FMV does not, by itself, provide a defense to potential AKS liability.

Practical Takeaways

When entering into financial arrangements or reviewing existing arrangements with current or potential referral sources, health care providers, organizations and other industry stakeholders should adhere to the following best practices:

• Analyze arrangements separately under the Stark Law and the AKS rather than assuming compliance with one law resolves risk under the other.
• Even where compensation is objectively FMV and an arrangement satisfies a Stark exception, OIG may still examine why the remuneration was provided and whether the parties knowingly and willfully intended to induce or reward federal health care program referrals.
• Do not rely on FMV support alone to mitigate AKS risk—intent, business rationale and the surrounding facts and circumstances remain critical.
• Confirm that each element of any applicable AKS safe harbor is satisfied before relying on safe harbor protection.
• Maintain documentation supporting the arrangement’s legitimate purpose, the compensation methodology and fair market value determination, and compliance analysis.

If you have any questions or would like any additional information about this topic, please contact:

• Erin Drummy at 317-977-1414 or edrummy@hallrender.com;
• Alyssa James at 317-429-3640 or ajames@hallrender.com;
• Katherine Schwartz at 317-977-1432 or kschwartz@hallrender.com;
• Connor Wallace at 317-429-3680 or crwallace@hallrender.com; or
• Your primary Hall Render contact.

Special thanks to Summer Associate Gracie Nichols for her assistance in the preparation of this article.