Federal antikickback laws are meant to prevent suppliers from rewarding doctors who use their products if those physicians participate in Medicare, Medicaid or other federal programs (this is also why seniors cannot use copay cards for Medicare Part D drugs).
This federal statute imposes criminal penalties on anyone who improperly offers to exchange anything of value to encourage or induce a referral of business from a federal healthcare program.
Historically, federal law enforcement action was generally against the companies and individuals who offered bribes or kickbacks. Increasingly, the U.S. Department of Justice is also going after the doctors who receive the perks. This from Medscape Medical News:
Surgeons who accept vacations and other freebies from medical device companies could face penalties like fines, stricter oversight, and even jail time, according to experts familiar with the federal Anti-Kickback Statute.
Historically, enforcement actions have primarily focused on the person or organization offering the perks — and not necessarily the physicians accepting it, Steven W. Ortquist, founder and principal of Arete Compliance Solutions, LLC, in Phoenix, told Medscape Medical News.
But that’s changing.
“In recent years, we are seeing a trend toward holding physicians and others on the receiving end of the inducement accountable as well,” said Ortquist, who is a past board member and president of the Health Care Compliance Association. He noted that authorities usually pursue the inducing company first before moving on to individual clinicians or practices.
In the past there was little risk to accepting freebies in return for using a particular supplier’s product. There may have never been a written or verbal agreement, just a reward. In other cases, there may have been an implicit arrangement. If there is risk to a quid quo pro arrangement, doctors are probably less likely to be receptive. An example of this emerging policy change is a recent Department of Justice (DOJ) case against an interocular lens supplier, distributor and a surgeon.
According to court documents, physicians received luxury travel and entertainment packages, including skiing, fishing, and golfing excursions at exclusive destinations, often traveling via private jet to attend Broadway musicals and major sporting events. Ehlen and company representatives also sold frequent flyer miles to physicians at a steep discount, allowing them to take personal and business trips below fair market value.
The DOJ subsequently investigated Jitendra Swarup, MD, an ophthalmologist and cataract surgeon who allegedly received “unlawful remuneration from Sightpath, Precision, and Ehlen” and filed false insurance claims. In addition to accepting expensive hunting and fishing trips from the medical device companies, Swarup was paid more than $100,000 per year for consulting services he did not fully render.
Physicians rewarded with sham consulting fees raises suspicions if the consulting was not the primary service. The eye surgeon had to pay a $3 million settlement to the DOJ, while the parties rewarding him had to pay $43 million to settle charges.
Another scam to provide (semi legal, often illegal) kickbacks is when physicians are rewarded with an honorarium, free tickets, lodging and transportation for them and their families to attend conferences in exotic locations. They (and colleagues) are invited to speak at a conference, often supplied with a presentation prepared by the medical device or drug company. In return they get CPE credits, cash and the rest of the time is their own to enjoy Hawaii. The practice can run afoul of anti-kickback rules, reports the Department of Health and Human Services’ Office of Inspector General.
The DOJ has charged other physicians for receiving compensation from venders. This from Medscape Medical News:
In another case, Kingsley R. Chin, an orthopedic surgeon and designer of a spinal implant, was indicted in 2021 for paying millions of dollars in sham consulting fees to physicians who used his products. At least six surgeons who accepted money from Chin were later named in a civil case and ordered to pay $3.3 million in penalties.
It’s a cat and mouse game where some ethically challenged suppliers straddle the line between legal and illegal marketing. The DOJ and OIG are warning all parties that the federal agencies are watching. Indeed, in some cases it’s whistleblowers who report malfeasance, presumably to get a cut of the penalties.