This article first appeared on LinkedIn on May 24, 2021 as part 1 in a 3 part series. Parts 2 and 3 will follow in future posts. It is republished here with permission of the author.

Dementia Wisdom

Providers, including marketers, are tempted to give patients free items and services. But be careful! These activities may violate laws prohibiting providers that participate in state and federal health programs from giving free items and services to patients. Private insurers often impose the same prohibitions. This means that private duty agencies are not exempt from these fraud and abuse prohibitions if they participate in any state healthcare programs, such as Medicaid or Medicaid waiver programs, or accept payments from private insurers.

The government generally prohibits providers from giving free items and services to patients because it is concerned that such activities may:

  • Result in overutilization of services
  • Produce decisions concerning care that are not objective
  • Increase costs to the Medicare and Medicaid Programs and other state and federal healthcare programs

Providers who violate prohibitions on what may be given to patients face criminal fines, civil money penalties, suspension or exclusion from the Medicare and Medicaid Programs and other state and federal healthcare programs, and jail time.

There are two applicable federal statutes:

  • The anti-kickback statute (AKS)
  • The civil monetary penalties law (CMPL)

The AKS generally prohibits providers from offering to give or actually giving anything to anyone in order to induce referrals for any items or services for which payment may be made by federal or state healthcare programs. There are, however, a number of exceptions or “safe harbors” applicable to the AKS. If providers are able to meet all of the requirements of applicable exceptions or safe harbors, they may engage in activities that would otherwise violate the AKS.

The federal government says that if referrals are obtained in a way that violates the AKS and providers submit claims for services provided to patients who were referred in violation of the AKS, then providers have also violated the federal False Claims Statute. Providers generally violate the False Claims Statute if they submit claims or cost reports to the government that include information that is untrue. When providers submit claims, they, according to enforcers, also promise that referrals were not received in ways that are prohibited. If referrals are received inappropriately by violating the anti-kickback statute, for example, then the claims are “false.” Giving free items or services to patients may also violate the civil money penalties law. 

This federal statute prohibits providers from offering to give or actually giving items or services to patients or potential patients that are likely to influence beneficiaries receipt from particular providers. This prohibition is especially relevant to marketing activities. It applies to both direct and indirect promotional activities.

Providers must also comply with applicable laws in all of the states in which they do business. State laws very, of course, from state to state. Many states have anti-kickback statutes that are similar to the federal statute described above. State licensure statutes for physicians, nurses, therapists, social workers and other types of providers may also include prohibitions on giving free or discounted items or services to patients, especially when they may induce patients to receive potentially unnecessary services.

Although providers may have good intentions when they give free items or services to patients and potential patients, such intentions must be subjected to consideration of the prohibitions described above before they are acted upon.