A Brief Analysis of the Anti-Kickback Statute as it relates to “Professional Courtesy” discounts or write-offs

The Antikickback statute (42 U.S.C. §1320a-7b(b)) prohibits the exchange of anything of value in return for referrals of business paid for by Medicare or Medicaid. The courts have applied the prohibition to exchanges as obvious as the payment by a provider in cash or goods for referrals to that provider, to less obvious exchanges such as the payment by a provider of above market rental rates, guarantees, or free services to a referral source designed to induce a referral.

While physicians may have never interpreted professional courtesy discounts and payment waivers as “payment for referrals”, the courts have interpreted the Antikickback statute to be violated even if only one purpose of a payment or other form of remuneration to a physician is to induce a referral. This statute creates liability for offering, providing, accepting, or soliciting anything of value in exchange for the referral of business that is paid for by the Medicare or Medicaid programs. The Antikickback statute is a criminal statute and penalties are severe. They include the following:

Jail: Up to five years imprisonment

Criminal Fine: Up to $25,000

Civil fines (1): Potential civil monetary penalty of $50,000 per act

Civil fines (2): Three times remuneration offered

Mandatory Exclusion:Exclusion from participation in Medicare/Medicaid

Therefore, if a physician treats Medicare or Medicaid patients, no professional courtesy discounts or write-offs should be extended to that physician or members of his family by a healthcare organization that also accepts Medicare or Medicaid patients. The penalties are applied to both parties to such a transaction—both the service provider and the recipient of those discounted or free services.