You are the compliance officer for Centennial Health (CH). CH provides laboratory services for patients of referring physicians (drug testing, genetic testing, etc.) throughout the United States.

"Bob" is a new physician sales rep. He calls you with a concern. He just got out of a sales meeting and learned about an existing campaign the marketing team launched last year where CH offers referring physicians, free urine specimen cups, to any physician who signs a "Cup Agreement."

Bob goes on to tell you under these Cup Agreements, CH provides free urine specimen cups to the physician so long as the following conditions are met:

1. The physician always orders CH's "Custom Panel" which tests for everything CH offers regardless of whether the patient needs such testing;
2. If further testing is required, the physician has to refer back to CH for additional testing; and
3. If the physicians fails to comply with these requirements, CH will charge the physician for the cups.

Assumptions

• CH has a compliance program in place, and based on the Seven Elements, one of the compliance officer's duties is to investigate potential concerns that are reported in good faith.
• You report directly to the CEO and Board of CH.
• The Cup Agreements are governed by the Anti-kickback Statute prohibition.
• The applicable AKS safe harbor for this assignment is personal services and management contracts ("personal services").
  • Related to the personal services safe harbor, assume any Cup Agreements that have been signed, were signed by all parties, and contain a term of more than one year.

Assignment Instructions

Internal memorandum to the CEO of CH analyzing this issue for potential non-compliance with the Medicare Anti-kickback Statute (AKS).

In your memo, include the following:

• Provide a brief summary of this issue, as reported to you.
• Provide an analysis of this issue by comparing the facts, as presented, against the AKS and personal services safe harbor. More specifically,
  • Does this arrangement implicate the AKS? Include why or why not.
  • Does the personal services safe harbor provide any protection? Include why or why not.
• Provide a conclusion of whether or not you think there is a potential violation of the AKS; and
• Provide recommendations to address and resolve this issue (if applicable).

Note: While the actual AKS and personal services & management contracts safe harbor regulations are available online, for purposes of this assignment, please use the following guidelines which have been partially paraphrased to help you in your discussion/analysis.

AKS Guidelines

The AKS prohibits knowingly and willfully soliciting, offering, giving, or receiving remuneration in exchange for referrals for items or services covered by Federal healthcare programs such as Medicare or Medicaid.

Personal Services and Management Contracts Safe Harbor Guidelines:

1. Agreement is set out in writing;
2. The agreement covers all services provided;
3. The term of the agreement is not less than 1 year;
4. Compensation paid is set in advance, fair market value and not determined in a manner that takes into account volume or value of services;
5. Do not involve the counseling or promotion of a business arrangement or other activity violating state or Federal law;
6. The services are commercially reasonable.

Finally, while the facts above may suggest an additional False Claims Act violation, please limit your discussion only to analyzing the potential for an AKS violation.