To Stay On Right Side Of Referral Relationships, Here’s What Home-Based Care Providers Should Know

Strong referrals can be the lifeblood of a thriving home-based care business. However, providers need to be sure they’re not running afoul of the federal laws, or the state law equivalents, that regulate the financial relationships between agencies and their referral sources.

If a provider receives funding under the Medicare, Medicaid, TRICARE, Veterans Health Administration or Indian Health Services, they are subject to the federal Anti-Kickback Statute, the Stark Law and the Civil Monetary Penalties Statutes.

“Those provisions are the big ones in a lot of ways,” Kurt Erskine, a shareholder at law firm Polsinelli, said during the organization’s recent webinar.


Prior to his role at Polsinelli, Erskine was the United States Attorney for the Northern District of Georgia. Before that, he was a criminal prosecutor at the Department of Justice.

Those roles have positioned him to be able to detail what goes into a criminal prosecution or civil prosecution.

The Anti-Kickback Statute makes it a felony to “knowingly and willfully offer to pay, solicit or receive any remuneration in order to induce referrals of items or services reimbursable by a federal or state health care program.”


“Remuneration … is a fancy word that means anything of value, it can be gift cards, it can be cash, it can be, in some cases, discounts or free goods,” Erskine said. “We’ve seen all kinds of variations of that, but remuneration is an incredibly broad term.”

Erskine noted that for the purposes of enforcing this provision of law, it doesn’t matter whether the potential referrals were actually made. It can be just the intent to induce the referral.

If a provider is charged with an Anti-Kickback Statute violation, the punishment can be more than a year in prison. In fact, the statutory maximum is five years in prison for each single payment that is received or paid.

Broadly, when an anti-kickback investigation takes place, there is both a civil and a criminal component to it.

“There are teams that investigate the civil side and the criminal side, and they work with agents that are with Health and Human Services, but I also worked often with the FBI and other Medicaid Fraud Control Units from various states if there was an anti-kickback violation,” Erskine said. “They’re incredibly well staffed. They’re well-resourced and sophisticated teams.”

Generally, it’s best to avoid federal investigations, which are often expensive and lengthy.

“Quite frankly, it’s difficult to have that hanging over the business and do business on a day-to-day basis,” Erskine said.

Civil Monetary Penalties Statutes are another way that liability can ensue in the event that there is an alleged kickback.

This is the offer of any remuneration that has the ability, or is likely, to influence an individual in order to receive a federally covered health care service.

Additionally, the Stark Law prohibits and makes illegal the referral — by a physician — of patients to an entity for which the doctor or family member has a financial relationship.

If the government proves there has been a violation from a criminal perspective, the provider is subject to a fine of $25,000 per violation and imprisonment up to five years. From a civil perspective, this applies to Civil Monetary Penalties Statutes, there’s a $50,000 assessment fine per violation and three times the total remuneration.

Providers that violate these laws can be excluded from participating in federal health care programs, such as Medicare and Medicaid.

In addition to the laws on the federal level, many states have anti-referral laws that are often criminal and carry very similar penalties to the federal prohibitions.

Once providers know the risk and penalties associated with those risks, it’s imperative that they implement a robust compliance program.

“When I was a federal prosecutor, one of the very first things that I would do in a case was invite the compliance officer from the organization to visit with us,” Erskine said. “I wanted to know how robust their program was. Was it drafted and put on a shelf, or was it really a living document? Was it updated regularly? Were there open lines of communication in the organization, so that employees could report a kickback violation?”

Historically, Erskine’s last question was especially important, because it often determined which organizations would have whistleblowers.

“One of the biggest reasons, besides the money, that an employee or former employee becomes a whistleblower is because they don’t feel like they have anywhere to turn,” he said.

Companies featured in this article: