Avoid These 5 Marketing Practices That Violate the Anti-Kickback Statute

Understand the dangers of ‘white coat marketing’

It is crucial that you know how to market your healthcare organization without violating the Federal Civil Anti-Kickback Statute (AKS)—as well as to protect yourself from crippling lawsuits and fines.

That’s according to healthcare law expert William Mack Copeland who, in his webinar “Keep Your Marketing Activities from Running Afoul of Federal Anti-Kickback Statute,” explains that the AKS makes activities that are common in other industries a crime in healthcare. That means it’s time to polish up your marketing team’s compliance know-how.

Here are a few of the most common marketing activities that violate the AKS—and how to avoid the pitfalls.

Resist the Urge to Give Gifts

  1. Gifts to patients: A major tenet of both the AKS and the Civil Monetary Penalties Law (CMPL) prohibits healthcare providers from offering gifts, rewards, or free or discounted items or services to patients, according to a recent Holland & Hart LLP blog post. Such gifts may include patient appreciation gifts or gift cards, free screening programs, referral reward programs, and rebates.

But the AKS does provide certain exceptions for discounts and transportation programs, Holland & Hart noted. The CMPL also provides exceptions for providing items or services of low monetary value, free or discounted items or waiving copays and deductibles after a good-faith determination of financial need, and incentives that promote certain types of preventive care.

  1. Gifts to referring providers: Likewise, you cannot offer gifts or other items or services to referring providers to encourage referrals, Holland & Hart stated. Common practices that violate the AKS include giving gifts or tokens of appreciation to referring providers, providing practice subsidies, paying for unnecessary services, overpaying for services, and providing free use of space, equipment, supplies, services, or personnel.

Don’t Misuse Patients’ Data

  1. Advertising a referring physician’s practice: In several recent cases that led to multi-million-dollar settlements, hospitals provided free or discounted healthcare marketing services to physicians in exchange for the physician practices’ referrals to the hospitals, according to a Buckhead FMV blog post. The cases involved hospitals paying for referring physicians’ advertisements in magazines, billboards, newspapers, radio, and television.

The hospitals faced allegations that they violated not only the AKS, but also the False Claims Act and the Stark Law, Buckhead reported. One hospital also paid for referring physicians’ brochures, website services, business cards, and promotional lunches.

  1. Using patients’ health information: Your marketing may violate the AKS if you use patients’ Protected Health Information (PHI) without their authorization—and this includes both internal and external marketing, Holland & Hart stated. You will violate AKS if your marketing sends PHI over an unsecure network, such as over the open internet or using unsecure text messaging. Also, be careful when using PHI for fundraising purposes and when selling PHI without prior written authorization from the patient.

 Beware of White Coat Marketing

  1. White coat marketing: A practice that has received a lot of attention lately, thanks to several high-profile court cases in recent months, is known as “white coat marketing.” Lawsuits have alleged that healthcare practitioners were moonlighting as drug company sales representatives, which violates the AKS, according to a report by Baum Hedlund, PC.

How it works: White coat marketing is a fraud scheme involving a drug or medical device company paying “nurses or certified educators (or a third party hires nurses on the company’s behalf) to provide independent medical advice in connection with its product line when, in fact, the nurses or educators act as undercover sales representatives for the company,” Baum Hedlund explained.

Bottom line: While on the surface, some of these marketing practices may seem benign, in the healthcare industry they are illegal under the AKS. Copeland explains in his webinar not only the AKS provisions, exceptions, and safe harbors, but also the federal government’s AKS enforcement activities and the related anti-fraud provisions under the Affordable Care Act. You need to know all of these details if you want to avoid hefty fines and civil penalties for violating the AKS.

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