Here is a familiar situation. A health care provider — such as a pharmacy, lab, DME or hospital — hires an “employee” to work as a sales representative to market their services and/or products. In many instances, the “employee” gets a base salary and a healthy commission for all the referrals he/she brings to the provider.
Over the past five years, the Department of Justice and the Office of the Inspector General (OIG) have been paying close attention to these kinds of business arrangements.
The federal Anti-Kickback Statute (AKS) prohibits any person from “knowingly and willfully” paying, offering, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, in exchange for or to induce the referral of any item or service covered by a federal health care program.
Health care providers have been banking on a special provision of the AKS: the “bona fide employee” safe harbor, which would shield them from civil and criminal liability.
However, many providers are unaware of the requirements to fit squarely within this safe harbor — specifically, the issue of what constitutes an “employee” under the safe harbor regulation.