Up to $50,000 per kickback, plus three times the payment amount: those are the civil penalties the HHS Office of Inspector General lists for anyone who pays or accepts a kickback; criminal fines, prison terms, and exclusion from federal health care programs are separate. The federal anti-kickback statute is the law behind them. It is a criminal law that prohibits knowingly and willfully paying anything of value to induce or reward referrals for items or services paid for by federal health care programs.
Telehealth companies run into it more often than they expect, because direct-to-consumer care grows through partnerships. Affiliates and influencers bring in patients, clinicians are paid per consult, pharmacies fill the prescriptions, and agencies are paid on results. Each of those deals moves money between parties who can influence where patients go. What follows explains what the statute prohibits, how it differs from the Stark Law, and which questions common telehealth arrangements raise. It is general information, not legal advice.
What the Statute Prohibits
OIG's guide to fraud and abuse laws describes the statute as a law that "prohibits the knowing and willful payment of remuneration to induce or reward patient referrals" or the generation of business involving items or services payable by federal health care programs. Remuneration is broad. OIG says it "includes anything of value and can take many forms besides cash." Its examples include free rent, expensive hotel stays and meals, and excessive pay for medical directorships or consultancies.
The statute covers both sides of the payment: the payer and the party that solicits or receives it. Each party's intent is a key element of its own liability.
Safe harbors, such as payments to bona fide employees and certain personal services and rental agreements, protect some arrangements. Protection is narrow. To qualify, an arrangement must "fit squarely in the safe harbor and satisfy all of its requirements."
Many states also have their own anti-kickback laws, and some apply regardless of who pays for the care. Check the states where your patients are located. Who may own a medical practice is a separate body of law, covered in this guide to the corporate practice of medicine.
Anti-Kickback vs Stark in One Table
People often mention the two laws together, but they work differently.
| Anti-Kickback Statute | Stark Law |
|---|
| What it prohibits | Paying or receiving anything of value to induce or reward referrals of federal health care program business | Physician referrals for designated health services to an entity the physician or an immediate family member has a financial relationship with, unless an exception applies |
| Who it reaches | Anyone, on either side of the payment | Physicians and the referrals they make |
| Intent | Knowing and willful conduct is required | Strict liability: proof of specific intent is not required |
| Programs | Federal health care programs | Medicare and Medicaid |
Stark questions come up when a physician, or a physician's family member, owns or is paid by a business the physician refers patients to. The anti-kickback statute reaches further, because it applies to anyone and to any federal health care program.
Common Telehealth Deals, Rated
The table below sorts the arrangements telehealth companies sign most often by the question each one raises. None of them is labeled safe or unsafe, because the answer depends on the facts, the payer, and the state.
| Arrangement | Why it raises questions | What to look at |
|---|
| Affiliate or influencer paid per patient sign-up | Payment is tied to each new patient | Whether any federal program business is involved, state law, and FTC rules on endorsements |
| Clinicians paid per prescription or per approved order | Pay rises with the volume ordered or prescribed, which OIG lists as a red flag | Pay per consult at fair market value, the same whatever the outcome |
| Pharmacy that pays the brand for routing prescriptions | The payment can look like a fee for steering referrals | What the payment actually buys, and whether it is fair market value |
| Marketing company paid a share of revenue | A percentage fee grows with every patient it brings in | Flat fees for defined services |
| Free items or services offered to patients | They can be an inducement to choose a provider | Beneficiary inducement rules when federal programs are involved |
Affiliates and influencers. The federal statute reaches business payable by federal health care programs, so the first question is whether any of the brand's business is. State law and the FTC's endorsement rules apply either way.
Clinician pay. OIG names compensation "based on the volume of items or services ordered or prescribed" as a suspect characteristic, so per-prescription pay is the row that draws the most attention. If clinicians come through a provider network, ask how the network pays them. Brands on Bask can use the integrated doctor groups included on every plan or bring their own clinical network on Enterprise, and in either setup it is fair to ask how the clinicians treating the brand's patients are paid. Technology contracts deserve the same reading, since a flat software fee and a fee that grows with each prescription are different structures. Reseller deals raise the volume question from another angle, covered in this look at telemedicine reseller arrangements.
Pharmacies. A brand that works with a pharmacy fulfillment partner should know what every payment between them is for. Money flowing from the pharmacy to the brand needs a clear service behind it, priced at fair market value.
Marketing agencies. A percentage of revenue rises with each patient the agency brings in, making it resemble pay-for-referrals. Flat fees for defined services raise fewer of these questions.
Free offers. OIG's beneficiary inducement rules impose civil monetary penalties for offering remuneration to Medicare and Medicaid beneficiaries to influence them to use a provider's services. Advertising free or low-cost items to recruit patients is also on OIG's list of red flags below.
OIG's Red Flags for Telemedicine Arrangements
In July 2022, OIG issued a Special Fraud Alert after investigating telemedicine companies that paid practitioners kickbacks to order medically unnecessary items, such as durable medical equipment, genetic tests, and wound care, and then billed them to federal programs. The alert lists seven suspect characteristics of an arrangement:
- The company recruits patients itself, through sales agents, call centers, or ads offering free or low out-of-pocket items or services.
- The practitioner has too little contact with or information about the patient to judge medical necessity.
- The company pays the practitioner based on the volume of items or services ordered or prescribed.
- The company serves only beneficiaries of federal health care programs and accepts no other insurance.
- The company says it serves only patients outside federal programs but may bill those programs anyway.
- The company offers only one product or class of products, narrowing practitioners' treatment options.
- The company doesn't expect practitioners to follow up with patients, or doesn't give them what they need to do so.
OIG calls the list "illustrative, not exhaustive," and says no single factor decides whether an arrangement is unlawful. It also says the alert "is not intended to discourage legitimate telehealth arrangements." Brands built around a single treatment should pay attention to the sixth item and be able to show that clinicians make every treatment decision, including the decision not to prescribe.
Questions to Ask Counsel Before You Sign
These questions are separate from the review a brand goes through for LegitScript certification, and they are worth asking about every partnership:
- Does any revenue in this deal come from Medicare, Medicaid, or another federal health care program, now or in the near future?
- Does anyone's pay rise with the number of patients, orders, or prescriptions?
- Is there a fair market value analysis behind what each party is paid?
- Does the arrangement fit a safe harbor, and does it meet every one of that safe harbor's requirements?
- Which state laws apply in the states where patients are located?
FAQs
Does the Anti-Kickback Statute Apply to Cash-Pay Telehealth?
The federal statute applies to business involving items or services payable by federal health care programs, so the first question for a cash-pay practice is whether any of its business involves those programs. State anti-kickback laws can still apply regardless of who pays, and OIG's alert specifically flags companies that say they serve only non-federal patients while billing federal programs.
What Is an Example of a Kickback in Telehealth?
OIG's 2022 alert describes telemedicine companies that paid practitioners to order medically unnecessary durable medical equipment, genetic tests, and wound care, which were then billed to federal programs. Outside telehealth, OIG's examples of remuneration include free rent, expensive hotel stays and meals, and excessive pay for medical directorships.
What Is the Difference Between Anti-Kickback and Stark Law?
The anti-kickback statute applies to anyone and requires knowing and willful conduct. The Stark Law applies to physician referrals for designated health services payable by Medicare or Medicaid, and it is a strict-liability statute, so you don't have to prove specific intent.
Can a Telehealth Company Pay Influencers?
Influencer pay raises anti-kickback questions when it is tied to each patient sign-up and involves federal program business, and state laws can apply regardless of payer. Sponsored posts also fall under the FTC's rules on endorsements.
References
- HHS Office of Inspector General. (2021). Fraud & abuse laws. https://oig.hhs.gov/compliance/physician-education/fraud-abuse-laws/
- HHS Office of Inspector General. (2022). Special fraud alert: OIG alerts practitioners to exercise caution when entering into arrangements with purported telemedicine companies. https://oig.hhs.gov/documents/root/1045/sfa-telefraud.pdf
