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Polsinelli - Senior Housing and Long-Term Care


February 2014


Proceed with Caution: Contracts Between Senior Communities and Placement Agencies May Not Violate the Anti-Kickback Statute







For more information about this e-Alert, please contact:


Matthew J. Murer

Practice Area Chair



Mary Beth Blake



Jason T. Lundy



Charles P. Sheets




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In the first OIG Advisory Opinion of 2014, the OIG addressed whether a referral contract between senior communities and a placement agency violates the Anti-Kickback Statute ("AKS"). The OIG concluded that, even though payments made under the contract implicate the AKS, it would not impose any administrative sanctions due to a number of unique factors. According to the OIG, the unique facts of the arrangement reduced any risk that the senior communities improperly paid the placement agency to induce referrals of or generate federal health care program business.

Background of the Arrangement

The Advisory Opinion was requested by a nonprofit corporation that owns several senior communities and two skilled nursing facilities ("SNFs"). In the senior communities, staff helped with daily living activities, administer medications, and provide skilled nursing services to residents. A small portion of residents receiving services paid for them through a state Medicaid waiver. Further, some staff from the corporation's SNFs provided federally reimbursable speech, occupational, and physical therapy to community residents. [More ...]

The OIG's Analysis: How the Senior Communities Reduced Their Risk

Under the AKS, payments purposefully made to induce or reward referrals of services payable by Medicare or Medicaid are prohibited and can result in administrative sanctions such as exclusion from federal health care programs or civil monetary penalties. Even though the contracting communities paid the placement agencies for patient referrals, the OIG outlined several specific factors that reduced the parties' risk of violating the AKS. [More ...]

What Providers Should Know

  • As the OIG generally warned, fees paid to placement agencies that refer new residents to facilities implicate the AKS. Such arrangements must be structured carefully to avoid AKS liability, exclusion from federal health care programs, and civil monetary penalties.

  • The OIG's decision not to impose sanctions is quite narrow—be wary. Many long-term care providers cannot meet some of the factors that led to the favorable decision. In particular, most providers offer services reimbursed by Medicare and do not have a resident population that exclusively pays for services through private pay or third party payors.

  • The OIG's decision only applies to the Federal AKS. Some states have statutes similar to the AKS that prohibit payment for referrals of health care services payable by any payor, not just Medicare or Medicaid. As a result, even though arrangements similar to those in the Advisory Opinion likely do not violate federal law, the arrangements can still violate state law.

To download the full alert, click here.

For More Information

The Advisory Opinion (No. 14-01) can be found here.

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