The Medicare Anti-Kickback Statute:In Need of Reconstructive Surgeryfor the Digital Age

Perspicuity, therfore, requires not only that the ideas should be distinctly formed, but that they should be expressed by words distinctly and exclusively appropriate to them But no language is so copious as to supply words and phrases for every complex idea, or so correct as not to include many equivocally denoting different ideas.1 The best laws should be constucted as to leave as lite as possible to the decision of the judge.2 I. Introduction Every day millions of Americans log on to Web sites and click on hyperlinks3 that direct them to related Web pages.4 Consider the following hypothetical: a physician creates a convenient service for her patients, whereby the patient accesses a Web site and types in a password. After entering the password, the patient may access a list of all the medications he or she is taking, including descriptions of potential side effects and negative interactions with other drugs.5 The page also may contain a section permitting the patient to self-- schedule appointments, a discussion group for others suffering from similar ailments, or a link allowing the patient to e-mail the physician with questions.6 This concept has the potential to enhance patient control of health care decisions and reduce Medicare expenditures.7 However, under a strict reading of the anti-kickback statute, this service could expose the physician to a fine of $25,000, exclusion from participation in Medicare and Medicaid programs, and five years in prison.8 The anti-kickback statute prohibits referrals, which are the very core of the Internet commerce business model.9 Consequently, courts may impose potentially draconian punishment if, for example, the site contains advertising or a link to a drug manufacturer.10 Consumers eventually bear the weight of this potential liability, either by denial of access to innovations such as the Web site described or by increased costs of medical care due to foregone cost-reducing transactions.11 In 2000, health care expenditures in the United States exceeded one trillion dollars.12 The General Accounting Office (GAO) estimates that health care fraud and abuse costs more than $100 billion annually.13 There isa clear consensus that policymakers must reduce the cost of health care;14 consequently, the legal community lately has focused much attention on the anti-kickback statute.15 In response to the problem of health care fraud, the Clinton Justice Department chose to enforce the Medicare anti-fraud statutes aggressively, labeling a number of potentially cost-efficient transactions "fraudulent."16 Moreover, Congress joined the crusade against Medicare and Medicaid fraud and abuse by significantly increasing statutory and administrative penalties.17 This Note argues that Congress has failed to recognize that health care functions in a capitalist market and that regulations based on sound economic principles are capable of limiting fraud and promoting efficient business relationships.18 The current regulatory framework is exceptionally confusing and unstable.19 Even attorneys well versed in issues of corporate and commercial law frequently are surprised to learn that the anti-kickback statute prohibits many health care transactions, the equivalents of which are legal in most industries. …