May 2020 Volume LV Number 3


Litch's Law Log: Federal Law and Discounts from Dental Vendors

May 2013 Volume XLVIX Number 3

 The May 2012 Litchs Law Log addressed the topic of how "Health Care is Different than Restaurants or Department Stores When it Comes to Clipping Coupons." This highlighted some constraints that dental practices face in honoring items from families such as Groupons, due to the federal anti-kickback and Stark self-referral laws.


The federal anti-kickback law1 also kicks in—so to speak— when dental offices are purchasing supplies from dental vendors. This law is designed to prohibit the exchange of any remuneration to induce the referral of business covered by a federal health care program. The

ADA Division of Legal Affairs recently prepared a Q&A: The Federal Anti-Kickback Statute, Promotional Discount Programs, Discounts and Rebates which is available on the ADA website at:


Here are some of the salient points, for an issue that is relevant to pediatric and general dentists who treat children enrolled in federal programs like Medicaid, CHIP, or TRICARE.


"Discount or rebate programs, including those that offer points, gifts, or special awards, may be found to violate the federal Anti-Kickback Statute ("AKS") when they can be seen as a means of providing compensation to induce the referral of federal healthcare program business. Accordingly, careful scrutiny should be given to any program offered by a manufacturer or supplier that offers points, gifts or other awards."


"Dentists should review their participation in discount programs and develop policies on gifts and other remuneration not only from manufacturers and suppliers, but also from individuals, businesses and professionals with whom the practice has a referral relationship."


"The Affordable Care Act has made it easier for the Department of Health and Human Services’ Office of Inspector General (the "OIG") to prosecute AKS violations; for example, by making it easier for the government to prove that a defendant intended to violate the law."


Dentists may be able to seek a "safe harbor" (i.e. permissible conduct under the law) in certain circumstances, if the arrangements for discounts or rebates are as follows:

"As applied to the dental practice (i.e., the "buyer"):


the discount must be made at the time of the sale of the good or service, or the terms of the rebate must be fixed and disclosed in writing to the buyer at the time of the initial sale of the good or service; and


the buyer (if submitting the claim) must provide, upon request by the Secretary of the U.S. Department of Health and Human Services or a State agency, information provided by the seller as specified below."


"As applied to manufacturer or supplier (i.e., the "seller"):


where the seller submits a claim or request for payment on behalf of the buyer and the item or service is separately claimed, the seller must fully and accurately report the discount on the claim or request for payment to Medicare or a State health care program and the seller must provide, upon request by the Secretary of the

U.S. Department of Health and Human Services or a State agency, information provided by the offeror of the sellers obligation to report the discount and to provide information as requested; or


where the buyer submits a claim, the seller must: (i) fully and accurately report such discount on the invoice, coupon or statement submitted to the buyer; (ii) inform the buyer in an effective manner of its obligations to report such discount; and (iii) refrain from doing anything that would impede the buyer from meeting its reporting obligations."


While the average person might observe that a dentist purchasing supplies at a discount rate could actually benefit the child on Medicaid by allowing for more cost-efficient care, the application of anti-kick-back law in these circumstances seems to be another example of the law of unintended consequences. Let me also add a disclaimer that this column is not intended as a substitute for obtaining legal advice from your own attorney if there are questions about a specific purchase. Also see the General OIG Compliance Program for Individual and Small Group Physician Practices: https://oig.hhs. gov/authorities/docs/physician.pdf.


For further information contact Chief Operating Officer and General Counsel C. Scott Litch at (312) 337-2169, ext. 29, or


142 U.S.C. § 1320a-7b(b)