Humana 2015 Annual Report Download - page 38

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Anti-Kickback, Physician Self-Referral, and Other Fraud and Abuse Laws
A federal law commonly referred to as the “Anti-Kickback Statute” prohibits the offer, payment, solicitation, or
receipt of any form of remuneration to induce, or in return for, the referral of Medicare or other governmental health
program patients or patient care opportunities, or in return for the purchase, lease, or order of items or services that are
covered by Medicare or other federal governmental health programs. Because the prohibitions contained in the Anti-
Kickback Statute apply to the furnishing of items or services for which payment is made in “whole or in part,” the Anti-
Kickback Statute could be implicated if any portion of an item or service we provide is covered by any of the state or
federal health benefit programs described above. Violation of these provisions constitutes a felony criminal offense
and applicable sanctions could include exclusion from the Medicare and Medicaid programs.
Section 1877 of the Social Security Act, commonly known as the “Stark Law,” prohibits physicians, subject to
certain exceptions described below, from referring Medicare or Medicaid patients to an entity providing “designated
health services” in which the physician, or an immediate family member, has an ownership or investment interest or
with which the physician, or an immediate family member, has entered into a compensation arrangement. These
prohibitions, contained in the Omnibus Budget Reconciliation Act of 1993, commonly known as “Stark II,” amended
prior federal physician self-referral legislation known as “Stark I” by expanding the list of designated health services
to a total of 11 categories of health services. The professional groups with which we are affiliated provide one or more
of these designated health services. Persons or entities found to be in violation of the Stark Law are subject to denial
of payment for services furnished pursuant to an improper referral, civil monetary penalties, and exclusion from the
Medicare and Medicaid programs.
Many states also have enacted laws similar in scope and purpose to the Anti-Kickback Statute and, in more limited
instances, the Stark Law, that are not limited to services for which Medicare or Medicaid payment is made. In addition,
most states have statutes, regulations, or professional codes that restrict a physician from accepting various kinds of
remuneration in exchange for making referrals. These laws vary from state to state and have seldom been interpreted
by the courts or regulatory agencies. In states that have enacted these statutes, we believe that regulatory authorities
and state courts interpreting these statutes may regard federal law under the Anti-Kickback Statute and the Stark Law
as persuasive.
We believe that our operations comply with the Anti-Kickback Statute, the Stark Law, and similar federal or state
laws addressing fraud and abuse. These laws are subject to modification and changes in interpretation, and are enforced
by authorities vested with broad discretion. We continually monitor developments in this area. If these laws are
interpreted in a manner contrary to our interpretation or are reinterpreted or amended, or if new legislation is enacted
with respect to healthcare fraud and abuse, illegal remuneration, or similar issues, we may be required to restructure
our affected operations to maintain compliance with applicable law. There can be no assurances that any such
restructuring will be possible or, if possible, would not have a material adverse effect on our results of operations,
financial position, or cash flows.
Environmental
We are subject to various federal, state, and local laws and regulations relating to the protection of human health
and the environment. If an environmental regulatory agency finds any of our facilities to be in violation of environmental
laws, penalties and fines may be imposed for each day of violation and the affected facility could be forced to cease
operations. We could also incur other significant costs, such as cleanup costs or claims by third parties, as a result of
violations of, or liabilities under, environmental laws. Although we believe that our environmental practices, including
waste handling and disposal practices, are in material compliance with applicable laws, future claims or violations, or
changes in environmental laws, could have a material adverse effect on our results of operations, financial position or
cash flows.