Legal Alert

PA Changes Anti-Kickback Rules on Co-Location of Medical Assistance Program Providers

by David Goroff and Phillip E. Legendy
January 17, 2023

On January 14, 2023, the state Department of Human Services published a final rule, 53 Pa.B. 376, to amend the Pennsylvania Human Services Code (Code) by removing obstacles that made it harder for providers to share costs. This amendment is intended to help providers pursue a more integrated approach to health care delivery.

Specifically, the amendment clarifies that Pennsylvania’s anti-kickback statute no longer prohibits providers participating in Pennsylvania’s Medical Assistance Program (MA Program) from either (1) co-locating or leasing space to other providers, or (2) sharing office staff.

Section 1407(a)(2) of the Code is the Commonwealth’s anti-kickback statute. The Section provides that it is unlawful to solicit or receive or to offer or pay any remuneration, including any kickback, bribe or rebate, directly or indirectly, in cash or in kind from or to any person in connection with the furnishing of services or merchandise for which payment may be in whole or in part under the MA Program. It also forbids remuneration for referring an individual to a person for the furnishing or arranging for the furnishing of any services or merchandise for which payment may be made in whole or in part under the MA Program.

The Pennsylvania Department of Human Services promulgated regulations in 55 Pa. Code § 1101.51 with examples of specific conduct that would violate Section 1407(a)(2). Until now, the regulation had included a general prohibition on MA Program providers from leasing or renting space within their office to another provider, or allowing the placement of staff from another provider in the provider’s office. This had presented significant barriers to co-located providers seeking to participate in the MA Program.

While the state Department of Human Services had previously developed a statement of policy and process for granting waivers for this prohibition, the newly published final rule, 53 Pa.B. 376, amends Section 1101.51 and removes the prohibitions on co-location and placement of staff from another provider.

The new rule should make it easier for providers participating in the MA program to share costs and office resources, which will be a boon to providers and patients in Pennsylvania. That said, there may be other laws, including remaining provisions of Pennsylvania’s anti-kickback statute, licensing regulations, and the federal anti-kickback and Stark Laws, that need to be addressed when considering particular leasing and/or co-location arrangements.

Ballard Spahr attorneys in the firm’s Health Care Group are available to assist clients comply with these regulations and help MA Program providers in structuring leasing and other arrangements.

Subscribe to Ballard Spahr Mailing Lists

Get the latest significant legal alerts, news, webinars, and insights that affect your industry. 

Copyright © 2024 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.