​Providers that contract with pharmacies can take some immediate steps to gird against the storm of intensified scrutiny imposed by the Office of Inspector General. Such facilities should attempt to structure their contracts to meet one of the anti-kickback statute “safe harbors”—statutory and regulatory provisions that provide protection from penalty or liability.

One such safe harbor is the personal services and management contracts safe harbor, which requires the following:

  • The agreement is in writing and signed by the parties, with a term of at least one year;
  • The full scope of the services or items being purchased is described in the agreement and does not exceed services that are reasonably necessary for the underlying business purpose;
  • 'The compensation paid and received by the parties is set in advance and consistent with fair market value in an arms-length transaction; and
  • The compensation is not related in any manner to the volume or value of federal health care program business between the parties to the contract.

Special rules apply for part-time services, which require that the agreement specify the schedule of the part-time services, the precise length of each time period in which the services will be provided, and the exact charge for each time period.

Although meeting a safe harbor is the best protection, it is not necessary. Arrangements can instead satisfy a “facts or circumstances” test showing that they do not have an improper purpose to induce inappropriate referrals from one party to another.

To satisfy such a test, parties should strive to meet as many elements of the personal services and management contracts safe harbor, or other safe harbor, as possible, in particular the requirement that the compensation be fair market value.  

Pharmacies’ costs for providing consulting services should be part of the analysis in setting prices for such services. This cost assessment may take into account what consulting services the pharmacies are providing to long term care facilities in comparison to what services are merely incidental to the pharmaceutical products the pharmacies are providing to residents. 

Once an arrangement is set, it is important for the parties to abide by and enforce its terms.