Compliance guide

Fraud and Abuse Laws: A Plain-Language Guide for Small Mental Health Practices

Fraud and abuse laws are the federal rules that punish false claims, paid referrals, and billing for services by excluded people. For a small mental health practice, five matter: the Anti-Kickback Statute, the False Claims Act, the Stark Law, exclusion rules, and the Civil Monetary Penalties Law. This guide explains each in plain words and ends with a short compliance routine.

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Fraud and abuse laws at a glance

The Office of Inspector General (OIG) at HHS publishes a plain summary of these fraud and abuse laws for physicians.

Five federal fraud and abuse laws (source: OIG, checked 10/10/26)
Law	What it targets	Intent standard
Anti-Kickback Statute	Paying or taking anything of value to induce or reward referrals for federal program business	Knowing and willful
False Claims Act	False or fraudulent claims to Medicare or Medicaid	Knowing includes deliberate ignorance and reckless disregard; intent to defraud not required
Stark Law (Physician Self-Referral Law)	Physician referrals for designated health services to an entity where the physician or a family member has a financial tie	None needed (strict liability)
Exclusion authorities	Barring people and entities from federal programs	Mandatory for certain convictions; discretionary for other grounds
Civil Monetary Penalties Law	Penalties per violation for false claims, kickbacks, and other listed conduct	Varies by violation; some use "knows or should know"

Read the full OIG summary of the fraud and abuse laws once. It is written for physicians, and the same ideas apply to therapists and billing staff. OIG also stresses that responsibility for complying rests with the provider, even when a billing service does the work.

These are federal program rules, so they bite when you bill Medicare or Medicaid. Private payers rely on your contract, and many contracts allow audits and recoupment. Read yours. Our private insurance guides help you find each payer's terms. Counsel should handle any real exposure. Knowing the fraud and abuse laws protects your staff as much as your claims, and the Billing Terms Glossary defines unfamiliar terms.

Anti-Kickback Statute: the fraud and abuse laws rule on referrals

The Anti-Kickback Statute (AKS) is about money tied to referrals.

The AKS is a criminal law. It bars knowingly and willfully paying or taking remuneration to induce or reward referrals of items or services paid by federal health care programs. Remuneration means anything of value, not only cash. OIG's 2023 compliance guidance calls a violation a felony with a maximum fine of $100,000, up to ten years in prison, or both, and conviction means mandatory exclusion from federal programs.

Is waiving a copay a kickback?

It can be. OIG says routinely waiving copays can violate the AKS, because patients are referral sources too. Individual decisions based on a patient's inability to pay, or after real collection efforts, are allowed. Free or discounted services for people without insurance are legal. Write down the reason each time, skip blanket "we waive your copay" promises, and ask counsel before you set a copay policy.

Safe harbors

Safe harbors are listed in 42 CFR 1001.952, and the OIG safe harbor page explains that they cover practices that are not treated as offenses. OIG's other summary says safe harbors protect only arrangements that meet every condition. The 2023 guidance adds that missing a safe harbor does not automatically make an arrangement illegal, because intent and the full facts decide. Have counsel review any deal that pays for referrals, shares fees, or rents space from a referral source. These fraud and abuse laws reward caution.

False Claims Act: what "knowing" means under the fraud and abuse laws

The False Claims Act (FCA) reaches honest mistakes that you ignore.

Federal programs: Medicare and Medicaid

The FCA is a civil law that lets the government recover money when someone knowingly submits, or causes someone to submit, false claims. Knowing covers actual knowledge, deliberate ignorance, and reckless disregard. OIG says each billed item or service counts as a separate claim, so one repeated error multiplies fast. Claims tied to a kickback or a Stark violation can count as false too.

Overpayments must be reported and returned by the later of 60 days after you identify them or the date any matching cost report is due, per the 2023 OIG guidance. Identification starts the clock. The FCA also lets private people, such as staff, partners, patients, or competitors, file a whistleblower (qui tam) suit on the government's behalf and share in any recovery. Accurate coding is your best defense, so use our CPT code guides and the CMS-1500 guide to check what each claim says.

Private payers

The FCA, like the other fraud and abuse laws here, covers federal program money. For commercial plans, your payer contract controls audits, refunds, and recoupment. Read the audit clause, and see our guide to claim denials and appeals when a payer takes money back.

Stark Law: brief, and mostly not your issue

Among fraud and abuse laws, Stark is the one most solo practices never meet.

The Stark Law, also called the Physician Self-Referral Law, bars physicians from referring Medicare or Medicaid patients for designated health services to an entity with which they or a family member have a financial relationship, unless an exception applies. It is strict liability, so intent does not matter. OIG lists designated health services such as clinical laboratory services, imaging, durable medical equipment, home health, and outpatient prescription drugs.

Most solo therapy practices rarely come near this one of the fraud and abuse laws, because OIG's examples are labs, imaging, equipment, home health, and drugs. A psychiatrist who owns part of a lab, an imaging center, or a pharmacy is the case to bring to counsel. So is any ownership tie to a company that receives your referrals.

Exclusion screening under the fraud and abuse laws: LEIE and SAM checks

An excluded person cannot bill federal programs, and programs will not pay for services that person furnishes, orders, or prescribes.

OIG keeps the List of Excluded Individuals/Entities (LEIE) and replaces the full file every month. The LEIE download page showed an update date of 10-09-2026 when we checked. Hiring or contracting with an excluded person can lead to civil monetary penalties and repayment duties, per the OIG exclusions background page. OIG also notes that orders or prescriptions for private-pay patients are not reimbursable by federal programs when an excluded person writes them.

How to screen

Check the LEIE before you employ or contract with anyone, including outside billers and coders.
Repeat monthly. OIG's 2023 guidance says screening each month best limits overpayment and penalty risk.
Use the LEIE online search to verify a named person. OIG says to use it for specific people because Social Security numbers cannot be shared.
If you take Medicaid, also check your state Medicaid exclusion list.
Many teams add a search of the federal System for Award Management (SAM) exclusion records at SAM.gov. Confirm its current scope before you rely on it.
Save a dated record of every search.

Run the check on your own staff before payer enrollment too. Our credentialing page shows where it fits in the process.

Compliance basics for fraud and abuse laws: seven elements for a small practice

OIG's 2023 General Compliance Program Guidance is voluntary, but it gives a clear map.

The General Compliance Program Guidance names seven elements of a compliance program. The full guidance PDF also has a section on small entities, so you can scale each element down to your size.

Written policies and procedures.
Compliance leadership and oversight, which can be one named person in a solo practice.
Training and education.
Effective lines of communication with the compliance officer, and ways to report concerns.
Enforcing standards, with consequences and incentives.
Risk assessment, auditing, and monitoring, such as sampling paid claims against notes.
Responding to detected offenses and starting corrective action.

If you suspect an error that was knowing, or a referral deal that pays for volume, stop and call a health care attorney before you decide what to do. OIG offers material on its Self-Disclosure Protocol, and counsel should lead that step. The OIG provider training page has short videos and handouts, though its webcasts date from 2011. Add these habits to your practice management routine.

What to do Monday morning

Five small jobs put the fraud and abuse laws into practice.

Name one person as compliance contact and write the name down.
Run the LEIE online search on every employee and contractor, and save the dated result.
Review which fraud and abuse laws touch your copay policy, and check that it is written, case by case, with reasons.
Compare the codes and times on a few paid claims against the notes.
See how outsourced billing services fit your compliance plan, and read who we serve on the Who We Serve page.

Frequently asked questions

What are the main fraud and abuse laws for a small practice?

Five federal laws matter most: the Anti-Kickback Statute, the False Claims Act, the Stark Law, the exclusion authorities, and the Civil Monetary Penalties Law. Kickbacks and false claims are the most likely risks for a therapy or psychiatry practice.

Do small practices need a compliance program for fraud and abuse laws?

OIG's 2023 guidance is voluntary and not binding, but OIG recommends the seven elements and describes small entity adaptations. A solo practice can name one compliance contact, keep short written policies, and review claims regularly.

How often should I screen for excluded staff under the fraud and abuse laws?

OIG's 2023 guidance says screening each month best minimizes overpayment and penalty risk. Check before hiring or contracting, then monthly, against the LEIE and your state Medicaid exclusion list if you take Medicaid.

Is waiving a copay allowed under the fraud and abuse laws?

Routine waivers can violate the Anti-Kickback Statute. Case-by-case decisions based on a patient's inability to pay, or failed collection efforts, are allowed. Ask counsel before you adopt any copay policy.

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