Texas Anti Kickback Statute and Federal Compliance: A Guide

Compliance is a critical concern in the healthcare industry, where complex regulations protect patients and ensure medical decisions are based on need — not green. 

Among the most impactful are the federal Anti-Kickback Statute (AKS), federal Stark Law, and Texas’ Patient Solicitation Act. These laws shape how healthcare providers, hospitals, and organizations operate, especially for referrals and compensation arrangements.

In Texas, providers must understand federal regulations and state-specific laws like the Texas Anti-Kickback Statute. These regulations impose additional layers of oversight — and consequences — that providers may ignore at their own risk.

In this article, we’ll break down the three laws at a high level and explore how they compare, overlap, and uniquely impact healthcare organizations operating in Texas.

The Federal Anti-Kickback Statute (AKS): Preventing Improper Referrals Nationwide

The Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)) is a federal criminal law. It prohibits exchanging — or offering to exchange — anything of value in return for referrals for services reimbursable by a federal healthcare program, like Medicare or Medicaid. 

This ensures medical decisions are made in the patient’s best interest, not driven by improper financial relationships. It also safeguards against unnecessary treatment that could inflate healthcare costs.

Key Points:

• The AKS focuses on intent. Even if a payment arrangement looks legitimate, if one purpose is to influence referrals, it could violate the law.

• It applies to anyone involved in federal healthcare programs, including providers, suppliers, hospitals, marketers, or vendors. 

• The law covers referrals, leases, consulting contracts, and even gifts.

• Criminal penalties include up to 10 years in prison, hefty fines, and exclusion from federal programs.

The AKS casts a wide net — almost any financial arrangement related to patient referrals could potentially violate the statute. Many legal cases, particularly healthcare whistleblower lawsuits, arise from AKS violations.

Be Careful With Healthcare Marketing 

Healthcare marketing strategies that might fly elsewhere could easily breach the Anti-Kickback Statute.

If your practice works with third-party marketers or referral partners, consider these questions:

• Paying them per patient sent your way? Possible kickback violation.

• Offering free services or perks for referrals? High-risk marketing.

• Forgetting to disclose financial ties? Conflict of interest exposure.

Even well-meaning patient acquisition strategies can cross the line into illegal territory.

Stark Law: Limiting Physician Self-Referral

Often mentioned alongside the AKS, Stark Law (42 U.S.C. § 1395nn) addresses a more specific issue: physician self-referral. Specifically, it prohibits physicians from referring Medicare or Medicaid patients for certain “designated health services” to entities with which they (or their immediate family members) have a financial relationship. Limited exceptions exist.

Key Points:

• Unlike AKS, Stark Law is a strict liability statute — intent doesn’t matter. A physician can violate Stark Law even without knowingly doing so.

• This only applies to physicians and specific “Designated Health Services” (DHS), including:

  • Lab tests

  • Imaging

  • Physical and occupational therapy

  • Durable medical equipment

  • Home health services

• Penalties include civil fines, exclusion from federal healthcare programs, and repayment of improperly received payments.

While the Stark Law is narrower than the AKS, its strict liability nature makes it easy for providers to violate the law unintentionally.

Are Your Physician Referrals Putting Your Practice at Risk? Unsure if your practice is at risk? See real-world examples of Stark Law violations and learn how to protect your practice and patients.

Texas Anti-Kickback Statute: State-Level Oversight

Texas adds another layer of regulation with the Texas Patient Solicitation Act (Texas Occupations Code § 102) — also known as the Texas Illegal Remuneration Act or Texas Anti-Kickback Statute. The law prohibits offering, paying, or receiving compensation to solicit or secure patients for healthcare services covered by government or private insurance programs.

What the Texas Patient Solicitation Act Covers:

• It applies to both licensed healthcare providers and non-licensed individuals or organizations.

• Broader than the federal AKS, covering all patients, not just Medicare or Medicaid beneficiaries.

• Includes cash, gifts, commissions, or any benefit offered in exchange for referrals.

• Violations are considered a criminal offense — a Class A misdemeanor punishable by up to 1 year in jail and fines.

The Texas Anti-Kickback Statute complements federal laws but casts a broader net — not just government programs. This distinction makes the law especially important for healthcare organizations serving privately insured patients.

Additionally, providers must be mindful of anti-soliciting laws in Texas, which may limit direct marketing or patient solicitation efforts depending on context and location.

Are the Texas Patient Solicitation Act and Texas Anti-Kickback Statute the Same? 

Yes. In Texas, these terms commonly refer to Texas Occupations Code § 102. Whether called the Texas Patient Solicitation Act, Texas Anti-Kickback Statute, or even the Texas Illegal Remuneration Act, they describe the same core law prohibiting payments for patient referrals. The interchangeable names often confuse providers but refer to one statute.

Comparing the Federal AKS, Stark Law, and the Texas Patient Solicitation Act: How Do They Differ?

While these laws share a common goal — preventing money from corrupting healthcare decision-making — there are important differences providers need to understand.

Are There Any Exceptions? 

Both federal and Texas laws recognize that not every financial arrangement is improper. The federal AKS offers “safe harbors” — specific scenarios that protect certain payments or referrals if strict requirements are met (e.g., employment relationships, personal services contracts).

While Texas law is less explicit about “safe harbors,” similar logic often applies. That’s why it’s essential to consult counsel before structuring marketing agreements, joint ventures, or referral programs.

Why Texas Providers Need to Pay Attention

For Texas healthcare providers, staying compliant means understanding how these laws interact — and where the state takes a tougher stance than federal regulations. The Texas anti-kickback statute broadens the rules by making it a criminal offense to offer remuneration for referrals covered by private insurance plans — something not fully captured by federal laws.

Additionally, Texas conflict of interest laws may come into play when providers have financial interests in facilities or ancillary services. These conflicts could trigger both state and federal punishment.

Practical Tips for Healthcare Organizations

Healthcare organizations in Texas should be proactive in building compliance programs that address both federal and state laws. Here are a few tips:

1. Review compensation arrangements: Ensure all contracts and payment arrangements with physicians, vendors, and marketing partners comply with AKS, Stark Law, and the Texas Patient Solicitation Act.

2. Train staff regularly: Ensure all employees — especially those in marketing, patient intake, and provider relations — receive ongoing education on the requirements of federal and Texas anti-kickback statutes.

3. Disclose financial relationships: Transparency is key to managing conflicts of interest laws.

4. Monitor marketing practices: Pay close attention to referral sources, marketing companies, and advertising efforts to avoid unintentionally violating no-soliciting laws.

5. Consult healthcare counsel: The complexity of these overlapping laws makes regular legal review essential — particularly when structuring joint ventures, ownership models, or patient outreach programs.
   
   

Prioritizing Compliance in Texas Healthcare

The healthcare industry’s regulatory environment is designed to protect patients and prevent fraud, waste, and abuse. While the Anti-Kickback Statute and Stark Law form the foundation at the federal level, the Texas Patient Solicitation Act demands additional attention.

Texas healthcare organizations must navigate these overlapping laws carefully, ensuring marketing practices, referral relationships, and ownership interests comply. With potential criminal charges, civil fines, and professional consequences at stake, understanding the Texas anti-kickback statute is not just smart — it’s mandatory for survival.

Is your practice compliant? Don’t wait for an audit or investigation. Contact us for a free compliance checkup to spot risks early and protect your business from costly penalties:

(Editor’s note: This article was originally published in February 2021 and was updated in March 2025.)