Minnesota’s New State Anti-Kickback Law: What Health Care Providers Need to Know
During the 2025 legislative session, Minnesota lawmakers enacted a new anti-kickback statute that significantly expands criminal liability for illegal remuneration schemes involving state health care programs. The new law, codified as Minnesota Statutes § 609.542, is effective August 1, 2025, and creates state-level criminal liability that parallels federal anti-kickback prohibitions while applying specifically to Minnesota programs.
This article provides an overview of the new law, its relationship to existing state and federal laws, and key compliance recommendations for Minnesota health care providers to implement in response.
Key Provisions of the New Law
Prohibited Conduct: The statute criminalizes intentionally soliciting, receiving, offering or providing money, a discount, a credit, a waiver, a rebate, a good, a service, employment, or anything else of value in connection with the following activities:
Receiving/Soliciting Remuneration: Intentionally soliciting or receiving any of the above forms of remuneration in return for doing any of the following:
Referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made under a qualifying program;
Purchasing, leasing, ordering, or arranging for, or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be under a qualifying program; or
Applying for or receiving any item or service for which payment may be made under a qualifying program.
Offering/Providing Remuneration: Intentionally offering or providing any of the above forms of remuneration to induce a person to:
Refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made under a qualifying program;
Purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made under a qualifying program; or
Apply for or receive any item or service for which payment may be made under a qualifying program.
Covered Programs: The law applies to remuneration involving the following programs:
Federal health care programs (as defined in 42 U.S.C. § 1320a-7b(f)), including Medicare, Medicaid, TRICARE, and other federally funded programs;
Behavioral health programs under Chapter 254B (Minnesota's state-funded behavioral health services); and
Programs under Chapter 142E (Minnesota’s Child Care Assistance Program).
Criminal Penalties: The law establishes criminal penalties based on the value of remuneration involved:
Up to $5,000: Up to 5 years imprisonment and/or $10,000 fine;
$5,001-$35,000: Up to 10 years imprisonment and/or $20,000 fine; and
$35,000+: Up to 20 years imprisonment and/or $100,000 fine.
Limited Exceptions: The law incorporates existing federal safe harbors by reference, exempting payments that qualify under:
Federal anti-kickback safe harbors (42 U.S.C. § 1320a-7b(b)(3)); and
Federal program payment exemptions (42 U.S.C. § 1001.952).
For Child Care Assistance Program violations, the law exempts:
Bona fide employee compensation for services within the scope of employment; and
Provider discounts, scholarships, and financial assistance permitted under existing regulations.
Additional Civil Liability
Beyond criminal penalties, the statute creates additional exposure under Minnesota’s False Claims Act (Minnesota Statutes § 15C.02). Any claim that includes items or services resulting from anti-kickback violations automatically constitutes a false or fraudulent claim, potentially triggering treble damages and civil penalties under the Act.
Relationship to Existing Minnesota Anti-Kickback Provisions
Minnesota's new criminal anti-kickback law operates alongside existing regulatory prohibitions under Minnesota Statute 62J.23, subdivision 2, creating a comprehensive enforcement framework with both civil and criminal consequences.
Minnesota Statute 62J.23, subdivision 2 has long prohibited financial arrangements where health care providers benefit financially from patient referrals or service recommendations. This law:
Applies broadly to all persons in Minnesota, regardless of state program participation;
Mirrors federal anti-kickback standards but allows the Commissioner of Health to adopt more restrictive rules;
Imposes civil penalties of $1,000 or 110% of the estimated financial benefit realized, whichever is greater; and
Provides limited exceptions for patient discounts, samples, and de minimis gifts.
Health care providers now face potential liability under both statutes for the same conduct. Accordingly, a single illegal arrangement could result in:
Civil penalties under 62J.23 administered by the Minnesota Department of Health;
Criminal prosecution under 609.542; and
False Claims Act liability triggered by the criminal violation.
This layered enforcement structure significantly increases compliance stakes and potential penalties for problematic arrangements.
Compliance Recommendations
Health care providers should implement the following measures to help ensure compliance with the state anti-kickback prohibitions:
Comprehensive Compliance Reviews: Evaluate existing referral relationships, vendor arrangements, and financial incentive programs for potential violations under both the new criminal law (609.542) and existing civil provisions (62J.23).
Multi-Layered Risk Assessment: When assessing risk, consider that arrangements may now trigger civil penalties, criminal prosecution, and false claims liability simultaneously.
Safe Harbor Analysis: Ensure existing arrangements qualify for applicable federal safe harbors, which provide protection under the new Minnesota law.
Documentation: Strengthen documentation for all arrangements involving potential remuneration to demonstrate legitimate business purposes and fair market value.
Contract Reviews: Review and revise agreements with referral sources, vendors, and other business partners to ensure compliance with both federal and Minnesota requirements.
Staff Training: Provide comprehensive training to staff involved in referral relationships, purchasing decisions, and program administration about anti-kickback prohibitions.
Risk Areas Requiring Particular Attention: Pay special attention to arrangements that may pose heightened risk:
Referral relationships involving Medicare, Medicaid or behavioral health programs;
Marketing arrangements and patient acquisition activities;
Vendor and supplier relationships;
Medical director and consulting agreements;
Recruitment and retention incentives; and
Joint venture and partnership arrangements.
Conclusion
Minnesota's new anti-kickback law expands the compliance landscape for health care providers operating in the state. Combined with existing federal laws and state civil prohibitions under Minnesota Statute 62J.23, providers now face a comprehensive enforcement framework with escalating penalties ranging from administrative fines to lengthy prison sentences.
The statute’s broad coverage, severe penalties, integration with false claims liability, and August 1, 2025 effective date require immediate attention from providers. The potential for dual civil and criminal liability makes compliance failures significantly more costly.
Providers should work with health care counsel to assess current arrangements under the statutory frameworks, implement necessary changes, and develop robust compliance programs that address federal requirements and Minnesota’s anti-kickback provisions. Proactive compliance measures will help minimize exposure and position organizations for successful navigation of Minnesota's enhanced enforcement environment.