Feds to doctors: Are you sure your contract doesn't violate anti-kickback rules?

Contracts can't be designed to increase referrals to certain providers, HHS OIG warns

HHS's Office of Inspector General (OIG) in a fraud alert released Tuesday warns physicians that they could be prosecuted for entering into payment agreements that violate the Anti-Kickback Statute.

Under federal anti-kickback rules, providers are prohibited from engaging in financial relationships to generate business paid for by Medicaid or other government health programs.

Alert details

In the alert, OIG tells physicians entering into payment arrangements that their compensation must be reflective of the market value for the services they provide.

The alert warns that physicians can be prosecuted for entering into compensation schemes that have the goal of increasing the number of referrals from a doctor to a particular hospital or other provider.

The alert points to a dozen separate cases recently settled by OIG concerning physicians who were involved in "questionable" office staff arrangements and medical directorships. In those cases, the payments were illegal in part because they "took into account the physicians' volume or value of referrals and did not reflect fair market value for the services to be performed," OIG says.

The alert states, "Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals of federal health care program business."

What the alert could mean for doctors

The alert could indicate that the federal government is increasingly following up on allegations involving individual physicians—rather than just larger organizations such as the hospitals that pay them— according to Modern Healthcare's Lisa Schencker.

"I think what we're seeing is OIG taking more of an interest in pursuing the physician side of the question, at least looking at if a physician has some role to play or liability in the conduct," says Tony Maida, former deputy chief of the OIG's Administrative and Civil Remedies Branch and a partner at McDermott Will & Emery.

Mark Silberman, a former special assistant U.S. attorney and a partner at Duane Morris, says the alert reminds physicians that while contract arrangement cases are generally handled as civil matters, the government could handle them criminally if it can prove criminal intent. "Enforcement efforts have certainly gotten more aggressive. When there's a violation of the anti-kickback statute, the liability flows on both ends of the transaction," he explains (Schencker, Modern Healthcare, 6/9 [subscription required]; Lowes, Medscape Medical News, 6/10).

The takeaway: A fraud alert issued Tuesday suggests that OIG may increase enforcement actions against individual physicians accused of entering into payment agreements that violate the Anti-Kickback Statute.

Does your physician compensation exceed fair market value?

For many health systems, recruiting for top physician talent seems like a bidding war. From enticing signing bonuses to school loan repayment, the need to offer a competitive compensation package means even more complex recruiting tactics. And that’s just to get them in the door.

So how can hospitals stay competitive to retain physician employees, without crossing the line on fair market value?


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