Physician Compensation Arrangements Under Scrutiny
On June 9, 2015, the Office of Inspector General issued a special Fraud Alert warning physicians that compensation arrangements (such as medical directorships) must ensure that the arrangement reflects fair market value. Such arrangements “may violate the anti-kickback statute even if one purpose of the arrangement is to compensation a physician for his or her past or future referrals of Federal health care program business.”
California statures and rules can be even stricter.
In this era of merger and consolidation, medical providers must be careful to create appropriate compensation arrangements. They must carefully document attempts at establishing fair market value, or be subject to regulatory prosecution.
This alert comes after the OIG recently reached settlements with 12 physicians who entered into medical directorships and other arrangements, which the OIG concluded violated the Federal Anti-Kickback Statute. In those cases, the arrangements appeared to be illegal for one or more of the following reasons:
• The payments to the physicians took into account the physicians’ volume or value of referrals.
• The payments did not reflect fair market value for the physicians’ services.
• The physicians did not actually provide the services required under the agreements.
• The entities contracting the physicians paid the salaries of the physicians’ front office staff.
Certain physician compensation arrangements – and particularly medical director arrangements – are perceived as risk areas for Anti-Kickback Statute violations. Facilities and physicians entering into such arrangements should review existing and new arrangements for compliance in light of this Fraud Alert and should seek the expertise of health care legal counsel.