On June 9, 2015, the Office of Inspector General (OIG) at the U.S. Department of Health and Human Services issued a Fraud Alert directed at compensation arrangements that individual physicians enter into with third parties. Specifically, the alert stated:
Physicians who enter into compensation arrangements such as medical directorships must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide. 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. OIG encourages physicians to carefully consider the terms and conditions of medical directorships and other compensation arrangements before entering into them.
In support of the alert, the OIG cited its recent settlements with physicians who entered into questionable medical directorships and office staff arrangements. In those cases, the OIG alleged that the arrangements constituted improper remuneration under the anti-kickback statute for a number of reasons, including that the payments were based on the physicians' volume or value of referrals and did not reflect fair market value for the services to be performed. The OIG also took issue with arrangements whereby an affiliated health care entity paid the salaries of the physicians' front office staff. In these cases, the government imposed fines between $50,000 and $200,000 on the physicians or physician groups involved.
The OIG's alert is another example of the government increasing its efforts to punish doctors for Medicare and Medicaid violations. It is extremely important that you have counsel review any existing or impending compensation arrangements, such as medical directorships to ensure that they comply with existing law.
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