Avoid liabilities associated with compensation arrangements

The U.S. Department of HHS’ Office of Inspector General issued a fraud alert recently warning doctors to avoid payment agreements that could violate the anti-kickback statute.

According to OIG, it recently reached settlements with 12 physicians who had negotiated contracts for medical directorship and office staff contracts that were deemed questionable.

OIG alleged that the compensation paid to these physicians under the medical directorship arrangements constituted improper remuneration under the anti-kickback statute because the payments took into account the physicians’ volume or value of referrals and did not reflect fair market value for services to be performed. OIG also alleged that the physicians did not provide services as outlined in the agreements.

This is a shift in focus as the OIG has historically pursued the contracting entity, not physicians, in similar situations.

Several of the 12 physicians OIG investigated entered into arrangements under which an affiliated health care entity paid the salaries of the physicians’ front office staff. Because these arrangements relieved the physicians of a financial burden they otherwise would have incurred, OIG alleged that the salaries paid under these arrangements constituted improper remuneration to the physicians and that the physicians were an integral part of the scheme and were subject to liability under the Civil Monetary Penalties Law.

Although many compensation arrangements are legitimate, the anti-kickback statute can be violated even if one purpose of the arrangement is to compensate a physician for his or her past or future referrals of Federal health care program business.

Physicians are encouraged to carefully consider all terms and conditions of medical directorships and compensation arrangements before entering into them.

Additional resources from OIG:

“Compliance Program Guidance for Individual and Small Group Physician Practices” 
“A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse”  

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