OIG Issue Fraud Alert on Physician Compensation Arrangements

The Office of Inspector General (OIG) at the Department of Health and Humans Services (HHS) recently issued a fraud alert for physicians who enter into compensation arrangements. Every physician should review carefully the terms and conditions of compensation arrangements, such as medical directorships, to ensure that they reflect fair market value for bona fide services provided by the physician. The OIG cautioned that a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to compensate a physician for past or future referrals of federal health care program business.

The fraud alert highlighted the OIG’s recent settlements with 12 individual physicians. According to the OIG, the compensation paid to these physicians under medical directorship arrangements violated the anti-kickback statute for several reasons, including the following:

• The payments took into account the volume or value of the physicians’ referrals rather than the fair market value for the services;
• The physicians did not actually provide the services; and
• Some of the physicians entered into arrangements where an affiliated health care entity paid the salaries of the physicians’ front office staff which relieved the physicians of a financial burden resulting in improper remuneration to the physicians.

Given the OIG’s recent focus on physician compensation arrangements, physicians should proactively review their agreements to ensure that they meet anti-kickback statute requirements, including any applicable safe harbors.