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Legal Updates

Warning From the HHS OIG: Physician Compensation Arrangements May Result in Significant Liability


The U.S. Department of Health and Human Services Office of Inspector General (the "OIG") recently issued a rare fraud alert warning physicians to ensure that their compensation arrangements, such as medical directorships, reflect fair market value for bona fide services actually provided, and noting that a compensation arrangement may violate the Anti-Kickback Statute if even one purpose of the arrangement is to compensate a physician for referrals of federal health care program business. 
The OIG cited as a basis for the alert recent OIG settlements with 12 individual physicians involving medical directorship and office staff arrangements.The OIG asserted that compensation under the arrangements in question constituted improper remuneration under the Anti-Kickback Statute because payments took into account the volume or value of the physicians’ referrals and did not reflect fair market value for services performed, because physicians did not provide services under their contracts and because an affiliate health care entity paid salaries of physicians’ front office staff, thereby relieving the physicians of costs they would otherwise have incurred. The OIG determined that the physicians were subject to liability under the Civil Monetary Penalties Law, which serves as a reminder that physicians—and not just the health care entities with which they contract — can be subject to liability under fraud and abuse laws. 
In light of this alert and the OIG’s continued attention to the issue of physician compensation arrangements, physicians should place significant emphasis and focus on ensuring that their compensation arrangements reflect fair market value for bona fide services actually provided.