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OIG Issues New Fraud Alert Warning Physicians of Increased Scrutiny

On June 9, 2015, the Office of Inspector General (OIG) issued a Fraud Alert titled “Physician Compensation Arrangements May Result in Significant Liability,” which is available here. In the Fraud Alert, the OIG warns physicians of the dangers of entering into compensation arrangements with health care entities, such as medical directorships or office staff arrangements, that do not reflect fair-market value or are not for bona fide services that the physicians actually provide. These compensation arrangements will violate the Federal Anti-Kickback Statute and expose the physicians to civil monetary penalties if not properly structured. Additionally, the OIG reminds physicians that the Anti-Kickback Statute will be violated “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.”

While the Fraud Alert does not include any guidance that has not been promulgated previously by the government, it does evidence the OIG’s intent to target physicians (as opposed to larger health care entities). In fact, the OIG references 12 recent settlements with physicians who entered into questionable medical directorship and office staff arrangements. In these cases, the OIG states that the medical directorship arrangements took into account the physicians’ referrals, did not reflect fair-market value and, in some cases, the physician did not even provide the medical directorship services contemplated under the arrangement. Some of the arrangements even involved the health care entity paying the salaries of the physicians’ office staff. Such arrangements are highly suspect and likely constitute a transfer of remuneration to the physician because the physicians are relieved of the financial burden of paying their employee salaries.

However, any medical directorship arrangements may be structured to comply with the Anti-Kickback Statute. In addition to structuring the arrangement to meet the fair-market value and bona fide services requirements, physicians can protect themselves by ensuring that there is an actual need for the services they are to provide and by documenting the performance of those services. In light of the recent government scrutiny on these arrangements, physicians should have their medical directorship agreements reviewed by healthcare compliance counsel.

For more information, please contact Adrienne Dresevic, Esq., at adresevic@thehlp.com, or Clinton Mikel, Esq., at cmikel@thehlp.com, or at (248) 996-8510.

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