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             On June 9, 2015, the Department of Health and Human Services Office of the Inspector General (OIG) issued a Fraud Alert to physicians warning that compensation arrangements for medical directorships that do not reflect fair market value for bona fide services may violate the Anti-Kickback Statute and could result in administrative, civil, and criminal liability.  These penalties could include the payment of fines and exclusion from the Medicare and Medicaid programs.

                In issuing the Fraud Alert, the OIG noted that it had recently reached settlements with several individual physicians who had entered into “questionable medical directorship” agreements.  Among the reasons cited for the questionable nature of these agreements were compensation tied to patient volume or the value of patient referrals and the compensation for services that were not actually performed.  The OIG also noted instances in which an institution paid physicians’ office staffs, thereby improperly relieving physicians of a financial burden.

                Although it may be difficult to ascertain the fair market value of a medical directorship of a hospital, clinic, nursing home or other entity, patient referrals should never be used to calculate compensation.  In addition, physicians should regularly review their medical directorship agreements to ensure that they are actually performing all the duties required by their medical directorship and they should document the performance of these duties.

                Issuance of the Fraud Alert specifically directed to physicians follows on two recent fraud alerts similarly directed to physicians.  These earlier fraud alerts involved physician-owned distributorships of medical equipment that the OIG characterized as “inherently suspect” and payments to physicians for referrals to laboratories.  These alerts signal a focus by the OIG on physician compensation and reinforce the importance of physicians implementing compliance programs to ensure compliance with the Anti-Kickback and other statutes.

 Notice:  The information contained in this article constitutes general commentary on the issues discussed  and is not intended to provide legal advice on any specific matter.  This article should not be considered legal advice and receipt hereof does not create an attorney-client relationship.