New OIG Fraud Alert Focuses on Compensation of Medical Directors

The United States Department of Health and Human Services Office of Inspector General (“OIG”) issued a short Fraud Alert last week focusing on the anti-kickback implications of certain compensation paid to medical directors.

OIG noted that it had recently settled with a dozen physicians who had entered into medical director positions of various health care entities.  OIG alleged that these arrangements violated the federal Anti-kickback law for reasons, including that the “payments took into account the physicians’ volume or value of referrals and did not reflect fair market value for the services to be performed, and because the physicians did not actually provide the services called for under the agreements.”

OIG also claimed that some of the health care entities had agreed to pay for the front office staff of the physicians, which the OIG alleged was also improper remuneration under the Anti-kickback statute “because these arrangements relieved the physicians of a financial burden they otherwise would have incurred.”

The key point of the alert, from OIG’s perspective, is to remind physicians to ensure that compensation arrangements “reflect fair market value for bona fide services the physicians actually provide.”  However, OIG also reiterated the key focus of the Anti-kickback law: that arrangements designed to compensate physicians for the volume of past or  anticipated Medicare and Medicaid referrals violate the law and can lead to the imposition of civil monetary penalties.  According, OIG concluded the alert by highlighting  its compliance resources for physicians to evaluate these compensation arrangements.

Physicians should always pay careful attention to any compensation arrangement they are offered by a health care provider, and while OIG has developed useful resources, it is highly advisable that physicians engage experienced health care counsel to review and assess compensation arrangements for compliance with the Anti-kickback statute.