The Office of Inspector General (OIG) for the U.S. Department of Health & Human Services (HHS) issued a fraud alert on June 9, 2015, targeting physician compensation agreements that potentially violate the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b). The Anti-Kickback Statute prohibits remuneration of payment in exchange for referrals of patients receiving aid from federally funded healthcare programs (i.e. Medicare and Medicaid). The OIG alert references 12 recent settlements with individual physicians who entered into “questionable” medical directorship and office staff arrangements. The key concern in those cases centered on individual physicians entering into arrangements where the compensation did not “reflect [the] fair market value for bona fide services the physicians actually provide[d].”

The OIG alert states:

Although many compensation arrangements are legitimate, a compensation arrangement may violate the anti-kickback statute if even one purpose of the arrangement is to compensate a physician for his or her past or future referrals of Federal healthcare program business. OIG encourages physicians to carefully consider the terms and conditions of medical directorships and other compensation arrangements before entering into them.

While the OIG fraud alert provides no additional Anti-Kickback guidance, it does signal increased federal scrutiny and enforcement activity directed at physicians participating in the Medicare and Medicaid programs. This likely will include tougher prison sentences for criminal Anti-Kickback violations and/or higher monetary penalties for civil violations. So too does the increased federal budget of OIG/HHS for 2016, in part aimed at bolstering OIG’s Medicare and Medicaid oversight, including the Medicare Strike Force teams and OIG’s pursuit of civil monetary penalties. Individual physicians and healthcare providers should proceed with caution with respect to any agreements where physician compensation is tied even remotely to factors unrelated to the provision of health care services, and should have such agreements reviewed by legal counsel to evaluate the potential for Anti-Kickback violations.