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The OIG and Physician Compensation

Physicians who enter into compensation arrangements commonly known as Medical Director Agreements must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide. 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 health care program business.

The OIG has been investigating individual physicians who entered into questionable compensation arrangements, alleging that the compensation paid to these physicians under medical directorship arrangements constituted improper remuneration under the anti-kickback statute for several reasons. 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. Those who commit fraud involving Federal health care programs are subject to possible criminal, civil, and administrative sanctions.

Due to the OIG’s increased scrutiny of Medical Director Agreements it is important that such documents meet the elements of the Safe Harbor to limit exposure to both the physician and the entity paying the physician.