OIG Issues Fraud Alert on Physician Compensation Arrangements

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On June 9, 2015, OIG released a fraud alert titled, “Fraud Alert: Physician Compensation Arrangements May Result in Significant Liability.”  Although the OIG’s enforcement of physician compensation arrangements, including medical director agreements, under the Anti-Kickback Statute (AKS) is not new, OIG’s clear emphasis in the Fraud Alert on its prosecution of physicians who enter into such problematic arrangements is notable.  The AKS criminalizes the conduct of both parties to an arrangement, both the offeror and the solicitor/recipient.  Generally speaking, however, OIG’s enforcement of physician compensation arrangements has traditionally focused on the party contracting with the physician. 

In the Fraud Alert, OIG sends a strong message to physicians.  The agency describes recent settlements with 12 individual physicians who entered into “questionable medical directorship and office staff arrangements,” clearly pointing out that thephysicians “were an integral part of the scheme” and subject to Civil Monetary Penalties liability themselves.  Moreover, OIG not so subtly “encourages physicians to carefully consider the terms and conditions of” compensation arrangements, including medical director agreements, and refers them to OIG’s “Compliance Program Guidance for Individual and Small Group Physician Practices” and OIG’s “A Roadmap for New Physicians: Avoiding Medicare and Medicaid Fraud and Abuse.” 

The Fraud Alert could signal the beginning of a new enforcement trend focused on physician culpability under the AKS.  Physician practices, both large and small, should certainly heed OIG’s message and take this opportunity to examine their compensation arrangements and carefully consider all new arrangements before they fall under government scrutiny.

To read the advisory opinion, click here.

Reporter, Kate Stern, Atlanta, +1 404 572 4661, kstern@kslaw.com.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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