Medical directors, beware. The Office of Inspector General (“OIG”) warns in its recently released fraud alert (“Fraud Alert”) that physician compensation arrangements, such as medical directorships, run the risk of violating the anti-kickback statute (“AKS”). The release of this Fraud Alert follows a series of recent settlements between the OIG and twelve individual physicians regarding medical directorships, office staff arrangements, and violations of the AKS (the “Settlements”).

The AKS makes it a criminal offense to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward referrals of items or services reimbursable by a federal health care program. “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,” cautions the OIG. Individuals and entities on either side of a transaction can be subject to penalties for violating the AKS.

“Physicians who enter into compensation arrangements such as medical directorships must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide,” states the OIG.

According to the OIG, the Settlements involved “questionable medical directorship and office staff arrangements” and the medical director compensation arrangements violated the AKS because 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 arrangements.”

The Settlements and the Fraud Alert seem to indicate that the OIG is beginning to look more closely at the role physicians have in questionable compensation arrangements. The OIG emphasizes that physicians should “carefully consider the terms and conditions of medical directorships and other compensation arrangements before entering into them.”

To read a copy of the Fraud Alert, click here.