Physician compensation under scrutiny by Office of Inspector General

Earlier this month, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a rare fraud alert on physician compensation. It warned physicians that their “compensation arrangements such as medical directorships must ensure that those arrangements reflect fair market value for bona fide services the physicians actually provide”. The impetus for this alert warning was the recent OIG settlements with twelve individual physicians involving medical directorship and office staff arrangements. The OIG reminds physicians that if one purpose of the compensation arrangement can be deemed to compensate for past or future referrals the arrangement may violate the anti-kickback statute. More importantly, the physicians (not the covered entities with whom they contracted) involved in the OIG settlements were subject to liability under the fraud and abuse laws and the Civil Monetary Penalties Law.

The physician arrangements constituted improper remuneration because:

  • Payments did not reflect fair market value for services performed and took into account the volume or value of the physicians’ referrals
  • Physicians did not provide the services called for under their contracts
  • The salaries of physicians’ front office staff were paid for by an affiliated entity relieving the physicians of a financial burden they would otherwise have incurred

For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.

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Transitioning to the 2013 COSO Framework