The Federal Fee-Splitting/Kickback Statute

Introduction

The below from the Social Security Act is the fee-splitting/kickback statute. For emergency physicians, referrals are the patients we see in the ED. Therefore, any contractual arrangement that forces you to give up a portion of your fee for the right to work in an ED and, hence, receive referrals, would fall within the purview of this legislation. Note below that employer-employee relationships are not exempt from this statute. Note also that the one who gives the compensation for such activities (the contracted EP) can be held accountable for allowing this to occur if it is done in a "knowingly and willful" manner. AAEM believes the "willful" clause (and, unfortunately, the "knowingly" in many cases) exonerates the working EP in their relationships with contract groups

CRIMINAL PENALTIES FOR ACTS INVOLVING FEDERAL HEALTH CARE PROGRAMS[140]

SEC. 1128B. [42 U.S.C. 1320a-7b] (portions deleted)

(b) (1) Whoever knowingly and willfully solicits or receives any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind--

(A) in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program[149], or

(B) in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under Federal health care program[150],

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

(2) Whoever knowingly and willfully offers or pays any remuneration (including any kickback, bribe, or rebate) directly or indirectly, overtly or covertly, in cash or in kind to any person to induce such person--

(A) to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program[151], or

(B) to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program[152],

shall be guilty of a felony and upon conviction thereof, shall be fined not more than $25,000 or imprisoned for not more than five years, or both.

(3) Paragraphs (1) and (2) shall not apply to--

(A) a discount or other reduction in price obtained by a provider of services or other entity under title XVIII or a State health care program if the reduction in price is properly disclosed and appropriately reflected in the costs claimed or charges made by the provider or entity under title XVIII or a State health care program;

(B) any amount paid by an employer to an employee (who has a bona fide employment relationship with such employer) for employment in the provision of covered items or services;

AAEM Note: The above employee "safe harbor" requires following the specific recommendations of this safe harbor which includes that there be "fair market value" considerations in these dealings. In other words, even if you are "employed" you cannot be forced to give up more than what is "fair market value" for what is given to you (scheduling, administrative functions, etc.). You can view the specifics of this employee safe harbor at Specifics of Employment "Safe-Harbor" for Fee-Splitting.