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During our TCG Monday Auditing, Coding and Compliance podcast Terry Fletcher brought up the topic of why physicians should provide free services to other physician or clinical professionals who have the ability to refer patients for services and or procedures… Offering services for free to other physicians can be illegal because it can violate several healthcare laws and regulations designed to prevent fraud, abuse, and unethical practices. It can violate the Anti-Kickback Statute, the Stark Law, state laws, and principles of fair market value, while also undermining ethical standards and patient trust. Laws and regulations are in place to ensure healthcare providers make decisions based on the best interests of their patients, those that are medically appropriate, necessary and reasonable, and free from undue financial influence. Here are some things to think about when it comes to reasons why we shouldn’t be offering free services to those who potentially influence patient referrals:

  1. The federal Anti-Kickback Statute (AKS) prohibits the exchange (or offer to exchange) of anything of value to induce or reward the referral of federal healthcare program business. Providing and/or offering of free services to clinical professionals could be seen as an inducement for referrals, which is illegal under the AKS statute. Violations can result in severe penalties, including fines, imprisonment, and exclusion from federal healthcare programs.
  2. The Stark Law prohibits physicians from referring patients for certain designated health services to entities with which they (or their immediate family members) have a financial relationship, unless an exception applies. Make sure you consult with your legal professional on what potential exception(s) may apply to your specific situation.
  3. Many states have their own anti-kickback and self-referral laws that mirror or expand upon federal regulations. These laws prohibit offering free services to other physicians if the intent is to influence referral patterns or gain a competitive advantage. State laws many times may be more stringent/restrictive than the federal law(s) so make sure you consult with your legal counsel.
  4. Healthcare regulations often require that any exchange of goods or services between healthcare providers be conducted at fair market value (FMV). Offering services for free may be a violation of this principle since it deviates from the norm of fair market transactions and can be construed as an improper incentive.
  5. Healthcare organizations are expected to adhere to high ethical standards and compliance practices. Offering free services to other physicians can be seen as an unethical practice that undermines the integrity of the healthcare system. It can lead to conflicts of interest, where clinical decisions are influenced by financial relationships rather than patient welfare. The primary concern in healthcare should always be the welfare of patients. Practices that involve offering free services to induce referrals can compromise patient trust and the quality of care. Patients must be confident that medical decisions are made based on clinical (medical necessity) need rather than financial incentives.

Make sure to check out Episode 38 of The Compliance Guy on Spotify or your favorite podcast platform…

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