Patient Brokering (Fee Splitting & Corporate Practice of Medicine)

Fee Splitting

I often receive questions about whether patient membership fees may be split in creative ways.  May a practice consultant be paid (especially a marketing consultant) based upon how many patients she obtains for the practice?  May I compensate patients for referring other patients to the practice?

Generally no.  This is almost always a (very) bad idea.  I would argue that it is almost impossible for a physician that has not opted out of Medicare to develop any of these referral relationships without creating a Stark law violation.  (Remember that Stark law does not apply to physicians that have opted out of Medicare and do not participate in Medicaid.)  For those that do want to pursue these arrangements, be prepared to spend a great deal in legal fees so that a creative contractual solution can be developed.  

In many states (such as Florida) these types of relationships are strictly prohibited.  Alabama is another example, consider (Ala Code Section 34-24-360(10)).  The AMA has public statements declaring these types of practices unethical.  In fact, there are some situations where improper fee splitting has been used as an argument to attempt to physicians from having direct billing (cash pay arrangements) for pathology services.  The Health Care Compliance Association has an article discussing the issue in detail as well.  

Corporate Practice of Medicine (CPOM)

Start by analyzing your state's medical practice act.  Physicians obtain a "license to practice medicine."  Corporate entities are not provided with a license to practice.  Many states fear that corporate ownership could interfere with physician decision making.  This can be a burden to growing DPC practices.  Ironically there are often exceptions to CPOM for hospitals and HMOs - the exact entities that are most likely to interfere with physician decisions.  

Here are some additional resources:

Silverman, Stuart I. "In an Era of Healthcare Delivery Reforms, The Corporate Practice of Medicine is a Matter That Requires
Health Law & Policy Brief 9, no.1 (2015): 1-23.

The Corporate Practice of Medicine Doctrine: Is it Applicable to Your Client?  
American Health Lawyers Association Business Law & Governance, Volume 3 • Issue 2 • May 2010
Michael F. Schaff, Esquire, Glenn P. Prives, Esquire, Wilentz Goldman & Spitzer PA, Woodbridge, NJ

Corporate Practice of Medicine Doctrine 50 State Survey Summary funded by the Center to Advance Palliative Care and the National Hospice and Palliative Care Organization.  (Be careful - this is from Sept 2006 and many laws have been updated)