The Office of Inspector General (OIG) recently issued Advisory Opinion No. 23-07 addressing a key concern in healthcare compliance – the payment of bonuses to employed physicians based on net profits from certain procedures. This article aims to provide an analysis of the opinion and its implications for healthcare practices.

Background
A multi-specialty physician practice (the “Requestor”) inquired about a proposed arrangement to pay its physicians bonuses based on net profits derived from specific procedures. The central question was whether this arrangement would fall foul of the federal anti-kickback statute – a law designed to prevent financial incentives from influencing healthcare decisions.

OIG’s Opinion
In this opinion, OIG concluded that the Proposed Arrangement would not generate prohibited remuneration under the Federal anti-kickback statute. The reasons include:

Bona Fide Employment: The physicians in question are bona fide employees of the Requestor, and their bonuses would constitute compensation for services rendered.

Safe Harbor Protection: The arrangement meets the safe harbor provisions related to employee compensation, which means it’s protected from penalties under the anti-kickback statute.

Certification by Requestor: The Requestor certified that all facts presented were accurate and that the Proposed Arrangement wouldn’t implicate the physician self-referral law.

Implications

While the OIG’s favorable opinion is specific to the Requestor’s circumstances, it offers valuable insights for other healthcare providers:

Employee Compensation Safe Harbor: This opinion underscores the importance of the employee compensation safe harbor. Practices can structure their compensation arrangements to fall within this safe harbor by ensuring a bona fide employment relationship and tying payments to services rendered.

Caution for Different Structures: The OIG noted that a similar arrangement involving independent contractors or a different corporate structure could raise concerns. Therefore, practices should be wary of extending similar bonus structures to non-employees.

Physician Self-Referral Law: While this opinion didn’t delve into the physician self-referral law, it serves as a reminder that practices must ensure they don’t violate this law when structuring compensation arrangements.

Conclusion

OIG Advisory Opinion No. 23-07 is a reminder of the complexity surrounding physician compensation in the context of federal laws. While the OIG provided a green light to the Requestor’s Proposed Arrangement, healthcare entities should seek legal counsel to ensure their compensation structures don’t violate applicable laws. It’s always better to seek clarity in advance rather than face potential sanctions later.