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When are high physician salaries an AKS violation?

The Department of Justice (DOJ) recently accused a hospital of Anti-Kickback Statute (AKS) and Stark Law violations. The allegations are the result of claims the hospital paid physicians high salaries based on the “volume or value of the physicians’ referrals.”

The agency points to the following as evidence to support its case:

  • Unreasonable pay. The DOJ states the hospital provided certain physicians more than four times the median salary for their respective specialties based on the payments brought in by referrals. This, the agency states, was far outside of the fair market value for the profession.
  • “Significant losses.” The complaint also alleges the physicians’ practices resulted in large losses to the hospital. In one case, a physician was allegedly responsible for an average of $400,000 lost annually. However, the DOJ states it has evidence hospital officials agreed to retain the physician due to the fact that her referrals accounted for $4.6 million in payouts.

Ultimately, the DOJ claims in the complaint that if hospital officials removed the value the physicians brought to the facilities through the use of referrals their compensation rates would not be commercially reasonable.

This case is just one of many involving government allegations rural hospitals are violating the law in their attempts to lure qualified candidates to practice in less lucrative areas. As a result, hospitals and private practices are wise to review their recruiting practices to better ensure they are in line with applicable rules and regulations. The government may flag benefits designed to make the practice look competitive as a violation of the AKS and move forward with an investigation and potential criminal charges.

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