Can Physical Therapists Exchange Money or Gifts for Referrals?

Referral fees or may sound like a smart tactic to bring in more physical therapy clients. However, the federal government constrains such activities. Learn how exchanging money or gifts for referrals can be problematic.

As a physical therapist, you may have been offered money or gifts in exchange for referrals to another provider. Perhaps you have considered offering physicians money or gifts in exchange for referrals. If you are not yet familiar with laws relating to giving and receiving of money or gifts to encourage or reward referrals, make sure you educate yourself about your ethical requirements.

Gifts To and From Physicians: The Anti-Kickback Statute and Stark Law

The purpose of both the Federal Anti-Kickback Statute and Stark Law is to eliminate any opportunities for financial incentives to influence medical decisions. However, the two laws differ in a few key ways.

If you have any questions about how either statute applies to your physical therapy practice, or if you believe you may have violated one of the following statutes, an experienced healthcare attorney can guide you.  But first, read on for the basics.

Federal Anti-Kickback Statute

The Federal Anti-Kickback Statute prohibits individuals and entities from offering anything of value, whether cash or otherwise, in exchange for any federal healthcare program business. Federal healthcare programs include Medicare, Medicaid, Tricare, Department of Labor health programs, and more.

In other words, a physician cannot refer a patient covered by a federal healthcare program, like Medicare, to your physical therapy practice in exchange for money or monetary gifts from you. Likewise, you cannot refer a patient covered by a federal healthcare program to a physician in exchange for money or monetary gifts.

Any violations of the Anti-Kickback Statute can result in civil fines, criminal penalties, and program removals. While the payment of referral fees might be tempting, it is vital that you avoid inadvertent Anti-Kickback Statute violations in your practice. 

Stark Law

The Physician Self-Referral Law, more commonly known as “Stark Law,” prohibits physicians from referring patients covered by Medicare or Medicaid to designated health services, such as physical therapy services, to practices with which the physician or the physician’s immediate family member has a financial relationship. Immediate family members include spouses, parents, children, siblings, step-siblings, in-laws, grandparents, and grandchildren.

Notably, the Stark Law is a strict liability statute, which means that the provider’s intent is not taken into consideration when determining violations of the law. Any violations of the Stark Law can result in civil fines and program removals (as opposed to the Anti-Kickback Statute which can result in criminal penalties). 

Giving Gifts to Patients

According to the American Physical Therapy Association, physical therapists may offer gifts such as promotional products and services to current or potential patients covered under federal healthcare programs. However, the APTA reminds physical therapists that this is restricted to certain circumstances:

• The gift must be “inexpensive,” which is defined as under $10 per gift or $50 annually per patient.
• The gift cannot be cash or eligible for cash equivalents.
• The physical therapist cannot give the gift with the intent of getting the patient to hire him or her.

Because it can be difficult to distinguish between gifts intended to induce a patient to “hire” the physical therapist and gifts offered for legitimate purposes, our attorneys frequently advise that therapists implement a stricter practice policy than that suggested here.

Other Referral Agreements

We frequently field questions about other types of referral agreements and fees, and many common practices violate either the law or a therapist’s ethical obligations. Arrangements that require further scrutiny might include:

• Networking membership groups which require, encourage, or incentivize referrals
• Advertising agreements which reward the advertiser for referring readers to the practice
• “Doorbuster” offers which offer the prospective patient an excessive discount with the intent of getting him or her in the door, and then raising the cost of subsequent visits (this may constitute a “gift,” depending upon the circumstances)

As you seek to promote your physical therapy business and attract new patients, it’s tempting to mimic the marketing tactics successfully used by businesses in other industries. Always remember that healthcare is highly regulated at both the state and federal levels, and therefore incentives require more careful consideration.

Because the penalties for violating the Stark Law or Anti-Kickback Statute can be severe, it’s best to consult with a healthcare attorney before entering into an agreement to pay or receive referral fees. Jackson LLP’s attorneys will also evaluate your ethical and legal obligations, as well as those of the other party to the proposed agreement.

To schedule your free attorney consultation, call us, visit our booking page, or click the button below.

This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader and should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.