In the first half of 2025, governmental scrutiny has intensified, reinforcing the critical need for healthcare organizations to maintain strict compliance with the Stark Law and the Anti-Kickback Statute (AKS). These foundational regulations are designed to preserve the integrity of clinical decision-making by eliminating improper financial incentives.
In brief, the laws ensure that patient care remains the central focus, free from the influence of financial arrangements that could compromise medical judgment. Understanding and adhering to physician-hospital compliance standards is essential to avoid costly enforcement actions.
Seven Compliance Pitfalls to Avoid in Physician Arrangements
A recurring theme in 2025 physician-hospital complaints filed by the U.S. Department of Justice continues to be related to fair market value (FMV), commercial reasonableness (CR), and the volume or value of referrals standard in physician arrangements. These elements are critical in evaluating whether compensation arrangements are compliant with the Stark Law and AKS.[1]
The following seven lessons offer additional practical guidance for avoiding common pitfalls highlighted in 2025 year-to-date physician-hospital complaints:
- Relators can come from any level of the organization—from physician compensation analysts to CEOs. This reality highlights the importance of fostering a culture of compliance and transparency at all levels.
- Inconsistent payment practices across hospitals within the same system may raise red flags. Inconsistent documentation and compensation may indicate a lack of oversight or intentional noncompliance.
- Lack of documentation for administrative duties, such as missing timesheets, can lead to questions about whether the work was actually performed. Proper recordkeeping is essential for defending physician compensation arrangements.
- Automatic, fixed monthly administrative payments to physicians may indicate a breakdown in oversight. Administrative compensation should be regularly (e.g., monthly) reviewed and approved to ensure any amount earned is supportable.
- Paying physicians under expired agreements without the appropriate payment safeguards may be more common than expected. Organizations should have stopgap measures in place to prevent payments from continuing after contracts lapse.
- Use of vague or boilerplate contract language regarding physician duties and obligations can invite regulatory scrutiny. Agreements should clearly define physician expectations and responsibilities and be reviewed and adjusted, as necessary.
- Engaging physicians in roles like “Physician Advisors” in non-clinical departments where no patient care occurs can appear suspicious and may not meet CR standards.
For more information on recent physician-hospital enforcement actions or to receive guidance on provider compensation design, valuation, commercial reasonableness, or compliance and strategy, PYA’s executive team is here to help with tailored solutions and expert insights.
[1] PYA recommends experienced healthcare legal counsel be consulted to ensure compliance with these complex and other applicable laws.
