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Published: 2008-03-26

Board of Medicine Splits Hairs Over Split Fees



In its ongoing attempt to identify and dissuade fee-splitting among physicians, the Florida Board of Medicine (the "Board") has issued a controversial declaratory statement which could have far-reaching implications in the employment of physicians.

The recently issued declaratory statement addresses the petition by Broward County physician George G. Levy, M.D., who queried whether it would be permissible for his practice to employ a radiologist part-time, and to pay the radiologist on a "per read" basis to interpret patient MRI scans performed at a totally independent MRI facility fee (the "technical component"), and would provide the films to Dr. Levy's practice, which in turn would bill for the reading and interpretation of the scans (the professional component") performed by its employee radiologist. The funds collected for the professional component would belong to the practice, less the "per read" compensation paid to the radiologist. The Board concluded that Dr. Levy's retention of any portion of the professional component (i.e., the remaining profit after paying the radiologist) without his actually having performed any professional service would be a prohibited "fee-splitting arrangement" under Florida's physician practice statutes.

Although Dr. Levy had requested an interpretation of other related sections of the Florida Statutes (including the Florida Patient Self-Referral Act of 1992 (the "Act") and the Florida anti-kickback provisions for health care providers enacted simultaneously with the Act), the Board focused solely on the physician practice laws which prohibit any physician form "paying or receiving any commission, bonus, kickback, or rebate, or engaging in any split fee arrangement . . . for patients referred to providers of health care goods and services . . ."

The term "fee-splitting" is not specifically defined by Florida statute. Therefore, the Board relied upon the Webster's dictionary definition used in a Florida appellate court decision (interpreting Illinois law) which defines fee-splitting as the "dividing of a professional fee for specialist's medical services with the recommending physician."

While the Board's decision is only binding upon Dr. Levy, it is nonetheless of concern. First, it indicates the Board's distaste for any arrangement which it perceives involves a kickback. Second, it is not precise in its focus and application. It fails to recognize the relationship of physicians within a group practice setting, and fails to address or acknowledge the relationship between the physician practice statute fee-splitting prohibition and other Florida and federal statutes governing fee-splitting among physicians. As such, not only has this decision perpetuated the ambiguity of the relevant statutes, but, if literally interpreted, it could even jeopardize compensation relationships which have long been utilized by group practices and their members.

As a threshold issue, by broadly labeling the retention by Dr. Levy of any portion of fees from services which he himself did not perform as fee-splitting, the Board inadvertently implied that when a group practice distributes profits of the practice among its members, such practice is also prohibited. Any such result certainly cannot be what the Board intended. In fact, members of the Board have since indicated that they were not addressing the issue of compensation within a group practice, but only responding to Dr. Levy's narrowly presented question. Unfortunately, the Board's decision still leaves many questions unanswered and misses an excellent opportunity to resolve apparently conflicting portions of Florida law regarding this subject. In fact, it can be argued that the payment arrangement which the Board disallowed is permitted under certain exceptions to the Florida patient brokering law (which is separate from the physician practice provisions on which the Board based its decision, but which has language addressing fee-splitting which is nearly identical to the physician practice law which prohibits fee-splitting). Regrettably, the Board did not address this conflict or the apparent conflict with the Florida anti-kickback provisions, which has a similar prohibition, and apparently (through confusing drafting) has the same exceptions as the patient brokering law. As a result, the Board's decision creates an anomaly: Activities which it has determined are impermissible under the physician practice statutes arguably are permitted under other provisions of Florida law addressing the same subject.

If the Board simply meant that Dr. Levy could not base the radiologist's salary entirely on the number of MRI scans he reads and interprets, then, the Board's decision is more clear, and probably consistent with its past declaratory statements on kickbacks and fee-splitting. In fact, many groups compensate their members with a salary and productivity bonus based on a percentage of revenues personally performed. However, the Board's decision is not tailored to address the various statutes and competing issues that bear on this question so as to enable physicians to have clear guidance. Hopefully, the Board's future decisions will be more tightly constructed and focused than this one.