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Warning Prompts Physician Concern On PPM Payments

MANAGED CARE July 1998. © MediMedia USA
Washington Initiatives

Warning Prompts Physician Concern On PPM Payments

MANAGED CARE July 1998. ©1998 Stezzi Communications
Washington Initiatives

Practice management companies' physician compensation arrangements that are based on percentages of practice revenue or income may be illegal, according to the Office of the Inspector General.

In an advisory opinion, OIG said that such practices may amount to illegal kickbacks and may therefore result in criminal penalties, civil fines or possibly even exclusion from the Medicare program.

Department of Health and Human Services officials caution that the advisory opinion was just that — a ruling on one specific fact pattern involving practice management companies. But both the AMA and the burgeoning practice management industry are monitoring the situation closely.

The specific case involved a physician who paid a PPM operating costs and a percentage of net revenues and wanted marketing services in return. The OIG was concerned that the PPM could increase its own revenues through marketing specialist referrals.

The problem: Most PPMs and physicians already have some sort of marketing arrangement in place. It's unclear how HHS intends to draw the line. Officials are receiving many requests for clarification and considering how best to resolve it.