Ounce of Prevention: Are Independent Contractor Agreements Signed?

February 22, 2024
Applicable Provider Types: All

Is Your Entity in Compliance?

Financial relationships with an independent contractor in a position to make or influence referrals of federal healthcare program business can implicate the federal Anti-Kickback Statute (AKS), Stark Law and various state law equivalents. Fortunately, if properly structured, these financial arrangements can fit within statutory and regulatory guidance from state and federal agencies charged with monitoring these relationships.

However, one key component to complying with the personal services exception to the Stark Law, the personal services and management contract safe harbor to the AKS, and statutory exceptions to state law kickback and self-referral prohibitions is the requirement that these financial arrangements be in writing, cover all services rendered at fair market value, and, are signed by the parties to be bound, among other things. Failure to comply with the signature requirement can result in a Stark Law violation and loss of protection from prosecution that AKS safe harbors afford.

In addition, for an independent contractor physician to be considered a “physician in a group practice” under the Stark Law, the independent contractor physician must have a contract directly with the group practice to provide services to the group practice’s patients, signed by the independent contractor physician.

How to Confirm?

To assess whether contracts with independent contractors comply with the signature requirement, providers should:

  1. Create a mechanism for tracking all contracts, which includes verification the contracts were signed and dated by both parties, and ensure there are checks in place to confirm the signed contract exists prior to payment.
  2. Periodically audit physician (and other provider) contracts by selecting a random sample for verification of all signatures. Consider pulling this random sample from a monthly accounts payable list to confirm there is a signed contract in place for all randomly selected independent contractor payees.
  3. If a signature is missing, obtain signatures as soon as possible and consult legal counsel to determine what, if any, legal risk exists for the organization.

Ounce of Prevention is a McGuireWoods series that details healthcare laws and regulations and offers tips on how providers can ensure they are in compliance. To recommend a topic for a future installment, email Gretchen Heinze Townshend at [email protected] or Tim Fry at [email protected].