July 24, 2025
Understanding the nexus between physician compensation and compliance is critical in an active enforcement environment.
Our experts explain how a robust governance process can help to shield your organization from risk and address growing regulatory scrutiny.
Over the past couple of years, federal agencies—including the DOJ, HHS, and CMS—have significantly increased oversight of health care organizations and compliance with the Stark Law and Anti-Kickback Statute. Scrutiny over these violations is no longer a trend, it’s the norm with more whistleblower lawsuits being filed in 2024 than any other year.
How can your organization work smarter to support compliance? Governance isn’t just about oversight—it’s your first line of defense against regulatory risk.
In their latest piece for Chief Healthcare Executive, SullivanCotter’s Mark Ryberg and Dave Hesselink focus on address financial arrangements between hospitals, health systems, and their employed and contracted physicians:
- Fair Market Value – These regulations require that physician compensation is consistent with fair market value – which is based on a variety of factors such as years of experience, specialty, market demand and more. Additionally, compensation cannot be based on the volume or value of referrals.
- The Case for Compliance – In 2024, the DOJ reported a record number of whistleblower actions and collected $2.9 billion in False Claims Act settlements—$1.67 billion from health care alone. Key violations included fraudulent Medicare/Medicaid billing, improper physician compensation, and kickbacks. As enforcement intensifies, health care organizations must adopt current best practices and conduct regular audits to avoid costly, multi-year investigations and settlements.
- Robust Governance – Strong governance is essential for compliant physician compensation. Organizations must ensure compensation aligns with fair market value, is commercially reasonable, and supported by an administrative team that is able to effective manage a complex process. Mistakes must be addressed promptly as failing to act on known issues increases your risk. Consistent oversight, effective governance mechanisms, and clear policies can help to prevent whistleblower claims or support your organization should an investigation occur.