Practitioner Pointer: Patient referral fees raise red flags

If you think it’s generally permissible to give or receive fees for patient referrals, you need to read this article.

Some practitioners have been building their referral networks and collaborating more closely with other practices as the Affordable Care Act is implemented. Whether you are thinking about collaboration or even just assisting patients with finding the right health care professional, it is important to be mindful about the issue of referral fees, sometimes referred to as fee splitting.

There are a lot of policies at both the federal and state levels that address the issue of self-referral. As a rule, a provider may be prohibited from referring a patient to a practice or facility where the provider has a personal financial interest. This tends to be more relevant to physicians who might refer their patients to a practice or clinic that has imaging or diagnostic equipment where the physician is an owner. This kind of scenario does not typically apply to psychologists.

However, psychologists may not be aware that it is generally inappropriate to accept fees or other compensation for referring a patient, or to give compensation to another provider for a patient referral

Nearly half of U.S. states have enacted statutory or regulatory policies barring psychologists from receiving any kind of “remuneration for referral of a client for professional services.” In other words, a psychologist should not accept any kind of compensation from another provider, nor offer any compensation to another provider, for simply making a patient referral. States with such a policy include Alabama, California, Colorado, Florida, Hawaii, Illinois, Indiana, Louisiana, Michigan, Minnesota, Missouri, Nebraska, New Jersey, New Mexico, New York, Ohio, Pennsylvania, Texas, Virginia and Wisconsin.

In fact, many of these states specifically assert in licensing or psychology practice laws that psychologists shall not bill for services not rendered (with the exception being missed appointments where the patient did not cancel in advance). The laws typically stipulate that doing so would constitute unprofessional conduct that may result in disciplinary action against the psychologist. 

This prohibition does not affect employment arrangements where the health care provider is an employee or independent contractor and paid for providing licensed health care services, or where the provider is a partner or corporate shareholder for a practice that provides health care services consistent with state law.

Some states may not have an explicit prohibition but may caution psychologists to fully disclose in advance to patients any compensation made or received for patient referrals. 

The APA Ethical Principles of Psychologists and Code of Conduct (Ethics Code) also addresses this issue in Section 6.07 — Referrals and Fees. The relevant provision specifically states that when “psychologists pay, receive payment from, or divide fees with another professional, other than in an employer-employee relationship, the payment to each is based on the services provided (clinical, consultative, administrative or other), and is not based on the referral itself” (emphasis added). 

Most states have adopted the APA Ethics Code as part of psychology licensing requirements. Even if your state has not enacted a specific prohibition on patient referral fees, paying or accepting fees for patient referrals is likely prohibited and constitutes unprofessional conduct based on the Ethics Code. So it is generally a good idea not to give or receive fees for patient referrals.

Note: The information in this article does not constitute legal advice and should not be used as a substitute for obtaining appropriate professional consultation prior to making decisions regarding individual circumstances.