In recent years, there has been an uptick in discussions surrounding the legality and ethics of referral incentive programs across industries, and specifically in fields such as dentistry. While these programs might appear to be a great way to attract a new customer base, their implications are not so straightforward all the time.
Take, for example, the recent case study conducted by Daniel Schulte, a legal professional whose work was recently featured in The Journal of the Michigan Dental Association. Schulte addresses an insidious question many dentists face: “Is it problematic to give a Starbucks, Apple, or other gift card to patients who refer a new patient to me? What if I organized a raffle of a TV, giving a ticket to patients who refer a new patient?”
Although it might seem perfectly harmless to reward loyal patients for referring a friend, family member, or even a colleague, it is crucial for businesses to understand the potential legal ramifications. Schulte argues that in addition to possible state law and professional ethical issues, such referral incentives might also raise concerns regarding federal anti-kickback statute compliance.
In simple terms, the federal anti-kickback statute is a piece of legislation designed to protect patients and the federal healthcare system from fraud and abuse by penalizing those who knowingly entice referrals for benefits which are paid for by federal healthcare programs.
Although the act may not necessarily apply to all health care practitioners like dentists, particularly if they do not provide services under such a federally-funded program, it’s an important consideration that underscores the potential complexity and risks associated with implementing a referral incentive program.
As such, legal professionals, especially those working in corporate law and healthcare industry, need to bear these considerations in mind when advising their clients on the implementation of referral incentive programs. Doing so will help ensure that businesses remain compliant, therefore mitigating risk and protecting the interests of all stakeholders involved.