DOJ Scrutinizing Physician-Hospital Arrangements
November 1, 2025 3 minutes read
By Gregory Freeman
The Department of Justice (DOJ) is intensifying its scrutiny of physician-hospital arrangements, heightening the need for strict compliance with the Stark Law and Anti-Kickback Statute, which safeguard patient care from financial influence.
Recent DOJ action in this area points to concerns over fair market value, commercial reasonableness, and referral-based compensation, says Angie Caldwell, principal with PYA, an accounting and consulting firm based in Knoxville, TN.
Physician-hospital relationships have been high on the radar of the DOJ and regulators for a long time, she says.
“It’s always one of the top items in the OIG (Office of Inspector General) risk plan. It’s always something that is highly scrutinized simply because of the number of whistleblower reports related to this activity, and simply because of the success that the DOJ has had with these types of cases in the past,” she says. “Whistleblower activity is on the rise, and they continue to see good activity as it relates to physician-hospital relationships and fair market value and other concerns.”
The increase in consolidations, joint ventures, and more creative physician alignment strategies, has prompted the DOJ to increase its scrutiny of those financial relationships, she says. The DOJ wants to ensure that compensation arrangements do not improperly influence a provider, especially as it relates to government program billing, she says.
The DOJ’s methodologies for review have become more sophisticated over time, so they are able to look at information more critically and more holistically to be able to identify trends even in the billing data, to identify potential billing weaknesses, Caldwell says. Then, they can look past those billing concerns to drill down into other trends.
“Often then they are able to trace it down or trace it through to an improper financial relationship. Sometimes, it’s just merely the provider not having the right training to be able to bill properly, but then, other times, they’re able to find what they suspect is an improper financial relationship.”
Finding that improper relationship is a success for the DOJ, and success breeds success, Caldwell says.
“If they’re able to able to find a fertile ground for investigations and settlements, then they will continue to do that,” she says. “The other thing that I think is really interesting is the guidance that has come out as it relates to the Bondi memo, which essentially limits the DOJ’s reliance on sub-regulatory guidance. (The) DOJ is looking for items within the regulation to seek and examine and prove compliance on, because any guidance within a sub-regulatory document is now off the table.”
Risk managers should take note of the DOJ’s interest in this area and do anything they can to tighten up compliance, Caldwell says. Focus on what has tripped up healthcare organizations in the past, she advises. “Missing documentation is a big issue, for example, so ensuring that documentation related to contracts, fair market value, analyses, board or and or committee approvals is at the ready and complete is a very easy step,” she says. “Also, ensuring that all arrangements between physicians and hospitals are reviewed on a regular basis. You want to make sure that any automatic payment is regularly reviewed to ensure that it is still fair market value, and that it is commercially reasonable.”
Also, ensure that the physician is still putting out the work or providing the level of effort required to support a payment to him or her, Caldwell advises. Make sure the organization is not continuing to pay on any agreement that has expired, she says.
“The response to this DOJ attention is thinking about controls, regular contract audits, documentation, protocols, monitoring, and review of payments to providers,” Caldwell says. “It requires making sure that the organization has a team that understands the importance of the documentation and how it should flow, and really proactive engagement. Make sure that committees have an understanding of why this important and what can happen if the organization falls out of compliance.”
Greg Freeman has worked with Clinican.com and its predecessor companies since 1989, moving from assistant staff writer to executive editor before becoming a freelance writer. He has been the editor of Healthcare Risk Management since 1992 and provides research and content for other Clinician.com products. In addition to his work with Clinician.com, Greg provides other freelance writing services and is the author of seven narrative nonfiction books on wartime experiences and other historical events.
Source
- Angie Caldwell, Principal, PYA, Knoxville, TN. Telephone: (865) 673-0844.
The Department of Justice is intensifying its scrutiny of physician-hospital arrangements, heightening the need for strict compliance with the Stark Law and Anti-Kickback Statute, which safeguard patient care from financial influence.
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