HMS Valuation Partners and compliance experts, Joe Aguilar and Chip Hutzler, recently collaborated with the Report on Medicare Compliance to provide expert insight into the recent civil monetary penalty (CMP) settlement involving The Hospitals of Providence in El Paso, Texas. The hospital agreed to pay $726,246 to the HHS Office of Inspector General (OIG) over allegations that it provided free marketing services to certain referring physicians, potentially violating the Stark Law and Anti-Kickback Statute (AKS). Aguilar and Hutzler shared their perspectives on the compliance risks associated with marketing arrangements that could be perceived as improper remuneration for physician referrals, highlighting the importance of fair market value (FMV) assessments and regulatory safeguards.
The Allegations and Settlement
The settlement stems from claims that between 2014 and 2021, the hospital offered free marketing services for referring physicians, which could be viewed as improper remuneration. While The Hospitals of Providence did not admit liability, it entered the OIG’s Self-Disclosure Protocol in 2022, leading to the eventual settlement in 2024.
Key Compliance Concerns
According to Joe Aguilar, managing partner at HMS Valuation Partners, these types of arrangements warrant careful scrutiny. “You are marketing to get patients. It immediately starts to raise an antenna,” Aguilar explained. The key question is whether these arrangements provide a financial benefit to physicians in exchange for referrals—something that could trigger compliance risks.
Healthcare attorney Bob Wade outlines a four-tiered approach to evaluating marketing compliance. If a hospital advertises its services and merely features a referring physician, the ad is generally seen as compliant. However, if the ad also promotes the physician’s practice or includes their contact information, it becomes a joint marketing effort—meaning the physician must cover a fair share of the costs to avoid potential violations.
Fair Market Value and Physician-Owned Advertising Risks
HMS Valuation Partners’ Chip Hutzler highlights another potential risk: physician-owned advertising spaces. If a hospital pays above-market rates for ad placements on billboards or other media owned by referring physicians, it could be viewed as an improper financial arrangement. Ensuring that payments align with fair market value (FMV) is essential for compliance.
Lessons for Healthcare Organizations
Ultimately, this case serves as a cautionary tale for healthcare organizations. To mitigate risk, hospitals must establish clear policies around marketing support for physicians, ensure compliance with Stark Law and AKS, and maintain thorough documentation.
For a detailed analysis of the case and expert insights from HMS Valuation Partners, read the full article here: Hospital Settles CMP Case Over Free Marketing to Allegedly Induce Physician Referrals | COSMOS Compliance Universe
