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The Ethics of Fee-Splitting

By: Dr. Thomas J. DeMayo

Suppose for a moment that you are fairly new to town and you have been told by your Primary Care Provider that you need a referral to a Cardiologist for tachycardia.  The referring doctor has gained your trust and you have no reason to question the referral or the qualifications of provider that you are being referred to.  What would you think if you found out that your doctor and the cardiologist had a business relationship where the cardiologist would split the fee that he or she would receive from you with your doctor?  How would you feel?  Would you question if you were being sent to the ideal provider for you?  You might even question your need for the referral itself?  Has it shaken your faith in your physician?

Call it a finder’s fee, kickback, commission or advisory fee, but in the medical and legal professions it is commonly referred to as Fee-Splitting.  By definition, Fee-Splitting is the practice of sharing fees with a professional colleague in return for referrals, and both the AMA and the ADA consider it to be unprofessional conduct.  It is illegal in most states, yet there are no statutes that regulate this practice within the Commonwealth of Virginia.  The Virginia State Board of Dentistry Guidance Document 60 -15 “Standards of Ethical Practice in Dentistry” clearly advises against it.  In a subsection dealing with Financial Transactions, this document states that the dental practitioner will not accept or tender ‘rebates’, or split fees with any other health professional.  Without a supporting law, however, the Board of Dentistry has no ability to reprimand or otherwise take action against parties involved in splitting fees.  It should be noted that there are Federal Anti-Kickback Statutes that broadly “prohibit the offer, solicitation, payment or receipt of anything of value, direct or indirect, overt or covert, in case or in kind, intended to induce a referral of a patient for items or services reimbursed by all federal programs… and programs covering Veterans benefits” (Social Security Act # 1128B).  Violators could be charged with a felony and face fines and or imprisonment. Fee splitting between provider and provider or provider and third party (social/internet couponing companies) is dangerous and uncharted territory. 

Legality aside, Fee-Splitting poses ethical concerns.  It is unprofessional conduct to directly or indirectly offer, give, solicit, or receive any fee or consideration from a third party for the referral of a patient in the performance of a professional service.  Doctors should not pay other doctors (or a third party) for a patient referral.  One could argue that this is simply a means of advertising, or it’s a business model and a marketing platform for merchant partners, but consider viewing it from the patient’s perspective.  A patient should be referred to the provider who is best suited to fit that patient’s need, not to the provider that pays for the patient referral.  Fee-Splitting represents a conflict of interest which may adversely affect both the patient’s care and well-being, since the patient is not necessarily being referred to the appropriate provider for care, but rather to one that has a compensatory or commission type of relationship with the referrer.


Virginia Dental Journal, Volume 89, Number 3 - July-September 2012