Avoiding The Traps Consumer-directed Marketing Poses Numerous Pitfalls For Physician Practices

By now, most physicians know that giving anything of more than nominal value to a patient or prospective patient with the intent of influencing the individual’s selection of a provider is improper.


Not always clear, however, is what constitutes ‘nominal value,’ or what otherwise would be a permissible courtesy or marketing arrangement. Physicians who are overly aggressive in their approaches to marketing and advertising may violate a myriad of federal and state laws and regulations, which carry heavy civil and criminal sanctions, as well as licensure discipline.

However, physicians do not have to completely abandon consumer-directed marketing and advertising. Here are some do’s and don’ts to consider.

DO give incentives to promote the delivery of preventive-care services. The law allows incentives given to individuals to promote the delivery of preventive-care services as defined in the current U.S. Preventive Services Task Force’s Guide to Clinical Preventive Services. Such preventive-care services include prenatal services or postnatal, well-baby visits, provided that the delivery of such services is not tied either directly or indirectly to the provision of other Medicare- or Medicaid-reimbursable services.

DO give only inexpensive gifts or services (never cash or instruments convertible to cash) as part of your marketing program. According to an Office of Inspector General (OIG) Special Advisory Bulletin published in August 2002, gifts and services (other than cash or instruments convertible to cash) with a retail value of no more than $10 individually, and no more than $50 in the aggregate annually per patient, may be provided by physicians to patients. So, exercise videos, pens, and T-shirts would be permissible, but not club memberships. Remember, any gifts must not have the purpose of securing the physician’s services to the patient, although incentives may be used to promote the delivery of preventive care services.

DO be very cautious about waiving co-insurance or deductible amounts, or forgiving bad debts. Such waivers can violate a number of laws. For example, under the federal civil monetary penalties law, such waivers can result in fines of up to $10,000 per violation if the physician knows or should know that the waiver is likely to influence a decision by a Medicare- or Medicaid-eligible person to order services from the physician.

Certain exceptions may apply. For instance, if the waiver is not offered as part of any advertisement or solicitation, the physician does not routinely waive co-insurance or deductible amounts, and the physician waives co-insurance and deductible amounts after determining in good faith that the individual is in financial need or cannot collect, that is acceptable — as is any practice permitted under the Anti-Kickback Statute safe harbors, such as permissible discount or waiver arrangements.

A blanket policy of waiving co-insurance or deductible amounts or the forgiveness of debts, without a good-faith attempt to collect the debts, also could result in violations of the Anti-Kickback Statute and False Claims Act.

DO make sure advertisements and marketing materials are clear and honest. Marketing materials must be clear and readily understandable, and must not create unjustified expectations. Make sure your marketing employees and consultants understand the importance of compliance with laws and regulations and that their activities are truthful, accurate, and non-deceptive.

DO review OIG guidance before structuring any marketing program. The OIG has issued a number of advisory opinions concerning marketing arrangements and the offering of items, goods, and services to beneficiaries of federal health care programs. When structuring any marketing arrangement, review these opinions. Although the opinion cannot be relied upon by a practice that did not request the opinion, it can provide useful guidance about OIG’s thinking on certain matters. OIG advisory opinions can be accessed at www.oig.hhs.gov.

DO NOT give gifts or services beyond nominal value in exchange for a recommendation or for using your services. In addition to possibly violating federal law, doing this could also violate state laws.

DO NOT give anything of value to potential patients with the intent of inducing them to choose your practice as a provider, or to existing patients with the intent of inducing them to continue selecting your practice as a provider.

DO NOT hire any employees or consultants who claim they have special or ‘inside’ access to OIG or OIG materials, or that they have a valuable relationship with the Centers for Medicare and Medicaid Services (CMS). Also, don’t hire employees or consultants who claim that their services or products are approved, certified, or recommended by Medicare, CMS, OIG, or any other government agency.

DO NOT allow your practice’s marketing employees and consultants to promise, explicitly or implicitly, that they can obtain unreasonable or inappropriate results for providers. Also, do not allow employees or consultants to discourage compliance efforts.

DO NOT compensate marketing employees and consultants based on the success or business attributable to the success of marketing efforts. Compensation should be fixed in advance and based on the amount of work and services to be performed.

DO NOT offer any contingent discount programs. These programs, which provide discounts for certain services only upon a commitment by the patient to buy another item or service at a specified price, violate federal and state law.

DO NOT include misleading or deceptive claims in advertisements. Generally, state laws and regulations prohibit the advertisement of a medical business that is intended to or has a tendency to deceive the public.

DO NOT include any statements in your advertising to the effect that your practice accepts Medicare or insurance as payment in full, that patients will have no out-of-pocket expenses, or that your practice provides discounts to Medicare beneficiaries. Also, never use the words, letters, symbols, or emblems of the Social Security Administration, the Department of Health and Human Services, the Health Care Financing Administration, CMS, Medicare, or Medicaid in a way that reasonably could be construed as implying government endorsement or approval of your advertising or your practice.

DO NOT make unsolicited phone calls to Medicare or Medicaid beneficiaries without making sure of some important facts. The beneficiaries must have given your practice permission to call, the contact must be about a service your practice provided to the beneficiary, and the practice must have provided services to the beneficiary in the preceding 15 months. You should consult with legal counsel before implementing such a program.


An excellent way to ensure that your marketing practices comply with state and federal laws is to have a marketing-compliance policy for your practice. To find out more about such a policy, or if you have any questions about whether your marketing efforts may run afoul of federal or state laws and regulations, don’t forget to call your health care attorney for legal counsel.

John W. Jones Jr. is an associate in the Commercial Department of Pepper Hamilton, LLP, in Philadelphia. He concentrates his practice in health care matters.