Fee-Splitting Arrangements Not Ethical

Q. I rent space to a nonmedical therapist. In exchange for office space, secretarial services, and other administrative support, the therapist pays me a percentage of the fees he collects from patients and third-party payers. We are entirely independent providers and have been very happy with this arrangement for several years. I know of many other psychiatrists who have the same arrangement, but recently a colleague told me that it might be illegal. I think he is mistaken.

A. Such business arrangements are very common; however, there are ethical and legal issues that must be considered. The fact that such an arrangement is common practice is recognized by the APA Ethics Committee. However, Section 2-MM of Opinions of the Ethics Committee on the Principles of Medical Ethics, With Annotations Especially Applicable to Psychiatry, states that the arrangement described above, where the psychiatrist accepts a percentage of another independent provider’s fees, “is not ethical and constitutes fee splitting. The costs of these services should be established at market value and paid per your agreement or contract.”

Moreover, Section 2, Annotation 7, to the Principles of Medical Ethics states “an arrangement in which a psychiatrist provides supervision or administration to other physicians or nonmedical persons for a percentage of their fees or gross income is not acceptable; this would constitute fee splitting.”

Note that this would be true regardless of whether the other provider is a nonmedical professional or another psychiatrist. To avoid the appearance of fee splitting, psychiatrists should negotiate a mutually agreed upon, specific, set, reasonable fee for the use of space, secretarial coverage, and other expenses.

In addition to the potential ethical problems of fee splitting, it may also be illegal. Accordingly, psychiatrists are encouraged to check with their legal counsel to determine how state and federal regulators view any such arrangement.

Please keep in mind that this discussion is limited to the facts presented, involving two independent practitioners without an employment relationship.

Q. I noticed that the Psychiatrists’ Program offers a risk-management discount. How do I earn this discount?

A. There are three ways to qualify for the premium reduction, though the specific education requirements and premium reductions permitted are governed by state statutes and regulations and vary from state to state: (1) successful completion of at least a four-hour Program-sponsored or jointly sponsored risk-management seminar, (2) successful completion of at least a four-hour non-Program-sponsored risk-management seminar pending approval by the Program, and (3) successful completion of the Program's Self-Evaluation Tool (SET), a self-administered, open-book risk-management educational and evaluation tool.

Q. In a recent column, it was mentioned that even with the change to the new insurance carrier, the risk-management services will remain the same for participants in the Psychiatrists’ Program, the APA-endorsed Psychiatrists’ Professional Liability Insurance Program (the Program). What services are available, and how do I access these services?

A. You are correct. All of the many risk management services available to participants of the Program remain the same under the new carrier. The Program considers risk management and timely access to risk-management information as important elements of every psychiatric practice. In support of this belief, the Program offers a variety of ways to meet the specific risk-management needs of psychiatrists including these:

• The Risk-Management Consultation Service: This toll-free service is an important value-added benefit of Program participation. It provides access to risk managers with clinical and legal backgrounds who can provide advice tailored to your needs. Program participants can contact the service at (800) 527-9181 Monday through Friday from 8:30 a.m. to 5:30 p.m. Eastern time. The service is also available in the Program’s participants-only section at the Web site www.apa-plip.com.

• Rx for Risk: This quarterly newsletter features timely and informative articles on risk-management topics such as the use of non-FDA-approved drugs, informed consent, and underwriting and claims-management information. It is available through regular mail, e-mail, and on the Web for Program participants. Back issues of the newsletters are posted in the “Participants Only” section of the Program’s Web site.

• The Online Education Center: This Web-based service, also based on the Program’s Web site, offers tutorials on a variety of risk-management and insurance topics. The format allows you to learn about important issues quickly by viewing educational materials at your convenience.

• Self-Evaluation Tool: This is a free risk-management assessment tool designed to accompany the Program’s risk-management manual. Each section presents a scenario followed by a series of questions designed to evaluate risk-management knowledge. Participants who receive a satisfactory score, based on the Program’s criteria, are eligible for a premium discount. (Unfortunately, under New York law, the discount for completing the course is not available to New York residents.)

• Risk-Management Seminars: The Program offers several national CME-accredited seminars each year. These seminars are designed to reinforce basic risk-management skills and techniques. Current professional liability trends in psychiatry are also addressed. Additionally, Program participants receive a reduction on their malpractice insurance premium. (These risk-management seminars are free for current Program participants. Special rates are available for members-in-training and early career psychiatrists.) For more information, call (800) 245-3333, ext. 347, or e-mail [email protected].

• Risk-Management Articles and Practical Pointers: The Program has a comprehensive library of articles and information regarding risk management in psychiatry. To access the information available, visit the “Participants’ Only” section of the Program’s Web site www.apa-plip.com.

There are also many other useful features and sources of information on the Program’s Web site, such as “HIPAA Help” and links to other mental health, practice management, and insurance resources. ▪