Physician Contract Compliance: How To Mitigating Stark Law and Anti-Kickback Risks in Complex Physician Arrangements

Posted on October 1, 2025

Physician Contract Compliance: How To Mitigating Stark Law and Anti-Kickback Risks in Complex Physician Arrangements

Table of Contents

A $31.5M Wake-Up Call for Healthcare Compliance

In May 2025, a Tennessee-based health system and its affiliate physician network paid $31.5 million to settle False Claims Act allegations.

They were accused of providing perks, bonuses, and indirect payments to physicians in exchange for patient referrals. These are the exact types of physician arrangements targeted by Stark Law and the Anti-Kickback Statue (AKS).

But here’s the catch: Even well-meaning health systems can face serious financial and reputational consequences if they don’t tighten up how they manage physician contract compliance and payments.

Here’s how you can prevent gaps before they become headlines.

What the OIG and DOJ Expect

The Office of Inspector General (OIG) considers many common physician arrangements to be high-risk for compliance violations. These include:

Medical Directorships
On-Call Coverage Agreements
Consulting Contracts
Space or Equipment Leases
Joint Ventures

Why? Because they can disguise payments for referrals, triggering Stark Law and AKS concerns.

Knowing what a strong physician contract compliance program should look like can feel overwhelming.

Thankfully, the OIG’s Compliance Program Guidance for Hospitals and Physicians offers a clear framework – focusing on contract specificity, ongoing documentation, and active monitoring.

Even large multi-site healthcare systems view this guidance as a practical roadmap for reducing risk.

To further prepare for potential government scrutiny, the DOJs Evaluation of Corporate Compliance Programs provides the lens prosecutors will apply:

Is the program well-designed? (Are risks identified and contracts structured properly?)
Is it being applied earnestly and in good faith? (Does management allocate resources and oversight?)
Does it work in practice? (Is there evidence of detection, remediation, and a defensible audit trail?)

Key Takeaway
Healthcare organizations are responsible for ensuring all payments to physicians are at fair market value (FMV). This is achieved through three pillars:

Contracts list all expected terms;
Continuously verifying that the provider performed the services they claim; and
Continuously verify that every payment aligns with the contract

A Strong Contract is Your First Safeguard

The foundational document for safeguarding Stark and Anti-Kickback physician contract compliance is the contract between the healthcare system and the physician or their medical group. Any payments without a contract, or under an expired contract, are a blatant violation.

Scope	OIG has repeatedly flagged “sham arrangements” where physicians were paid for services never performed. A good contract outlines duties clearly; a great one ties each to organizational need and mandates real-time documentation.
Rate	Pre-set rates are foundational to ensuring FMV compensation. They prevent ad hoc or poorly considered adjustments once work begins.
Caps	While not inherent to FMV, caps (e.g., max hours per month or annual compensation) give reviewers a clear ceiling to monitor against and prevent gradual overpayment.
Duration	Duration terms define when a contract begins and ends. Stark requires most physician arrangements to be in writing for at least one year, providing protection against rolling or at-will agreements.
Documentation	The OIG has long emphasized maintaining evidence of services performed, and DOJ cases frequently cite missing or incomplete time logs.

Key Takeaway
Compliance teams do not need to know every aspect of contracting but understanding the core elements of high-risk physician arrangements and why they exist is essential to supporting a system that flags un-aligned payments.

De-Risking Relationships by Monitoring Invoices

Compliance gaps tend to grow over time, especially in long-term physician contracts. One of the most effective ways to reduce risk?

Tighten your invoice review process.

Every reviewer plays a critical role. With the right checks in place, each step becomes a safeguard against errors, overpayments, and potential fraud.

Reviewers and approvers serve two roles:

Ensuring invoices align with contract terms and documentation.
Confirming that the documentation itself is an accurate reflection of work performed.

Alignment reviews require cross-checking across contracts, invoices, and documentation. For example:

Nature of the work: Do the activities documented in a medical director’s time log match those in their contract’s schedule of activities?
Payment totals: Does the math (hours × rate) add up, and is it under the maximum allowed?
Documentation: Are supporting records consistent and complete?

Key Takeaway
It’s easy for reviewers to assume that invoices and documentation is accurate. Actually scouring through the details of every submission is necessary to prevent violations and ensure that in an investigation it will be demonstrated that every approval was done with rigor and in good faith.

Making Best Practices Feasible with Technology

Even the most advanced health systems run into real-world issues – missed amendments, double-billing, or plain human error.

These risks around physician contract compliance multiply in complex arrangements involving multi-role or sites. Understanding Stark and AKS principles is just the starting point. Top-performing organizations go further – they tackle these challenges by rethinking and streamlining their processes.
Tech That Makes Compliance Easier – and Smarter
Digital tools like contract management, documentation systems, and workflow automation do more than streamline processes. They also signal a proactive compliance posture.

For example:

A contract management system can send automated alerts when an agreement is near expiration, reducing the risk of duration violations
An invoice system can cross-check submissions against contract terms, flagging overages or missing documentation before a payment is approved

In large, complex health systems – especially those with lean teams – these tools reduce manual workload and catch issues before they become liabilities.

Knowledge Gaps Are a Hidden Risk

Many frontline staff aren’t fully trained on FMV rules or compliance expectations, and some don’t know them at all. Even physicians often lack visibility into the details of their own contracts, let alone the OIG’s guidance or DOJ enforcement history.

While leadership may promote a culture where employees can question or escalate unusual payments, real-world pressures like speed, workload, uncertainties can get in the way. That’s why organizations that are serious about compliance don’t just rely on good intent – they invest in technology like digital time tracking for physicians to reinforce the right actions, flags risks, and closes knowledge gaps.

Key Takeaway
A sustainable physician contract compliance program isn’t just about contracts and invoices. It’s also about implementing processes and technology in a way that makes day-to-day operations more defensible. That can start with small, manageable improvements.

What you can do today

With the right foundation and the right systems, you can stay ahead of regulators, and out of the headlines. In the meantime, here are some things you can do immediately:

Review your existing contracts against a Checklist for Physician Contract Compliance
Implement a Physician Timekeeping Policy and Procedure
Standardize documentation by giving physicians a thorough Time and Activity Log Sheet
Book a demo to see how platforms like TimeSmart.AI offer physician contract management and digital time tracking for physicians – automating cross-checks, flagging risks before payments are made, and generating the audit trail regulators expect

Not sure where your gaps are? Let’s talk. We’ll walk through a quick discovery to help you assess where you stand and how we can help.

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