By Duane Tinker – The Toothcop
Dental Compliance Consultant | Former Law Enforcement Investigator | Expert on Fraud Prevention in Dentistry
“It’s Just a Referral Bonus”—Or Is It?
If you’ve ever received or offered a referral gift, marketing incentive, or “business development” fee, you may have unknowingly stepped into the world of federal fraud law.
I’m Duane Tinker—The Toothcop—and one of the most misunderstood laws among dental professionals is the federal Anti-Kickback Statute (AKS). You might think it doesn’t apply to you and you would be wrong.
In this post, we’ll break down:
- What the Anti-Kickback Statute is
- How it applies to dental practices
- Examples of risky behavior
- How to stay 100% compliant
What Is the Anti-Kickback Statute?
The Anti-Kickback Statute (42 U.S.C. §1320a-7b) is a federal criminal law that prohibits offering, paying, soliciting, or receiving anything of value in exchange for referring patients for services reimbursable by a federal healthcare program, such as:
- Medicaid
- Medicare (including Medicare Advantage)
- CHIP (Children’s Health Insurance Program)
This includes:
- Money
- Gifts
- Rent discounts
- Equipment
- “Marketing fees”
- Event tickets
- Trips
- Anything that could be seen as quid pro quo for referrals
Violations can lead to:
- Felony (criminal) charges
- Fines up to $100,000 per violation
- Exclusion from Medicaid/Medicare
- Up to 10 years in prison
- Loss of License
Does It Apply to Dental Practices?
Yes, if you:
- Bill Medicaid or CHIP for any service
- Bill Medicare (including Medicare Advantage plans) for any service (in or out of network
- Refer patients to or receive referrals from providers billing government programs
- Employ or refer to specialists or labs under “incentivized” agreements
Even if the patient is privately insured, if your arrangement involves federal program dollars, you’re under AKS scrutiny.
💡 Remember: Intent matters less than structure. If the setup looks like it rewards referrals, it’s a red flag.
Real-World Risk Scenarios
- A dental group gives a $100 gift card to pediatricians who send referrals.
Red flag. That’s a financial incentive for referrals.
- A dentist gives “rent discounts” to a provider who refers Medicaid patients.
That can be construed as a kickback.
- Hiring an RDH or dentist with an expectation they’ll bring patients with them.
Unless structured carefully, this can trigger compliance issues.
Safe Harbors: When Remuneration Is Allowed
The law includes “safe harbor” exceptions—structured relationships that are legal if they meet strict criteria.
Common safe harbors include:
- Personal services arrangements (with fair market value, written contracts, legitimate business need)
- Space and equipment rental agreements (must be in writing, FMV, and not based on referrals)
- Group practice internal referrals
- Employee relationships (under W-2 employment, not 1099 contractors)
But safe harbors are not automatic—you must meet every condition precisely.
How to Stay Compliant in Your Dental Practice
✅ 1. Avoid Pay-for-Referrals
Never pay, offer, or receive compensation tied to patient volume or referral behavior.
✅ 2. Disclose Financial Relationships
If you refer patients to an entity you or your family have a financial interest in, disclose it to patients and document it.
✅ 3. Structure Contracts Carefully
Use written agreements that:
- Reflect fair market value (FMV)
- Are not based on referrals
- Clearly define services rendered
✅ 4. Audit Your Arrangements
Do you “sponsor” events for referrers? Provide perks? Share marketing leads? Time for a legal review.
✅ 5. Train Your Team
Staff should know the basics of AKS—especially marketers, office managers, and referral coordinators.
💬 The Toothcop’s Take
Most dentists I talk to aren’t trying to cheat the system—but the Anti-Kickback Statute doesn’t care about intent.
It’s not what you meant to do—it’s how it looks on paper and how it’s structured legally. Think about the ‘optics’ of the situation (or, how does it look?)
One “thank you” gift, one cozy rent deal, or one informal verbal agreement can cost you your career.
Stay sharp,
Duane Tinker – The Toothcop