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The Referral Line: Patient Brokering, Kickbacks and the Cash-Pay Myth
A common assumption in membership medicine is that kickback rules only matter when Medicare pays. The statutes say otherwise. This brief maps the federal and state laws that can reach how a concierge practice pays for growth, so physicians know which questions to take to a healthcare attorney.
Start here: the questions this brief answers
Tap a question for the short answer, then jump to the evidence.
“We are cash-pay, so kickback laws do not apply” is not a safe assumption. The federal Anti-Kickback Statute covers referrals for anything a federal health care program may pay for, which can include labs, imaging and specialist care that a concierge physician orders for Medicare-age members, even when the membership fee itself is private. A second federal law, EKRA, reaches referrals to laboratories and certain treatment facilities for services covered by private plans as well as public ones. Several states, including Florida, Texas and California, have their own patient brokering or referral-fee laws that are not limited to government payers. A recurring theme across these laws is payment that rises with the number of patients referred. This brief is educational. It does not decide whether any arrangement is lawful. Only a qualified healthcare attorney who knows your facts and your state can do that.
“Every practice needs growth. But the moment you pay for a patient instead of earning one, you have stopped building a practice and started buying risk. Cash-pay changes who pays the bill. It does not change the law, and it does not change what your patients deserve: a referral made because it is right for them.”
If my practice is cash-only, do kickback laws still apply?
They can. The federal Anti-Kickback Statute reaches referrals for any item or service payable by a federal health care program, such as labs or imaging ordered for Medicare patients. EKRA and several state laws are not limited to government payers.
Go to the full answer ↓What is “patient brokering”?
Paying, or being paid, to steer patients. Florida’s statute, for example, makes it unlawful for any person to offer or pay a commission, bonus, rebate, kickback, bribe or split-fee arrangement to induce patient referrals.
Go to the full answer ↓Can I pay a marketer per new member?
This is the arrangement to review most carefully with counsel. Pay that varies with the number of patients referred is the common thread in federal and state kickback laws. Flat, documented fees for actual services raise different questions.
Go to the full answer ↓Can I reward patients who refer friends?
OIG says the federal kickback prohibition applies to all sources of referrals, even patients. Gifts to Medicare and Medicaid beneficiaries are also limited. Ask counsel before launching any referral reward.
Go to the full answer ↓Has a court addressed this recently?
Yes. In July 2025 the Ninth Circuit upheld the EKRA conviction of a laboratory companyupheld an EKRA conviction of a laboratory ownerrsquo;s president and held the law can reach payments to marketers who deal with those who make referrals. The Supreme Court declined to review it in March 2026.
Go to the full answer ↓What should I ask my attorney?
Part 5 lists the questions: who is paid, how the amount is set, whether it changes with patient volume, which states apply, and whether any Medicare or other plan dollars are involved downstream.
Go to the full answer ↓The cash-pay myth, and the three layers of law that answer it
This brief summarizes laws in general terms so physicians can have a better conversation with their own attorney. It does not decide whether any arrangement is lawful, and it does not create an attorney-client relationship. Kickback and patient brokering laws turn on specific facts, intent and state law, they carry criminal penalties, and they change. Before paying anyone in connection with patients, or accepting payment from anyone, get advice from a qualified healthcare attorney licensed in your state.
The assumption sounds reasonable: if no insurer or government program pays the practice, the rules written for those programs should not reach it. The statutes are written more broadly than that, in three layers.
Layer 1: the federal Anti-Kickback Statute
The federal Anti-Kickback Statute makes it a felony to knowingly and willfully offer, pay, solicit or receive “any remuneration (including any kickback, bribe, or rebate),” in cash or in kind, to induce or reward referrals for items or services that a federal health care program may pay for. Each violation carries up to 10 years in prison and a fine of up to $100,000. A person does not need to know the statute exists, or intend to violate it, to violate it, and claims that result from a violation are treated as false claims.1 Policy and Law
OIG’s guide for physicians adds three points that matter to membership practices: physicians are “an attractive target for kickback schemes” because they are a source of referrals; the prohibition “applies to all sources of referrals, even patients”; and the government does not need to show patient harm or program loss.2
The practice’s own fee structure does not decide whether this law applies. What decides it is whether the referral involves an item or service a federal program may pay for. A concierge physician whose membership fee is private may still order labs, imaging, specialist visits, equipment or drugs for Medicare-age members. CMT analysis: a payment tied to those referrals is the kind of arrangement the statute describes, whatever the practice’s own payer mix.
Layer 2: EKRA, which does not stop at government payers
In 2018 Congress passed the Eliminating Kickbacks in Recovery Act (EKRA). It covers payments for referrals to laboratories, recovery homes and clinical treatment facilities, with respect to services covered by a “health care benefit program,” with penalties of up to $200,000 and 10 years in prison for each occurrence.3 Federal law defines a health care benefit program as “any public or private plan or contract” under which a medical benefit, item or service is provided.4 Policy and Law
EKRA’s exception for employees and contractors is narrower than the federal Anti-Kickback Statute’s. The Anti-Kickback Statute protects amounts an employer pays a bona fide employee for employment in providing covered items or services.1 EKRA protects employee and contractor pay only if it is not determined by, and does not vary by, the number of individuals referred, the number of tests or procedures performed, or the amount billed.3
Layer 3: state patient brokering and referral-fee laws
States add their own rules, and several are not limited to government payers. Three examples:
| State law | What it prohibits (summary) | Who it reaches | Penalty (summary) |
|---|---|---|---|
| Florida Patient Brokering Act, s. 817.505 | Offering or paying, or soliciting or receiving, a commission, bonus, rebate, kickback, bribe or split-fee arrangement to induce or in return for patient referrals; also aiding or participating in that conduct | “Any person, including any health care provider or health care facility”; exceptions include payment practices not prohibited by the federal Anti-Kickback Statute and certain group practice and health plan payments | Third-degree felony and $50,000 fine; higher felony levels and fines of $100,000 (10 to 19 patients) or $500,000 (20 or more patients) |
| Texas Occupations Code, Chapter 102 | Knowingly offering to pay or agreeing to accept remuneration for securing or soliciting a patient or patronage for or from a state-licensed health professional | Any person; the chapter permits arrangements permitted under the federal Anti-Kickback Statute and lists entities it does not apply to | Class A misdemeanor; third-degree felony with a prior conviction or for government employees; the chapter also provides for disciplinary action and civil penalties |
| California Business and Professions Code s. 650 | Offering, delivering, receiving or accepting any rebate, refund, commission, discount or other consideration as compensation or inducement for referring patients | Persons licensed under the healing arts division of the code (and chiropractors); payment for services other than referrals is permitted if commensurate with the value of the services | Public offense: for a first conviction, imprisonment (up to one year in county jail, or under Penal Code s. 1170) and/or a fine of up to $50,000 |
Sources: Florida Statutes s. 817.505; Texas Occupations Code Chapter 102; California Business and Professions Code s. 650.5,
And the profession’s own standard
Separate from any statute, the AMA Code of Medical Ethics states that “payment by or to a physician or health care institution solely for referral of a patient is fee splitting and is unethical,” and that physicians may not accept payment of any kind, from any source, for referring a patient or for prescribing a specific drug, product or service.8 Policy and Law
Seven growth tactics to review with counsel
None of the arrangements below is automatically unlawful, and none is automatically safe. Each touches a rule described in Part 1. They are listed so a practice can recognize them and ask the right questions before signing anything.
1. Paying a marketer, recruiter or lead service per new member
Payment that rises with the number of patients delivered is the common thread in the federal and state laws above. Florida’s law reaches “any person” who pays to induce referrals, regardless of payer.5 Ask counsel how the fee is set, what services it pays for, and whether a flat, documented fee for actual services is the better structure.
2. Rewarding patients who refer friends
OIG states the federal kickback prohibition applies to all sources of referrals, “even patients.”2 Separately, OIG limits gifts to Medicare and Medicaid beneficiaries to items of nominal value, which OIG set at $15 per item and $75 per year in aggregate in December 2016, and never cash or cash equivalents.9 A free month of membership for a referral is a question for counsel, not a marketing decision.
3. Accepting fees from labs, imaging centers or diagnostics companies
Payments from a company whose services a physician orders are a classic kickback pattern. If the company is a laboratory, EKRA may apply even for privately insured patients.3 This matters for practices adding advanced testing (see Brief No. 31). The AMA treats payment for prescribing or referring as unethical.8
4. Referral swaps and split fees with other providers
Florida’s statute names “split-fee” arrangements, and California’s law applies irrespective of membership, ownership or co-ownership in the practice receiving referrals.5,
5. Waiving Medicare copays for members
For concierge practices that still bill Medicare, OIG warns that routinely waiving copays “could implicate the AKS” and that physicians may not advertise that they will forgive copayments.2 See Brief No. 33 for the Medicare rules on membership fees.
6. Paying staff a bonus per enrollment
The federal Anti-Kickback Statute protects pay to bona fide employees for employment in providing covered services, but EKRA’s employee exception does not cover pay that varies by the number of individuals referred or tests performed.1,
7. Working with companies that say they avoid Medicare
OIG lists a company that “claims to only furnish items and services to individuals who are not Federal health care program beneficiaries but may in fact bill Federal health care programs” as a suspect characteristic, and warns that carving out federal beneficiaries may not protect a practitioner from liability.11
Across the texts reviewed for this brief, the recurring question is whether payment is tied to patients: to the number referred, the services they use, or the amount billed for them.1,
What the first federal appeals decision on EKRA says
In United States v. Schena, the president of a California medical technology company that operated a laboratory was sentenced in October 2023 to 96 months in prison and ordered to pay $24 million in restitution to investors and insurers. According to the Justice Department, the case involved more than $69 million in false and fraudulent claims for allergy and COVID-19 testing, and alleged kickbacks to recruiters and doctors.12 Policy and Law
On July 11, 2025, the Ninth Circuit affirmed the EKRA and other convictions, while vacating part of the restitution order and sending it back to the trial court. The court held that EKRA can reach payments to marketing intermediaries who deal with the people who make referrals: “there is no requirement that the payments be made to a person who interfaces directly with patients.” It also held that a percentage-based pay structure for marketing agents, “without more,” does not violate the provision at issue, but that such payments violate EKRA when marketers are directed to mislead those making the referrals.13
A petition for Supreme Court review was filed on October 9, 2025, and the United States opposed it in February 2026.14 On March 23, 2026, the Supreme Court denied review, leaving the Ninth Circuit decision in place.15 One law firm analysis described the Ninth Circuit ruling as the first appellate decision interpreting EKRA.16
EKRA enacted as part of Public Law 115-271.3
OIG issues a Special Fraud Alert on arrangements with purported telemedicine companies, including companies that say they serve only non-federal patients.11
Sentencing in United States v. Schena: 96 months in prison and $24 million restitution (later vacated in part on appeal).12,
Ninth Circuit affirms the convictions, vacates part of the restitution order, and holds EKRA can reach marketing intermediaries.13
Petition for Supreme Court review filed; the United States opposes.14
Supreme Court denies review.15
Justice Department denies a laboratory industry petition asking it to allow variable pay for employed sales representatives under EKRA.10
CMT analysis: membership practices are increasingly adding advanced labs, diagnostics and partner services. Schena shows that the people paid to generate referrals, not only the people who make them, can be part of the analysis, and that how marketers describe a service to referring physicians can matter. It is a case about a laboratory, not a concierge practice, and its facts were extreme.
What practices often assume, and what the texts say
| Common assumption | What the cited text says | Source |
|---|---|---|
| “We don’t bill Medicare, so the Anti-Kickback Statute can’t apply.” | The statute covers referrals for any item or service payable in whole or part by a federal health care program, including items the practice orders but does not bill. | Anti-Kickback Statute1 |
| “Kickback laws are only about government money.” | EKRA applies to services covered by any public or private plan; Florida’s law applies to any person. | EKRA; 18 U.S.C. 24(b); Florida3, |
| “If I didn’t know it was illegal, I’m fine.” | Under the Anti-Kickback Statute, a person need not have actual knowledge of the statute or specific intent to violate it. | Anti-Kickback Statute1 |
| “Paying patients for referrals is just good marketing.” | OIG says the prohibition applies to all sources of referrals, even patients, and limits gifts to beneficiaries. | OIG2, |
| “If they’re my employee, any bonus is fine.” | The AKS employee protection is broad, but EKRA’s is limited to pay that does not vary by referrals, tests or billings. | AKS; EKRA1, |
| “A vendor told me they only serve non-Medicare patients.” | OIG lists that claim as a suspect characteristic. | OIG Special Fraud Alert11 |
| “Splitting fees with a partner is a business decision.” | The AMA calls payment solely for referral fee splitting and unethical; Florida names split-fee arrangements. | AMA; Florida8, |
Analysis and table: Concierge Medicine Today. This table compares common assumptions with the plain text of the cited sources. It is not a legal conclusion about any arrangement.
Questions to take to your healthcare attorney
Map every payment
List everyone the practice pays in connection with patients (marketers, agencies, recruiters, staff incentives, partners) and everyone who pays the practice (labs, vendors, sponsors). Note how each amount is set.
Ask how the amount moves
Does any payment rise or fall with the number of patients, members, tests, orders or dollars billed? Those are the arrangements to review first.
Follow the downstream dollars
Even if the membership is private, does any referral lead to a lab, imaging study, prescription or specialist visit that Medicare, Medicaid or a private plan may pay for?
Check every state you touch
Where are the practice, its patients and its partners located? State patient brokering laws differ in scope, exceptions and penalties.
Put it in writing
Ask counsel whether written agreements, flat fees set in advance, and documentation of the services actually provided are appropriate for your arrangements, and how often to review them.
These questions are prompts for a conversation with a qualified healthcare attorney. They are not a compliance program, a safe harbor analysis or a legal opinion, and answering them yourself does not make an arrangement lawful. Some arrangements that look similar receive different treatment because of small factual differences.
Know the three layers
Federal programs, EKRA, and your state. Cash-pay changes only part of the picture.
Pay for work, not patients
Ask counsel to help structure growth spending around services delivered, documented in advance.
Refer on merit
Patients trust that a referral is about their care. Protecting that trust is the point of every rule in this brief.
How this brief was built
CMT reviewed the current text of the federal Anti-Kickback Statute (42 U.S.C. 1320a-7b(b)), the Eliminating Kickbacks in Recovery Act (18 U.S.C. 220) and its cross-referenced definition (18 U.S.C. 24(b)); patient brokering or referral-fee statutes in three example states (Florida, Texas, California); HHS Office of Inspector General physician guidance and a 2022 Special Fraud Alert; AMA Code of Medical Ethics Opinion 11.3.4; and the Ninth Circuit opinion, Justice Department case summary and Supreme Court filing in United States v. Schena. Law firm summaries were used only for context and are labeled as such. Statutory text was read from official or widely used legal publishers in October 2026; state text was checked against versions noted as current through 2025.
The three states are examples, not a 50-state survey. Statutes are summarized, not quoted in full, and every summary leaves out exceptions and details that may matter to a specific practice. Penalty amounts are statutory maximums. The comparison table in Part 4 is a CMT analysis of what the cited texts say; it is not a legal conclusion. This brief contains no CMT survey data. Version 1.1 (October 2026) adds the Supreme Court’s March 23, 2026 denial of review in Schena and the Justice Department’s September 25, 2026 response declining to create a variable-pay exception under EKRA. It has not yet been reviewed by an outside healthcare attorney, and CMT recommends that review before any practice relies on it.
How to read the evidence types
Every key finding is labeled by evidence type. Labels describe the type of evidence, not its value. Each type answers different questions. Funding is disclosed on every source.
Randomized trials and systematic reviews.Best for cause and effect.
Large observational studies and government data.Best for trends at scale.
Surveys, smaller studies and expert consensus.Best for real-world experience.
Company-sponsored or company-reported data that is not peer-reviewed.Best for early signals and operating data.
Statutes, regulation and official guidance.Best for what is required.
What we don't know
- How every state treats patient brokering and referral fees. Many states have their own laws, with different payer scope, exceptions and penalties; this brief covers three examples.
- How far EKRA reaches in a physician office setting, for example a practice that runs its own in-office laboratory, and whether a purely self-paid service is “covered by a health care benefit program.” These are questions for counsel.
- Public enforcement specific to concierge membership practices. A limited CMT search did not identify a public kickback action against a concierge membership practice; that does not mean none exist.
- How regulators would view newer arrangements such as per-lead digital advertising or affiliate links. Facts and contract terms decide these.
How to cite this brief
External review: this brief has not yet been reviewed by an outside expert. When review is complete, the reviewer is credited by name above with any conflicts of interest, and the version number is updated. Reviewers check accuracy and fairness; CMT is responsible for the final content.
Corrections policy: when an error is identified, CMT corrects it in the open and updates the version number above. Send corrections to the editor through conciergemedicinetoday.net.
Related CMT Research Briefs
References
- 42 U.S.C. 1320a-7b(b). Criminal penalties for acts involving Federal health care programs: illegal remunerations (federal Anti-Kickback Statute), with subsections (f), (g) and (h). United States Code, 2023 edition, via GovInfo (U.S. Government Publishing Office). www.govinfo.govFunding: federal (United States Code, published by the U.S. Government Publishing Office)
- HHS Office of Inspector General. A Roadmap for New Physicians: Fraud and Abuse Laws (physician education resource). Undated web page. Accessed October 2026. oig.hhs.govFunding: federal (HHS Office of Inspector General publication)
- 18 U.S.C. 220. Illegal remunerations for referrals to recovery homes, clinical treatment facilities, and laboratories (Eliminating Kickbacks in Recovery Act of 2018, Pub. L. 115-271, Oct. 24, 2018). Legal Information Institute, Cornell Law School. www.law.cornell.eduFunding: federal statute (text via Cornell Legal Information Institute, a nonprofit)
- 18 U.S.C. 24(b). Definition of "health care benefit program." Legal Information Institute, Cornell Law School. www.law.cornell.eduFunding: federal statute (text via Cornell Legal Information Institute, a nonprofit)
- Florida Statutes s. 817.505. Patient brokering prohibited; exceptions; penalties (2024 Florida Statutes text). Via Florida.Public.Law, sourced from the Florida Legislature. florida.public.lawFunding: state statute (text via Public.Law, an independent legal publisher)
- Texas Occupations Code, Chapter 102, Subchapter A (Sections 102.001 to 102.011), soliciting patients. Texas Legislature. tcss.legis.texas.govFunding: state (Texas Legislature publication)
- California Business and Professions Code s. 650. Compensation for referral of patients. Via California.Public.Law, sourced from the California Legislature. california.public.lawFunding: state statute (text via Public.Law, an independent legal publisher)
- American Medical Association. Code of Medical Ethics Opinion 11.3.4: Fee splitting. Accessed October 2026. code-medical-ethics.ama-assn.orgFunding: not stated (American Medical Association ethics policy)
- McGuireWoods. OIG raises "nominal value" for gifts to Medicare and Medicaid beneficiaries (summary of the HHS OIG policy statement of December 7, 2016). December 16, 2016. www.mcguirewoods.comFunding: not stated (law firm analysis)
- U.S. Department of Justice, Office of the Attorney General. Department of Justice; Response to Correspondence Requesting Rulemaking. Federal Register 91 FR 60905, Doc. No. 2026-19642. September 25, 2026. www.federalregister.govFunding: federal (U.S. Department of Justice publication)
- HHS Office of Inspector General. Special Fraud Alert: OIG alerts practitioners to exercise caution when entering into arrangements with purported telemedicine companies. July 20, 2022. oig.hhs.govFunding: federal (HHS Office of Inspector General publication)
- U.S. Department of Justice, Criminal Division, Victim Notification. United States v. Mark Schena, No. 5:20-CR-00425 (N.D. Cal.): case summary and sentencing (October 18, 2023). www.justice.govFunding: federal (U.S. Department of Justice publication)
- United States v. Schena, No. 23-2989 (9th Cir. July 11, 2025). Opinion of the U.S. Court of Appeals for the Ninth Circuit. cdn.ca9.uscourts.govFunding: federal (court opinion)
- Brief for the United States in Opposition. Schena v. United States, No. 25-447 (U.S. Supreme Court), February 2026. Petition for a writ of certiorari filed October 9, 2025. www.supremecourt.govFunding: federal (U.S. Department of Justice court filing)
- Supreme Court of the United States. Order List (607 U.S.), Monday, March 23, 2026: certiorari denied, No. 25-447, Schena v. United States. www.supremecourt.govFunding: federal (court order)
- Memmott SA. Ninth Circuit ruling confirms strength of the Eliminating Kickbacks in Recovery Act. Health Law Scan, Morgan, Lewis and Bockius LLP. August 6, 2025. www.morganlewis.comFunding: not stated (law firm analysis)
Educational and informational only. This CMT Research Brief does not constitute medical, legal, tax, financial, accounting or other professional advice, and it does not create a professional relationship of any kind. Statements about laws, regulations, tax rules and payer policies are general, may not reflect the rules in your state, and can change after publication. Consult a qualified attorney, accountant, tax adviser, compliance professional or licensed clinician before acting on anything here.
Legal topics in this brief. Nothing in this brief is a determination that any arrangement complies with or violates any law, and nothing here is a safe harbor analysis. Statutes are summarized, not reproduced in full, and exceptions are omitted. Penalties described are statutory maximums. Discussion of court cases reflects public records available at the time of writing and does not describe any reader or practice. Readers should consult a qualified healthcare attorney licensed in their state before entering into, changing or ending any arrangement involving payment connected to patients or referrals.
Independence. Concierge Medicine Today is an independent publication. It does not accept payment for favorable coverage, and it does not favor one practice model over another. Company names and products are mentioned for context only and are not endorsements. Funding is disclosed for every source in the reference list.
Accuracy. CMT verifies figures against their original or best available sources at the time of publication. Where a figure is an estimate, an inference or a company-reported number, the brief says so. This content is not without possible error or omission.
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