The $150 LASIK Referral, the Percentage Lease, and the "Free" Exam That Wasn't
Dr. Kim practices in a suburban Connecticut town with a steady primary care referral base. A regional LASIK center proposes a written arrangement: the center will pay Dr. Kim $150 for every patient she refers who ultimately undergoes surgery there, and will list her on its website as a "preferred affiliate." Separately, a locally owned optical boutique that Dr. Kim does not own proposes to pay her 10 percent of every eyewear sale made to patients she refers, with no written agreement and payment in cash monthly. Dr. Kim also runs a radio advertisement that says, "Free comprehensive eye exam, no strings attached." In practice, the front desk tells callers that the examination is free only if they purchase frames costing more than $200, and that contact lens evaluations are excluded. The advertisement also describes the practice as offering "board-certified specialty care," although no one in the office holds a specialty certification beyond licensure.
1. Analyze the LASIK center's $150 per-surgery payment and the "preferred affiliate" listing.
Read the worked answer
The per-surgery payment is compensation for the referral itself rather than for services Dr. Kim renders, which is fee splitting and a kickback. It creates an incentive to refer for financial reasons, it is not tied to any work she performs, and if any federal or commercial payer is involved, it raises additional anti-kickback exposure. Licensure discipline is a realistic consequence, and the written arrangement makes the problem easy to prove.
What is permissible is different: co-management in which Dr. Kim is paid fair market value for specific post-operative services she actually provides, with the patient informed of the arrangement and the fees, and with the patient free to choose her post-operative provider. A flat, fair-market-value fee for genuine services, documented and disclosed, is defensible; a bounty per case is not.
The "preferred affiliate" listing is not inherently improper, but only if it accurately describes the relationship and does not imply endorsement or a financial relationship that has not been disclosed. If the listing is bought with referrals, it should be disclosed as such.
2. Evaluate the 10 percent-of-sales arrangement with the optical boutique.
Read the worked answer
This is the clearest violation of the three. Dr. Kim receives money calculated as a share of revenue from patients she referred who bought eyewear elsewhere. That is textbook fee splitting: payment contingent on the referral and on the volume of business generated, with no professional service rendered in exchange.
It is worse for having no written agreement and being paid in cash monthly, which makes it look like a private arrangement and is difficult to defend as an accounting oversight. Even a flat "marketing" or "consulting" fee from the boutique would be scrutinized if it tracks referral volume.
Permissible structures exist: a genuine lease of space at fair market value, with a written agreement and rent that does not vary with patient volume; or an arm's-length employment or independent contractor relationship with the boutique. Dr. Kim should unwind the current arrangement, stop accepting the payments, and consider whether any prior payments must be disclosed if questions arise.
3. What must change about the radio advertisement and the front-desk script?
Read the worked answer
The advertisement is deceptive as implemented. A free examination offered with a hidden purchase condition is a material omission, and the condition is being communicated only by staff to callers who ask, which is the opposite of clear and conspicuous disclosure.
Advertising itself is permitted; false, misleading, or deceptive advertising is not, and it is a standard ground for disciplinary action. The fix is either to remove the purchase condition and genuinely offer the free examination, or to state the condition in the advertisement in language a listener can actually hear and understand, including that a minimum purchase is required and that contact lens evaluations are excluded.
The front desk must be given a written script that matches the advertisement exactly, and the office should keep a copy of the ad, the script, and the dates each ran. The "board-certified specialty care" claim should be deleted unless someone in the practice actually holds the certification being implied; implying a credential that no one has is a separate misrepresentation.