Written and maintained by CASRAI Editorial Board
Last updated
General information, not legal or medical advice. Rules differ by state and by situation; ask qualified counsel about a specific arrangement.
Short answer
Fee splitting in medicine is a payment made to or by a physician or health care institution solely for referring a patient. The American Medical Association (AMA) calls it unethical. It is related to, but not the same as, a federal kickback: the Anti-Kickback Statute covers remuneration tied to items and services paid for by a Federal health care program, while the AMA rule is an ethics opinion that applies whatever the payer.
Definition and scope
AMA Code of Medical Ethics Opinion 11.3.4, “Fee Splitting”, states that payment by or to a physician or health care institution solely for referral of a patient is fee splitting and is unethical. Under that opinion a physician may not accept:
- compensation of any kind for referring a patient, with one stated exception: distributions of a health care organization’s revenues as permitted by law;
- payment for prescribing a specific drug, product or service;
- payment for patient-care services from a facility the physician referred the patient to;
- payment for referring a patient to a research study.
For capitated primary care, the opinion also says a physician may not base referrals on whether the referrer negotiated a discount for specialty services.
“Fee splitting” is therefore a referral-payment concept first. A fee that pays for real work, such as a billing service or a supply purchase, is a different question, and the sections below show where the three bodies of rules treat that difference.
Fee splitting vs kickback vs permitted payment
People often use these words as if they were interchangeable. The sources distinguish them by who sets the rule and what triggers it.
| Layer | What the source says | Source |
|---|---|---|
| Medical ethics (AMA) | Payment by or to a physician or institution solely for referral is fee splitting and unethical. Applies to the physician’s conduct regardless of payer. | AMA Opinion 11.3.4 |
| Federal criminal law (Anti-Kickback Statute) | Knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward referring an individual, or purchasing, leasing, ordering or recommending items or services payable by a Federal health care program, is a felony. Penalty on conviction: a fine of not more than $100,000, imprisonment of not more than 10 years, or both. Actual knowledge of the section or specific intent to violate it is not required. | 42 U.S.C. 1320a-7b(b), (h) |
| State law | Many states have their own rules. Check state law and the state medical board for the state concerned. | Not summarised here |
The practical consequence: an arrangement can be a problem under one layer and not another. Federal program payment is the hook for the Anti-Kickback Statute; the AMA opinion is aimed at physician conduct generally. For the federal side, see the CASRAI explanations of Anti-Kickback Statute penalties for medical suppliers and kickback versus bribe in healthcare.
Fee splitting medical referral
A referral here means a physician sending a patient to another physician, facility, study or supplier. The AMA opinion treats a payment whose sole basis is that referral as the core case. It names four situations explicitly (listed above) and does not treat revenue distributions that the law permits as fee splitting.
Where it touches supply decisions
Supplies enter through two phrases in the sources. The AMA opinion lists “payment for prescribing a specific drug, product or service” among payments a physician may not accept. The Anti-Kickback Statute reaches remuneration to induce purchasing, leasing, ordering or recommending items payable by a Federal health care program. Read together, a payment that depends on who recommends or orders a product is the pattern both sources point at.
That is why arrangements such as supplier commissions, rebates and referral-linked affiliate payments deserve a closer look. CASRAI covers neighbouring topics in medical device sales commission, medical supply affiliate programs and beneficiary inducement for medical suppliers.
Fee splitting laws and medical supplies
The Anti-Kickback Statute and the AMA opinion do not set out a separate “fee splitting law” for supplies. The relevant federal provision is the Anti-Kickback Statute above, and the relevant ethics rule is the AMA opinion. State rules vary and are not summarised on this page.
Documents to ask for
The federal regulation 42 CFR 1001.952 lists safe harbors, which are payment arrangements the regulation protects when their conditions are met. Two of them give a concrete checklist of paperwork that distinguishes a service or purchasing arrangement from a payment for referrals.
| Arrangement | Conditions stated in the regulation |
|---|---|
| Personal services and management contracts, paragraph (d) | Agreement in writing and signed; term of not less than one year; compensation set in advance, consistent with fair market value, and not determined by the volume or value of Federal program referrals. |
| Group purchasing organizations, paragraph (j) | Written agreement; vendor fee of 3 percent or less of the purchase price, or the amount specified; annual written disclosure of vendor amounts to provider purchasers. |
These are the conditions the regulation states for those two paragraphs; the full text contains further requirements, so read the regulation itself before relying on a safe harbor. For the purchasing side, see group purchasing organization and GPO administrative fee.
A sorting checklist for staff reviewing an arrangement:
- Who pays whom, and for what: a referral, or a service or product actually delivered?
- Is there a written, signed agreement?
- Is compensation set in advance and tied to fair market value rather than to the volume or value of referrals?
- If a group purchasing organization is involved, is the vendor fee stated and disclosed to purchasers in writing each year?
- Does any Federal health care program pay for the items or services involved?
- Has counsel checked the state rules?
Common misunderstandings
- “Fee splitting and kickback are the same thing.” They overlap, but the AMA opinion is an ethics rule about referral payments, while the Anti-Kickback Statute is a federal criminal statute tied to Federal health care program items and services.
- “Not being aware of the statute is a defense.” Under subsection (h) a person need not have actual knowledge of the section or specific intent to violate it.
- “Any shared revenue is fee splitting.” The AMA opinion itself excepts distributions of a health care organization’s revenues as permitted by law.
- “A federal safe harbor settles state law.” This page covers federal regulation and AMA ethics; state rules are a separate check.
FAQ
What is fee splitting in medicine?
Payment by or to a physician or health care institution solely for referral of a patient. The AMA states it is unethical (Opinion 11.3.4).
Is fee splitting the same as a kickback?
No. A kickback under 42 U.S.C. 1320a-7b(b) is remuneration to induce referrals or purchases payable by a Federal health care program and is a federal felony. Fee splitting is the ethics term for payments solely for referral. One arrangement can raise both.
Can a physician be paid for referring a patient?
Under AMA Opinion 11.3.4, not compensation of any kind for the referral. The one stated exception is distribution of a health care organization’s revenues as permitted by law.
Do fee splitting laws apply to medical supplies?
The AMA opinion names payment for prescribing a specific product, and the Anti-Kickback Statute covers purchasing, ordering or recommending items payable by a Federal health care program. State rules vary and should be checked with counsel or the state medical board.
Sources
- American Medical Association, Code of Medical Ethics Opinion 11.3.4, Fee Splitting, checked 2026-11-01.
- 42 U.S.C. 1320a-7b, criminal penalties for acts involving Federal health care programs, checked 2026-11-01.
- 42 CFR 1001.952, exceptions (safe harbors), checked 2026-11-01.
