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General information about a federal statute, not legal advice. Whether a particular arrangement is lawful depends on its facts; organisations should take advice from qualified health-care counsel.
Short answer
A referral fee for medical supplies is a payment made because someone sent a customer to a supplier or recommended or ordered its products. If any part of the payment for those supplies can come from Medicare, Medicaid or another Federal health care program, the federal Anti-Kickback Statute (42 U.S.C. 1320a-7b(b)) can apply to both the person who pays the fee and the person who receives it, unless the payment fits a statutory exception or a regulatory safe harbor. Calling a payment a “marketing fee” or “finder’s fee” does not change that test.
Definition and scope
The statute does not use the phrase “referral fee”. It covers any “remuneration (including any kickback, bribe, or rebate)”, paid “directly or indirectly, overtly or covertly, in cash or in kind”, in two situations. The first is payment for referring an individual to a person for furnishing or arranging any item or service payable in whole or in part by a Federal health care program. The second is payment for purchasing, leasing, ordering, or arranging for or recommending the purchase, lease or order of any good, facility, service or item payable by such a program. Medical supplies fall inside both limbs whenever a Federal program may pay for them.
The statute applies to “whoever” engages in the conduct, not only to physicians. Under subsection (h), a person “need not have actual knowledge of this section or specific intent to commit a violation of this section.” The offence requires that the person acted knowingly and willfully, and the current penalty text is a fine of not more than $100,000, imprisonment for not more than 10 years, or both. Older secondary pages that quote $25,000 and five years describe a superseded version of the text.
How the statute treats paying and receiving
Subsection (b)(1) covers whoever solicits or receives remuneration. Subsection (b)(2) mirrors it for whoever offers or pays remuneration to induce a referral, or a purchase, order or recommendation. A supplier that pays a fee and a marketer that accepts it are therefore each within the statute’s reach. For broader background, see the CASRAI guides on the Anti-Kickback Statute, penalties for medical suppliers and fee splitting in medicine.
Fee labels sorted against the statute
The table sorts common fee labels by the provision of the statute or regulation that governs them. It reports where the text puts each label; it does not say any particular arrangement qualifies.
| Fee label | Governing provision | What the text says |
|---|---|---|
| Referral or finder’s fee paid to a non-employee for sending a person to a supplier | 42 U.S.C. 1320a-7b(b)(1)(A) and (b)(2)(A) | Payment in return for referring an individual for an item or service payable by a Federal health care program. No exception is triggered by the label. |
| Commission or marketing fee for recommending or ordering supplies | 42 U.S.C. 1320a-7b(b)(1)(B) and (b)(2)(B) | Payment in return for purchasing, ordering, arranging for or recommending a good or item payable by a Federal health care program. |
| Pay to an employee in the provision of covered items | 42 U.S.C. 1320a-7b(b)(3)(B) | Excepted: an amount paid by an employer to an employee with a bona fide employment relationship, for employment in the provision of covered items or services. |
| Fee paid by a vendor to a group purchasing organization | 42 U.S.C. 1320a-7b(b)(3)(C); 42 CFR 1001.952(j) | Excepted when there is a written contract with each member that specifies the amount (a fixed amount or fixed percentage of purchases) and members receive disclosure of amounts received from each vendor. The regulation sets vendor fees at 3 percent or less, or an amount specified, with annual written disclosure. |
| Fee paid by a participant to a referral service | 42 CFR 1001.952(f) | Not remuneration only if all four standards below are met. |
| Discount or price reduction | 42 U.S.C. 1320a-7b(b)(3)(A) | Excepted when properly disclosed under the statute’s terms. |
The group purchasing arrangement is covered in detail in the GPO safe harbor guide. Contract drafting questions are in the guide to a referral agreement for medical supplies.
The referral-service safe harbor: four standards and five disclosures
OIG describes safe harbors as payment and business practices that, “although they potentially implicate the Federal anti-kickback statute, are not treated as offenses under the statute.” The referral-services safe harbor, 42 CFR 1001.952(f), says a payment between a participant and a referral service is not remuneration if all four standards are met:
- The service does not exclude any individual or entity that is qualified to be a participant.
- Payments by participants are assessed equally, collected equally, and “based only on the cost of operating the referral service, and not on the volume or value of any referrals to or business otherwise generated” payable by Medicare, Medicaid or other Federal health care programs.
- The service imposes no requirements on how the participant provides services to the referred person, apart from permitting a requirement that the participant charge the same rate as for non-referred persons, or a free or reduced charge.
- The service makes five disclosures to each person seeking a referral, kept as a written record signed by that person or the individual making the disclosure. They cover how the service selects the group of participants, whether the participant paid a fee to the service, how it selects a particular participant, the nature of the relationship between the service and participants, and the nature of any restrictions that would exclude an individual or entity from continuing as a participant.
Read against that text, a “lead fee” or “marketing fee” that rises with the number or value of referrals does not meet standard 2, because the standard requires fees based only on the cost of operating the service. This is a reading of the text, not a legal determination about any arrangement.
Where it matters for suppliers and buyers
For a supplier of items that Federal programs may reimburse, a fee paid to anyone outside a bona fide employment relationship for referrals or recommendations falls under the statute’s two limbs. For the person receiving such a fee, the same subsection applies on the receiving side. In an enforcement action announced by OIG on 21 October 2013, two owners of a Louisiana durable medical equipment company agreed to 20-year exclusion under 42 U.S.C. 1320a-7(b)(7) in connection with a False Claims Act resolution; OIG alleged the company paid marketing companies for referrals when Medicare beneficiaries ordered diabetic supplies. That description reflects OIG’s allegations, not an adjudicated finding.
Related CASRAI guides cover sales commissions on medical devices and beneficiary inducement. Programme-level compliance expectations are in the guide to OIG compliance program guidance. As of 2026-11-01, OIG’s safe harbor regulations page lists 2026 items including a request for information on the Federal Anti-Kickback Statute and the beneficiary inducements civil monetary penalty, so the regulatory text is under review and should be rechecked before relying on it.
Common misunderstandings
“Only doctors are covered”
The statute applies to “whoever” solicits, receives, offers or pays the remuneration, so suppliers, marketers and intermediaries are within its text.
“Missing a safe harbor is automatically a violation”
Safe harbors describe practices that are not treated as offenses under the statute. They are voluntary: an arrangement outside a safe harbor is not automatically unlawful, but it receives no protection from the safe harbor and is judged on its facts.
“A fair-market-value label settles it”
The statute’s exceptions have their own conditions, such as a bona fide employment relationship, a written contract with specified amounts, or fees based only on the cost of operating a referral service. A label alone is not one of those conditions.
“The law only matters if I know about it”
Subsection (h) removes any requirement of actual knowledge of the section or specific intent to violate it.
FAQ
Is a referral fee for medical supplies legal?
It depends on the facts. If a Federal health care program may pay for the supplies, a payment for referring a person or for recommending or ordering the supplies falls within 42 U.S.C. 1320a-7b(b) unless a statutory exception or regulatory safe harbor applies. The label on the payment does not decide the question.
Does the Anti-Kickback Statute apply to the person who pays the fee as well as the person who receives it?
Yes. Subsection (b)(1) covers whoever solicits or receives remuneration and subsection (b)(2) covers whoever offers or pays it.
Does a payment have to fit a safe harbor to be lawful?
No. OIG describes safe harbors as practices that are not treated as offenses under the statute. An arrangement outside a safe harbor is not automatically unlawful, but it gets no protection from the safe harbor.
What is the penalty under the statute?
The current statute text provides a fine of not more than 00,000, imprisonment for not more than 10 years, or both, for a knowing and willful violation.
Sources
- 42 U.S.C. 1320a-7b, Cornell Legal Information Institute, law.cornell.edu/uscode/text/42/1320a-7b, checked 2026-11-01.
- 42 CFR 1001.952, Exceptions, Cornell Legal Information Institute, law.cornell.edu/cfr/text/42/1001.952, checked 2026-11-01.
- HHS Office of Inspector General, Safe Harbor Regulations, oig.hhs.gov/compliance/safe-harbor-regulations, checked 2026-11-01.
- HHS Office of Inspector General, enforcement action of 21 October 2013 on a Louisiana DME company, oig.hhs.gov enforcement page, checked 2026-11-01.
