Doctor Advertising Regulation

Where lawyers are regulated under a structure of antiquated, often hyper-specific marketing rules, the marketing of doctors is limited by a set of rules both broader and more consequential. For while these rules don’t typically delve into the details (unlike lawyers’ rules, which often dictate font size on envelopes and mandate specific disclaimer language), they prohibit a wide range of medical referral practices, and can carry significant penalties — including criminal liability — for violations.

I’m not going to get too far into the weeds on these laws here, but suffice it to say that a clutch of overlapping federal and state regulations restrict the ability of doctors to pay for — or get paid for — patient referrals. At the federal level these regulations include:

  • The Stark Law – restricts physicians from referring patients to providers owned by the physician.
  • The Anti-Kickback Statute – restricting doctors from paying for referrals, expect in limited circumstances.
  • The Beneficiary Inducement Civil Monetary Penalty Law – similar coverage to the Anti-Kickback Statute

Why so much focus on referrals, rather than marketing to patients more generally? Because — similar to lawyer referral plans — doctor referral systems can mislead consumers and cause doctor financial interests to take precedence over the patients’ interests. Referral services can also drive overuse of medical services; a particular concern when the patient being referred is not paying the bill (it’s not for no reason that these rules largely apply to services covered by Medicare and Medicaid).

However, the consumer-protective purpose of these rules too often gets lost in the thicket of technical compliance. These rules were designed for a world of direct and personal referrals, but they are increasingly at odds with modern online marketing. Such marketing may have the trappings of a prohibited referral — payment on a per-patient basis; pricing scaled to the value of the underlying treatment — without carrying any of the consumer harm inherent in traditional paid referrals.

Take, for example, a doctor who offers consumers a Groupon deal for discounted LASIK eye surgery. Groupon markets the offer, collects payment from the consumer, and passes the payment on to the doctor. This payment will be less Groupon’s marketing fee, which is a percentage (often 50%) of the value of the service purchased. Thus, marketing via Groupon meets the technical definition of a “medical referral” in that its payment is both dependent on the medical service actually being sold AND it is scaled to the value of the treatment purchased.

Some states are moving to address; in 2017 California enacted its so-called “Groupon Law,” which exempts such coupon and discount offers from that state’s medical referral prohibition so long as various consumer-protective requirements are met. The exception also only applies to elective health treatments.