Skip Navigation

Smile Michigan Pro

Legal Services

By Dan Schulte, J.D.
MDA Legal Counsel
From the September 2011 issue of the Journal

Question: I would like to add a referral incentive program to attract new patients. I have a few questions:

1.) Is it OK to give a small gift, such as a prepaid debit card, a Starbucks gift card, a movie theater gift card or some other gift to patients who refer a new patient to me?

2.) Would it be legal to give a raffle ticket to patients who refer a new patient to me? The raffle ticket would then be entered into a drawing for a large-screen TV or some other expensive gift.

3.) Can I give new patients who are referred to me a small gift, such as a gift card or movie tickets?

4.) If these are not OK, what can I do?

Answer: The ideas you describe in these questions might seem like an innovative ways to attract new patients. However, there are ethical rules, federal and state law, and possibly contractual limitations making the implementation of these ideas problematic.

First is the MDA’s ethical rule 4.E., which applies to MDA members. It states: “Dentists shall not accept or tender rebates or split fees.” Notice that the rule is not limited to dentists rebating or splitting fees with other dentists. Rebating or splitting a fee with anyone (including a patient or any other non-dentist referral source) violates the rule.

A rebate is defined as a return of an amount paid. It appears that giving any small gift to either a new patient or an existing patient who has referred a new patient could be considered to be a rebate.  Both the new patient and the existing patient would have paid you for services. The gift following that payment (as a reward for a referral or for becoming a new patient) could be considered a return of the amount previously paid for services.

The same is true for the raffle ticket given to the existing patient who made the referral. You could argue that only the patient who received the winning raffle ticket has actually received anything of value. However, even those patients with losing raffle tickets received a chance to win something of value in return for the referral. This, too, could be considered a rebate.

These are close calls and if a complaint was made the issues would be decided by the MDA Peer Review/Ethics system and the MDA member involved would have to follow its decision.

Second, there is state law (applicable to all Michigan dentists) on this subject. (I am going to assume that these incentives are not being used to attract Medicaid or Medicare patients. If they are, you should know there are federal laws that may make these incentives illegal.)

MCL 333.16221 states that it is an unethical business practice for any health care professional to “divide fees” for the referral of patients.

Like the rebate issue discussed above, giving a gift to either a new patient or an existing patient who has referred a new patient following his or her payment of your fees for services could be deemed a division of those fees (and a return of a portion of the fees to the patient). The same could be said for the TV given to the patient with the winning raffle ticket and possibly the losing raffle tickets as well.

There is no precedent or other clear answer to these questions. Upon a complaint the Board of Dentistry would ultimately make the call on whether any of these incentives violate MCL 333.166221.

Finally, you need to carefully check your agreements with insurers and dental plans. Often times these contracts will require you to charge the fee schedule amount to all patients and to charge and make reasonable attempts to collect co-payments and deductibles. Delta Dental’s Uniform Requirements of participation contain these provisions.

Will giving a new patient or an existing patient who has made a referral with such insurance or is enrolled in such a dental plan a small gift or a raffle ticket be deemed by the insurer or dental plan to be a back-door way of reducing the fee you are contractually required to charge? Is there a prohibition in any insurer or dental plan contract prohibiting the payment of referral fees? Insurers and dental plans often include these provisions as well, so that patients choosing dentists within the network do so based only on quality of care.

You must review and understand your contracts, and when in doubt seek clarification. Ultimately, if you wish to remain in the insurer’s or plan’s network you must abide by its interpretation.

As you can see, no unqualified answers can be given to your questions. What can you do?  The best practice is to compete for new patients based on the quality of the care you provide, the hours you are open, and other patient-convenience factors. Of course it is perfectly permissible to send a referring patient a “thank you” note for the referral. They may even appreciate such a personal note as much as a gift. And, offering discounts to new patients for the initial treatment they are seeking is not illegal or unethical. Use the opportunity to provide the initial treatment to show the new patients why they should not go anywhere else for their dental care.

But, you still need to check your insurer and dental plan contracts to make sure that offering the discount is not a breach of the agreement. As always, consulting with your attorney to review these contracts is a good idea.

Return to Legal Services  |

Copyright © 2014 Michigan Dental Association | Privacy Policy
Website design and development by Web Ascender