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Referral Gifts and Groupon Discounts

Referral Gifts and Groupon Discounts


The legal division of the American Dental Association recently sent a memo to all State Dental Association Executive Directors to provide some guidance on the topics of:  1) gifts, incentives or discounts given in exchange for referrals; and, 2) Groupon discounts.  The crux of the memo is that dentists may unknowingly be violating State or Federal laws, insurance contracts, or the ADA Code of Ethics when they give gifts or certain types of discounts.


Dentists receiving payments through a Federal health care program, like Medicaid, should be aware of the Federal anti-kickback statute which prohibits any person form “knowingly and willfully offering and paying an remuneration to any person to induce such person to refer an individual to a person for the furnishing, or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program.”


The memo states that, “A dentist utilizing Groupon to offer discounts to new patients will split a portion of the revenue generated from the Groupon promotion with Groupon.”  Many states, including South Dakota, have laws that prohibit “fee-splitting” between a dentist and a third party.  South Dakota laws state “….it is a Class 2 misdemeanor for any dentist to divide fees with, or promise to pay part of his fee to, or to pay a commission to any dentist or other person, who calls him in consultation or who sends patients to him for treatment or operation.”


Insurance contracts may require that fees submitted to the insurer reflect any rebates or reductions in the fees charged to the patient.  A rebate given to a patient after the service has been billed to the insurer could be construed as effectively reducing the fee for the service and place the dentist in violation of the insurance contract.


It may be argued that Groupon is not referring patients, but is simply advertising or promoting a dentist’s services.  The overall topic of referrals, gifts and discounts has been brought to the attention of the South Dakota Board of Dentistry with the expectation that the Board will provide some guidance on the topic.  In the meantime the ADA suggests that members take a prudent approach to using gifts for referrals, Groupon promotions and discounts.



(Published by the South Dakota Dental Association, Volume 46, No. 4.)