Federal and Texas Referral Laws: A Physician’s Comparison

Marketing and referral strategies are part of running a private practice. In Texas, they come with legal risks that aren’t always obvious.

Many physicians rely on what’s allowed under federal law. But Texas has its own set of rules that go beyond the Anti-Kickback Statute. The Patient Solicitation Act (PSA) is one of them.

This isn’t just a technical detail buried in fine print. These laws affect how you advertise, refer patients, and communicate during practice transitions. Even something as routine as a departure letter can cause problems if the language crosses a line.

This article breaks down how Texas law differs from federal guidance, what counts as a violation, and what physicians need to keep in mind before making their next move.

The Texas Patient Solicitation Act (PSA): A Closer Look

Texas law doesn’t mirror federal law – it adds another layer. The Texas Patient Solicitation Act applies to anyone who offers or pays for patient referrals or attempts to influence a person’s choice of provider in exchange for some form of benefit. That includes compensation, discounts, rebates, or anything else of value.

The statute places heavy emphasis on intent. If the goal behind the payment or offer is to steer a patient toward a particular provider, that’s where problems begin. It doesn’t require proof that harm occurred or that the patient followed through – only that the offer was made with an improper purpose.

Under Texas law, “solicitation” is defined broadly. It’s not limited to cash exchanges or formal contracts. Informal referral setups, off-the-books discounts, or friendly favors can fall into this category if there's a benefit involved.

Penalties can be severe. The law classifies violations as criminal offenses and opens the door to licensing consequences.

Understanding the Federal Anti-Kickback Statute (AKS)

The Anti-Kickback Statute is a federal law that targets transactions tied to referrals for federal healthcare programs like Medicare and Medicaid. It applies to both sides of the arrangement – whoever offers the incentive and whoever receives it.

Unlike state law, the AKS only applies when federal funding is involved. But within that scope, it casts a wide net.

The statute prohibits:

• Offering or receiving money or anything of value in exchange for referrals

• Arrangements intended to influence where patients go or which services they use

• Even “friendly” referral setups, if the intent behind them involves financial gain

Penalties for violating the AKS can include:

• Felony charges

• Civil fines

• Exclusion from federal healthcare programs

There are structured exceptions, called safe harbors, that protect certain financial relationships – but only if every requirement is met. These include:

• Employment contracts with fixed salaries

• Personal services agreements with defined terms and set fees

• Investment opportunities under specific ownership and risk conditions

Even if a setup seems reasonable, falling short of the safe harbor requirements can result in legal exposure.

Side-by-Side Comparison: Federal vs. Texas

The Texas Patient Solicitation Act and the federal Anti-Kickback Statute deal with some of the same behaviors. That doesn’t mean they work the same way.

Each law comes with its own structure, enforcement, and risk profile. An arrangement that seems acceptable under one law might raise red flags under the other.

It doesn’t take much for a well-meaning decision to run into trouble. The risk often shows up in day-to-day decisions – referral setups, practice departures, or financial agreements that weren’t built with both systems in mind.

Common Referral Traps That Put Practices at Risk

Some compliance issues are easy to spot. Others look like normal parts of running a practice… until they trigger an investigation.

Here are four referral-related situations that tend to cause problems in Texas:

Practice Departures And New Openings

Physicians who move to a new office or open a private practice often send letters to patients. If that message encourages them to follow the provider – especially when there's a financial interest involved – it may be flagged as solicitation under Texas law.

The Texas Patient Solicitation Act applies to more than traditional advertising. Even a direct message to a current patient can raise concerns if it appears to influence their choice of provider for financial gain. The wording, tone, and timing of these letters all matter.

Marketing Tied To Patient Volume

Campaigns that use paid referrals, lead fees, or volume-based incentives can create legal exposure. That includes deals with third-party marketers or consultants who charge per patient booked.

Under the Texas anti-kickback statute, payments tied to the volume or value of referrals can be treated as unlawful remuneration. Even when the arrangement is labeled as marketing support, it may still be seen as a way to generate business through financial inducement.

Referral Relationships Between Unaffiliated Providers

Informal arrangements that include perks – shared rent, exclusive referrals, or bundled services – can raise concerns. When value changes hands, even loosely, the law may apply.

These setups often fall under the scope of physician referral laws in Texas, especially when they involve private practices working across different specialties. The risk increases when no formal agreement exists or when the exchange is difficult to document.

Compensation Models For Contractors Or Employees

Bonuses or pay structures based on productivity can become problematic if they’re tied to patient flow. Texas regulators may view these as financial incentives to generate referrals.

The Texas Illegal Remuneration Statute may apply if compensation appears to reward referral behavior, rather than clinical work. Practices that use tiered bonus systems or volume-driven incentives should review how those plans align with state law.

How to Stay Compliant With Texas Referral Law

The Texas Illegal Remuneration Statute applies to a wide range of financial arrangements. Perks, services, discounts, and other non-cash benefits can still raise red flags when they’re tied to patient direction.

• Intent matters. Regulators focus on why something of value was offered. If the purpose is to influence a patient’s decision, it doesn’t take much for that arrangement to be scrutinized. The language used in emails, agreements, and conversations can all come under review – especially if there's evidence of expectation around patient flow or referral volume.

• Practice transitions are a risk zone. Referral patterns shift, new agreements are signed, and communication increases. These moments often trigger problems, especially when compensation changes haven’t been reviewed with compliance in mind. 

Something as simple as a bonus agreement or a verbal understanding with a new employer can introduce liability.

• Documentation should reflect purpose. If a financial arrangement looks like it rewards referrals, even indirectly, it may need to be restructured or clarified before it becomes a liability. This applies to employment contracts, marketing service agreements, and third-party referral relationships. 

Showing that the structure is based on fair market value, and not patient volume, can help avoid misinterpretation.

4 Operational Steps to Safeguard Your Practice

Compliance with the Texas Patient Solicitation Act doesn’t happen in the background. It depends on deliberate choices – how you train your team, how you structure agreements, and how you communicate with patients and partners. Every part of your operation can support compliance – or expose you to risk.

1. Train your staff on state and federal rules

Front office staff, billing teams, marketers, and even contractors should know what the Texas Anti-Kickback Statute and Texas Patient Solicitation Act prohibit. Training doesn’t need to be complex, but it should be specific to how your practice handles referrals, outreach, and partnerships.

2. Review all financial and marketing agreements

This includes anything that involves third-party marketers, consultants, vendors, or professional referrals. Look for language that ties compensation to patient volume or financial performance. If it's in writing, it’s on record – and the Texas Illegal Remuneration Statute may apply.

3. Check your patient communications

Letters, emails, or marketing campaigns that promote a provider or location should be reviewed with compliance in mind. Language that implies pressure, preference, or direct solicitation could be interpreted as a violation.

4. Get help before making structural changes

Before adding a new provider, signing a shared space agreement, or adjusting pay models, talk with a legal or compliance partner. Practices that grow quickly without reviewing these elements often end up exposed under Texas patient referral law.

The Strategic Advantage of Local Compliance Insight

Federal law gets a lot of attention, but it’s state enforcement that often catches practices off guard. The Texas Patient Solicitation Act brings its own rules – and its own risks.

When you're making decisions about referrals, marketing, or compensation, having someone who understands how Texas approaches those issues makes a difference. It’s not about overcomplicating things. It’s about catching the little details that lead to big problems.

A local compliance mindset helps you:

• Spot state-level red flags before they turn into legal issues: What passes a federal sniff test might still raise questions in Texas. A second look from someone familiar with local enforcement patterns can save time and frustration.

• Write agreements that hold up under scrutiny: Vague terms, casual bonus structures, or loose language in service contracts tend to get picked apart. The wording matters more than you think.

• Plan growth with fewer surprises: When you’re adding providers, changing ownership, or rolling out new marketing, compliance shouldn’t be an afterthought. It's easier to build smart from the start than to backtrack later.

• Protect what you’ve already built: A practice that’s already stable doesn’t need disruption. Local insight helps keep you moving forward without unnecessary risk.
  
  

Being a Smart Operator in Texas

The Texas Patient Solicitation Act isn’t something to treat as background noise. It shapes how practices handle referrals, marketing, and transitions – often in ways that aren’t obvious until something goes wrong.

Clear, proactive planning helps protect what you’ve built. When compliance is part of how you operate – not something you patch in later – you spend less time reacting and more time focusing on patient care.

Free Checklist: Start Your Practice the Right Way

If you're building a private practice in Texas – or planning a move – this free checklist covers the steps that matter. Avoid common compliance issues from the start and move forward with confidence.