Pay-for-performance marketing models tie an agency’s compensation directly to outcomes—such as per-patient, per-case or per-referral payments—and the arrangement is especially risky in healthcare. These models can conflict with federal laws such as the Stark Law and the Anti-Kickback Statute, as well as state fee-splitting rules, because they effectively pay for patient volume or referrals. In healthcare, safer fee models focus on fair-market-value fees for work performed, not bounties for individual patients.
How pay-for-performance models typically work
In a pure pay-for-performance model, the agency ties its compensation directly to specific outcomes. That might mean getting paid per new patient appointment, per case started, per procedure completed, or per referral generated. Sometimes this is framed as “100% commission” or “no fees unless we produce results.”
The appeal is obvious: it appears to perfectly align incentives and reduce the organization's perceived risk. The problem is that in healthcare, tying payment directly to patient volume or referrals often crosses lines that regulators—and many professional boards—care deeply about.
Why these models are risky under federal law
In the United States, federal laws such as the Stark Law and the Anti‑Kickback Statute generally prohibit paying for referrals of patients whose care is reimbursed by federal healthcare programs. In practical terms, you cannot legally pay a “bounty” or commission for Medicare or Medicaid patients being steered to a particular provider.
A marketing arrangement that pays an agency based on the number of federally funded patients it delivers can be interpreted as an improper financial relationship or kickback. Even if the intent is purely commercial, regulators focus on how the arrangement is structured and what it incentivizes. Violations can result in significant fines, repayment obligations, and reputational damage.
After more than 20 years in business, we have yet to see a legitimate agency legally get paid on a per‑patient or per‑case basis for delivering patients. Early in our own journey, we asked a healthcare attorney to explore these models—because frankly, we would have liked to offer them—and at every turn, we were advised that per‑patient or percentage‑of‑fees structures were not compliant. Since then, we’ve repeatedly urged newer agencies and uninformed clients to talk with their own lawyers about “100% commission” or bounty‑style deals, and many were unaware they were even flirting with fee‑splitting or kickback issues until we pointed it out.
The trap for cash-pay and private practices
Some organizations assume that if they are largely cash-pay or do not bill federal programs, they are safe. But many state medical and dental boards have their own rules prohibiting fee‑splitting or commission-based marketing. These rules are designed to prevent clinicians from sharing professional fees with non‑clinicians or giving third parties a financial stake in clinical decision‑making.
An arrangement where an agency is paid a percentage of revenue per case or per patient can be viewed as fee‑splitting, even if no federal payers are involved. That puts both the organization and the agency at risk with licensing boards and professional regulators.
What safer fee structures look like
Because of these risks, reputable healthcare marketing agencies avoid models that directly tie compensation to individual patients, cases, or referrals. Instead, they charge flat fees, retainers, or project-based pricing that reflects fair market value for the work performed—strategy, creative, media management, analytics, and optimization—rather than the volume of patients generated.
Performance and accountability still matter, but they are handled through clear goals, visible reporting, and ongoing optimization rather than per‑patient commissions. This allows organizations to pursue growth while remaining aligned according to legal and ethical requirements.
How to respond when an agency pitches “100% commission.”
If a marketing agency in healthcare pitches you on a “100% commission” or per‑patient bounty model, that should be a major red flag. In many cases, it signals that the agency does not fully understand healthcare regulations—or is willing to ignore them. Either scenario exposes your organization to risk that far outweighs any perceived savings or alignment benefits.
The safest path is to work with partners who can explain why they avoid pay‑for‑performance structures, how they ensure their fees reflect fair market value, and how they measure and optimize performance within compliant boundaries. In healthcare, a clearly defined, compliant fee model is not a luxury; it is a critical part of protecting your organization while you grow.
We are not providing legal advice here, and regulations vary widely. Before entering into any pay‑for‑performance or per‑patient arrangement, you should consult qualified healthcare counsel to confirm that the structure is compliant with your organization's regulations.
