Fee-splitting laws were enacted many years ago in several states including NY to protect patients from unscrupulous physicians. Fee-splitting occurs when a physician splits part of the professional fee he earns with someone else. It was enacted to prevent harm from a small minority of physicians who were looking to strictly line their pockets. It was meant to keep doctors from referring services to another doctor who was getting paid for the referrals.
In the strictest sense of this law, it also pertains to doctors who take credit cards as a form of payment as the credit card companies are charging a percentage to the doctors.
Medicaid admits that charging a provider a percentage is very common but still illegal. Most medical professionals prefer to pay a percentage as it is easier for them to compare to other services. All are now required to find another method of payment or risk losing their medical license.