A client recently raised a question about whether it can provide cookies to other physicians that it works with. The goal was to show appreciation and provide a nice little treat. However, given that the question arose in the context of healthcare, my first gut reaction was to question the appropriateness of the proposal.
Why was this proposal concerning at first blush? In healthcare, the regulatory environment creates many obstacles to financial relationships between parties where patient referrals also occur. The best way to describe the regulatory scheme is to say that normal business practice is turned completely around. There are not really de minimis exceptions when dealing with the regulations either. Accordingly, even the provision of cookies, a nominal gift, could give rise to a concern.
However, there is an exception to the Stark Law that allows for low levels of nonmonetary compensation, i.e. cookies, to be provided. The nonmonetary compensation is limited to compensation up to an aggregate of $300 per calendar year, which amount is indexed to inflation. That means in 2014, the limit is actually $385. Compliance with the exception means meeting the following elements:
- The compensation is not determined in any manner that takes into account the volume or value of referrals or other business generated by the referring physician;
- The compensation may not be solicited by the physician or the physician’s practice (including employees and staff members); and
- The compensation arrangement does not violate the anti-kickback statute (section 1128B(b) of the Act) or any Federal or State law or regulation governing billing or claims submission.
In the event too much compensation is provided in a year, there is a savings clause, if the excess is not more than 50% of the limit. If too much is given, the receiving physician must return the excess compensation.
As with any healthcare arrangement, entities must use extreme care when entering into any arrangement. Good advice should be sought because any non-compliance can result in severe, negative consequences.