Medicare Compliance & Reimbursement

Tip: Update your practice holiday gift guidelines to avoid AKS and Stark snafus.

For many, the holidays are a happy time to spread joy and cheer, and gift giving is at the top of the list to make an associate feel special and appreciated. However, in the healthcare industry, giving and receiving gifts means following certain state and federal guidelines to ensure your practice steers clear of kickback territory, fines, and jail.

Background: Showering lavish gifts on referring physicians, other healthcare associates, business partners, labs, vendors, and/or patients can get you into hot water with the feds. Additionally, the last year’s enforcement results highlight that the HHS Office of Inspector General (OIG) has put gift giving at the top of its target list, levying substantial penalties for providers bunking federal laws. So, it is important to remember that depending on the value and circumstances of your gift — the feds can and do bring major fines for gift giving violations under the Anti-Kickback Statute (AKS) and the Stark Law.

Be Mindful of the Rules

Though the temptation to spread the cheer around can be overwhelming, it’s wise to check yourself and follow the rules. Under the AKS, even if you have the very best of intentions, gifts suggest a financial obligation, and that’s a no-no.

“Gifts from health care providers to referral sources, patients, vendors, and colleagues can create unintentional sticky situations,” cautions attorney Patricia Hofstra with Duane Morris in Chicago.

AKS: Remember that the AKS is a criminal law and violating the gift-giving rules outlined under the regulation is considered a crime. “It is a felony to offer, provide, request, or accept any payment if one purpose is to influence payments under a federal healthcare program,” stresses attorney David Glaser with Fredrikson & Byron, PA in Minneapolis. “Paying referral sources is a big problem.”

This is particularly important for Medicare and Medicaid providers, as AKS is tied up with the federal healthcare programs. Enforcement activity also shows that providers who frequently incentivize referrals with big holiday payouts may be privy to both civil and criminal indictments — and exclusion from state and federal healthcare programs down the line.

“Significantly, the AKS applies to both the giver and recipient; thus, soliciting or receiving gifts from vendors or other providers may expose the recipient to liability,” explains attorney Kim Stanger of Holland & Hart LLP in legal analysis of the statute.

“In some industries, it is acceptable to reward those who refer business to you,” OIG reminds in its AKS online guidance. “However, in the federal healthcare programs, paying for referrals is a crime.”

Stark: Ethically speaking, if you give extravagant presents to referring physicians or their family members over the holidays, that’s a violation of the physician self-referral law, or Stark for short. “Gifts create a financial relationship under Stark,” advises Stanger. “Accordingly, Stark would prohibit the physician from referring patients to the giver for certain designated health services payable by Medicare or Medicaid, and would prohibit the giver from billing for those services, unless a regulatory exception applies.” He adds, “Stark violations may result in civil penalties, repayments, and False Claims Act [FCA] liability.”

Use Good Judgement When Giving

Though you may need to put the kibosh on any luxurious gift baskets that you were planning to give your favorite providers or vendors, you can still offer a token of appreciation and holiday spirit. “Certain small gifts such as pens or coffee mugs are permissible, other larger gifts are not,” Hofstra counsels.

In fact, the feds allow some holiday cheer — however, they don’t really go into detail. “The OIG has suggested that ‘nominal’ gifts would not create much AKS risk,” Stanger notes. “But, [the agency] offers no guidance as to what is ‘nominal’.”

To be on the safe side, it’s wise to keep your gift giving in line with the federal requirements.

Beneficiaries: The government determines that Medicare providers may give gifts with a retail value equaling $15 per gift or $75 annually per beneficiary. Giving cash to these patients also triggers the Civil Monetary Penalties Law (CMPL) and suggests that these gifts may be looked at as a way to influence beneficiaries. “As with the AKS, the CMPL does not apply to private pay patients, although state kickback, rebate or fee splitting statutes may apply,” reminds Stanger.

Referring physicians: Regulation 42 CFR 411.357(k) outlines the non-monetary compensation limits under the Stark Law as well as certain medical staff incidental benefits, notes the CMS Consumer Price Index-Urban All Item (CPI-U) guidance. Medical staff incidental benefits refer to things as varied as meals, transportation, or other items that must be used on the hospital campus, according to national law firm Hall Render in online analysis.

Adjusted annually for inflation, the CY 2018 limits are $407 for non-monetary compensation and $34 for medical staff incidentals. Next year, there’s a slight bump of 2.3 percent. In 2019, $416 will be allowed for non-monetary compensation and less than $35 for each occurrence of medical staff incidentals.

See the CMS breakdown at www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/CPI-U_Updates.html.

Vendors: Don’t forget that the vendors you deal with fall under referral territory, too. “The AKS may also apply to gifts offered by vendors: it prohibits providers from soliciting or receiving such gifts as a reward or in exchange for referring federal program business to the vendors,” Stanger writes in analysis.

Watch the Rules on Accepting Gifts, Too

You should exercise similar caution when it comes to accepting gifts, whether they come from referral sources, colleagues, or patients, suggests attorney Ross Lanzafame with Harter Secrest & Emery in Rochester, New York.

Gifts from colleagues and patients can be particularly problematic, Lanzafame worries. That’s because “although the gift may appear innocent, the act of giving and accepting a gift can potentially create a conflict of interest for the recipient,” he points out.

Here’s the problem: “When someone gives a gift, the social construct within which we generally operate is that the gift will in some way be reciprocated. It is the polite thing to do,” Lanzafame explains. “This social construct can potentially tempt the recipient to make decisions not motivated by objective factors, but rather based on the subjective in order to reciprocate.”

While it won’t be a popular decision, “my rule of thumb, as difficult as it may be, is not to accept gifts,” Lanzafame says. “Consider advising patients and colleagues who desire to give gifts to make a donation to some public charity instead.”

Tip: If you don’t have a practice compliance policy that includes your gift-giving procedures, you should add that to your holiday to-do list. “Health care providers should consult with counsel and exercise caution when giving gifts during the holidays, or at any time, to avoid the appearance of impropriety and potential prosecution for legal and regulatory violations,” Hofstra counsels.

Note: Find a more in-depth look at the fraud and abuse laws that govern healthcare and gift giving at https://oig.hhs.gov/compliance/physician-education/01laws.asp.