Moving the HME Industry Forward

General Healthcare

Holiday Gifts to Physicians and Staff

October 31, 2016

AMARILLO, TX – As the holidays approach, DME supplier may desire to provide gifts to physicians and their staff. In doing so, suppliers need to be aware of federal anti-fraud guidelines that address gift giving.

What Stark Says About Nonmonetary Gifts to Physicians
The federal Stark (physician self-referral) statute governs whether it is permissible for a DME supplier to provide Christmas gifts to physicians. Stark prohibits any physician (or the immediate family member of a physician) that has a financial relationship with an entity, whether through ownership, compensation, or investments, from referring to that entity for the furnishing of any “designated health services” that may be covered by a federal health care program. These designated health services include durable medical equipment and home health services.

While the definition of a prohibited “compensation arrangement” includes an arrangement involving any remuneration from the entity furnishing designated health services to the referring physician, nonmonetary gifts to physicians are legally acceptable under Stark’s nonmonetary compensation exception, so long as the following requirements are met:

i) the nonmonetary compensation does not exceed (in the aggregate) $392 per calendar year for each physician;
ii) 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 physicians;
iii) the compensation is not solicited by the physician or physician’s practice (including employees and staff members); and
iv) the compensation arrangement does not violate the anti-kickback statute or any federal or state law or regulations governing billing or claims submission.

Even if the supplier satisfies these requirements, note that this exception does not apply to non-physicians or physician’s staff. Also, as item (iv) above suggests, gifts that comply with the Stark exception may still implicate the anti-kickback statute, which does not have a corresponding nonmonetary compensation safe harbor. However, it is unlikely the government will bring an enforcement action under the anti-kickback statute if the arrangement satisfies the Stark nonmonetary compensation exception.

In the event the DME supplier inadvertently provides nonmonetary compensation to a physician that exceeds $392, the compensation is deemed to be within the limit if:

i) the value of the excess nonmonetary compensation is not more than 50 percent of the limit (i.e., $196);
ii) the physician returns to the supplier the excess nonmonetary compensation (or an amount equal to the value of the excess nonmonetary compensation) by the end of the calendar year in which the excess nonmonetary compensation was received or within 180 consecutive calendar days following the date the excess nonmonetary compensation was received by the physician, whichever is earlier; and
iii) the supplier has not taken excess nonmonetary compensation back from the physician within the last 3 years.

The DME supplier should maintain an accurate record to track the amount of nonmonetary compensation provided to physicians in each calendar year to ensure that such compensation does not exceed the limit. This practice will also enable the supplier to take any corrective action necessary to have physicians repay amounts over the $392 limit.

What the Anti-Kickback Statute Says About Nonmonetary Gifts
As mentioned above, providing gifts to referral sources implicates the federal anti-kickback statute in addition to Stark. And, unlike Stark, this even includes the provision of Christmas gifts to non-physicians, such as physician office staff. The federal anti-kickback statute makes it a felony (i) to knowingly and willfully offer, pay, solicit, or receive any remuneration in return for referring an individual for the furnishing, or for arranging for the furnishing, of any item or service reimbursable by a federal health care program, or (ii) to induce a person to refer an individual for the furnishing of item or service reimbursable by a federal health care program or to purchase, lease, or recommend the purchase or lease of any item reimbursable by a federal health care program.

There is not a statutory exception or a regulatory safe-harbor to the anti-kickback statute for nonmonetary or de minimis compensation. However, the risk of an enforcement action under the anti-kickback statute for Christmas gifts to physicians is low if the gift satisfies the Stark nonmonetary compensation exception. The risk related to providing gifts to physician office staff is low provided that (i) the gift is of a modest value and (ii) the gifts are limited to one gift per employee. The supplier can further temper the risk associated with gifts to physicians and their staff by providing gifts with a purpose related to the practice or patient care as opposed to gifts solely for personal use or benefit. The supplier should maintain an accurate record to track the amount of nonmonetary compensation provided to physicians and their staff and to consider the nature and purpose of the gifts being provided.

Jeff Baird will be presenting the following webinar:

Value-Added Services vs. Prohibited Beneficiary Inducement: When is the Line Crossed?
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C.
Tuesday, November 8, 2016
2:30-4:00 p.m. EASTERN TIME
It is perfectly acceptable for the DME supplier to provide services to its patients that the supplier’s competitors do not provide. This is good business. These are classified as “value-added services.” On the other hand, when a supplier offers “something of value” to induce a prospective customer (a Medicare beneficiary) to buy something from the supplier (as opposed to buying something from the supplier’s competitor), then this may result in a prohibited inducement in violation of the beneficiary inducement statute and the Medicare anti-kickback statute. The line between a value-added service and a prohibited inducement can be unclear. This program will discuss the difference between “value-added services” and “prohibited inducements” and how the supplier can be aggressive in providing great services without “crossing the line.”

Register for “Value-Added Services vs. Prohibited Beneficiary Inducement:  When is the Line Crossed?” on Tuesday, November 8, 2016, 2:30-4:00 pm ET, with Jeffrey S. Baird, Esq., of  Brown & Fortunato, PC.

Please contact Ika Sukh at if you experience any difficulties registering.

Member: $99.00    
Non-Member: $129.00

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or