WEBSITE TEMPLATE To Give or Not to Give A Comprehensive

To Give or Not to Give: A Comprehensive To Give or Not to Give: A Comprehensive Analysis of Stark’s NonAnalysis of Stark’s Non Monetary Monetary Analysis of Stark s NonAnalysis of Stark s Non--Monetary Monetary

Compensation ExceptionCompensation Exception

Robert A. WadePartner

Krieg DeVault LLP4101 Edison Lakes Parkway Suite 1004101 Edison Lakes Parkway, Suite 100

Mishawaka, IN 46545Telephone: 574-485-2002

Email: [email protected]

11KD_4911079

Stark ActStark Act42 42 U S CU S C 1395nn1395nn42 42 U.S.C.U.S.C. 1395nn1395nn

The Stark II Act prohibits a physician from making a Referrala Referral to an Entity for the furnishing of a Designated Health g g

Service for which payment may be made under Medicare

or Medicaid if the physician (or an immediate family member)

h Fi i l R l ti hi ith th tit has a Financial Relationship with the entity

22

Stark II ActStark II ActSta ctSta ct

Proof of I t t i N tIntent is Not

Required

33

PenaltyPenaltyPenaltyPenalty

Denial ofpayment or refund;payment or refund;

civil money penalties (up to $100,000) and $ , )

exclusions from federal and state

programs for i l iimproper claims or

schemes

44

ExamplesExamplesa p esa p es

Simple Example:Simple Example:

Dr. X Practice

Lab Ownedby Dr. X

ReferralReferral

55

ExamplesExamplesa p esa p es

Simple Example:Simple Example:

Dr. X Practice

Lab Ownedby Dr X

ReferralReferral

Practice by Dr. X

How Stark II has been applied:How Stark II has been applied:

Hospital VDr. X P ti

Medical Suite Medical Suite

Medical DirectorshipMedical DirectorshipPaymentsPayments

pPractice Rent PaymentsRent PaymentsReferralReferral

In both examples the referrals violate Stark unlessIn both examples the referrals violate Stark unless

66

In both examples, the referrals violate Stark unlessIn both examples, the referrals violate Stark unlessan exception appliesan exception applies

What is a Referral?What is a Referral?What is a Referral?What is a Referral?

AA referralreferral Request for an item or aA A referralreferralincludes:includes:

Request for an item or aservice by a physician

Request by physician for consultation with another physician, and any tests or procedures the other physicianor procedures the other physician orders, performs or supervises

Request for or of plan of care that includespro ision of designated health

77

provision of designated healthservices

What is a Referral?What is a Referral?

A A referralreferral is not a DHS personally performed by a is not a DHS personally performed by a p y p yp y p y

physicianphysician

A referral does not include a request by:A referral does not include a request by:

Pathologists for clinical diagnostic laboratory tests and

pathological examination servicespathological examination services

Radiologists for diagnostic radiology services

Radiation Oncologists for Radiation TherapyRadiation Oncologists for Radiation Therapy

If the request for such additional services results from a

consultation initiated by another physicianconsultation initiated by another physician88

Designated Health ServicesDesignated Health Services

Designated Health Services include:Cli i l l b t i

gg

Clinical laboratory services; Physical therapy and occupational therapy services; Radiology or other diagnostic services (including MRI, CAT

scans);scans); Radiation therapy services; Durable medical equipment; Parental and enteral nutrients, equipment and supplies;, q p pp ; Prosthetics, orthotics and prosthetic devices; Home health services; Outpatient prescription drugs; and Inpatient and outpatient hospital services (encompassing almost

every type of medical procedure).Note: Ambulatory Surgery Centers services are not not DHS!

99

What is a DHS Entity?What is a DHS Entity?W at s a S t ty?W at s a S t ty?

Entity that bills for DHS service Entity that performs DHS service

“Perform” is given common meaningg g

1010

What Is a Financial Relationship?What Is a Financial Relationship?

A Financial Relationship includes:O hi i t t

pp

Ownership interests Through equity, debt , compensation or other means;

andand Compensation arrangements

Includes virtually any form of direct or indirect remuneration (i.e., personal service contracts, medical directorships, lease agreements, consulting arrangements medical service provider arrangements)arrangements, medical service provider arrangements)

1111


Remuneration is defined (42 CFR 411.351) as “any payment or other benefit made directly or indirectly overtly or covertly

pp

or other benefit made directly or indirectly, overtly or covertly, in cash or in kind …”

1212


Benefits:P t f i d d

pp

Payments for services rendered Use of space

U f l Use of personnel CME

Dinners Dinners Trinkets Parking Parking

1313

Nature of ExceptionsNature of Exceptionsatu e o cept o satu e o cept o s

If Financial Relationshipexists with an Entity, andexists with an Entity, and

patients are being Referredfor Designated Health

Service then activity mustService, then activity must either comply with an

exception or the activity is illegal

1414

ExceptionsExceptionsPermitted Ownership and Compensation Arrangements:

Physician Services

pp

Physician Services In-office Ancillary Services Services to Members of Prepaid Health Plans Academic Medical Centers Academic Medical Centers Implants Furnished by ASC Dialysis-related Drugs Furnished by End Stage Renal Disease

FacilityFacility Preventative Screening Tests, Immunizations and Vaccines Eyeglasses and Contact Lenses Following Cataract Surgery Intra family Rural Referrals* Intra-family Rural Referrals

1515

ExceptionsExceptions

Permitted Ownership Interests:

pp

Publicly-traded securities Mutual Fund Investment

Rural Provider (75% of DHS to Rural Residents) Rural Provider (75% of DHS to Rural Residents) Hospitals in Puerto Rico Hospital Ownership (whole not department or floor) Hospital Ownership (whole, not department or floor)

1616

ExceptionsExceptionsPermitted Compensation Arrangements:

Rental of Office Space

pp

Rental of Office Space Rental of Equipment Employment Relationships

S Personal Service Arrangement Physician Recruitment Isolated Transactions Services Unrelated to Provision of Designated Health

Services Hospital-affiliated Group Practice ArrangementsHospital affiliated Group Practice Arrangements Fair Market Value Payments Made by Physicians for Items

and Services (i.e., clinical laboratory services)

1717

Exceptions Exceptions

Permitted Compensation Arrangements:Charitable Donations b Ph sician

pp

Charitable Donations by Physician Non-monetary Compensation (Benefits) up to $300

Per Year Fair Market Value Compensation Medical Staff Incidental Benefits

Risk sharing Arrangements (i e withholds bonuses Risk-sharing Arrangements (i.e., withholds, bonuses, risk pools)

Compliance Training Indirect Compensation Arrangements Referral Services

1818

Exceptions Exceptions

Permitted Compensation Arrangements:

pp

Obstetrical Malpractice Insurance Subsidies Professional Courtesy

R t ti P t i U d d A Retention Payments in Underserved Areas Community-wide Health Information Systems Electronic Prescribing Items and Services Electronic Prescribing Items and Services Electronic Health Records Items and Services

1919

NonNon--Monetary Compensation Monetary Compensation Up Up to $to $373 Exception373 Exception

C ti (d fi d b fit) t i l di h h

Up Up to $to $373 Exception373 Exception((Applies to Applies to Compensation Compensation Relationships)Relationships)

Compensation (defined as any benefit), not including cash or cash equivalents (i.e., gift certificates that may be redeemed in whole or in part for cash), may not exceed and aggregate of $373 per year per physician as long as: Benefit is not determined based upon volume or value of

referralsreferrals. Benefit is not solicited by physician or anyone affiliated with

their practice. Maximum cannot be aggregated to make a larger gift to a

group.

2020

NonNon--Monetary CompensationMonetary CompensationUp Up to $to $373 Exception373 Exception

(Applies to(Applies to CompensationCompensation Relationships)Relationships)

Up Up to $to $373 Exception373 Exception

The $373 limit is updated annually.

See: www.cms.hhs.gov/PhysicianSelfReferral/

2121

NonNon--Monetary Compensation Monetary Compensation ExceptionExceptionExceptionException

$373 limit applies to calendar year.

2222

NonNon--Monetary Monetary CompensationCompensationUp to $Up to $373 Exception373 ExceptionUp to $Up to $373 Exception373 Exception

((Applies to Applies to CompensationCompensation Relationships)Relationships)

1. If a hospital inadvertently exceeds the annual limit, the hospital will still be deemed to be in compliance if i) the value of the excess is no more than 50% ofif i) the value of the excess is no more than 50% of the limit, and ii) the physician returns the excess by the end of the calendar year or within 180

ti l d d hi h i liconsecutive calendar days, whichever is earlier. NOTE: Can only be used once every 3 years.

2 Hospitals can now hold 1 formal medical staff event2. Hospitals can now hold 1 formal medical staff event per year without including the cost in this exception.

2323

NonNon--Monetary Monetary CompensationCompensationUp to $Up to $373 Exception373 Exception

(Applies to (Applies to CompensationCompensation Relationships)Relationships)

Up to $Up to $373 Exception373 Exception

For example:

$Cannot give $1,000 oil painting to 5 physician group and allocate $200 to each physician

2424



Preamble, on Page 16112 of Phase II, stated that “[the


Medical Staff Incidental Benefits Exception] was not intended to cover the provision of tangential, off-site benefits such as restaurant dinners or theater ticketsbenefits, such as restaurant dinners or theater tickets,which must comply with the exception for non-monetary compensation up to $355.” (emphasis added)monetary compensation up to $355. (emphasis added)

2525


(Applies to (Applies to Compensation Compensation Relationships)Relationships)

“[F]ree CME could constitute remuneration to the

(Applies to (Applies to Compensation Compensation Relationships)Relationships)

[F]ree CME could constitute remuneration to the physician depending on the content of the program and the physician’s obligation to acquire CME credits.”

Phase II, page 16114

2626

Medical Medical Staff Incidental Benefits Staff Incidental Benefits ExceptionExceptionExceptionException


Items or services used on the hospital's campus may


Items or services used on the hospital s campus may be given to members of its medical staff if: Item or service is provided to all members in the same

specialty without regard to volume or value of referrals. Item or service is provided only during periods when

the medical staff members are making rounds orthe medical staff members are making rounds or involved in other services that benefit the hospital and its patients.

2727

Medical Medical Staff Incidental Benefits Staff Incidental Benefits ExceptionExceptionExceptionException


The item or service is reasonably related to the


ydelivery of medical services at the hospital.

E h it i i l th $31 b fit Each item or service is less than $31 per benefit

Free For Physicians

2828

Medical Medical Staff Incidental Staff Incidental BenefitsBenefitsExceptionExceptionExceptionException

((Applies to Applies to Compensation Compensation Relationships)Relationships) The exception specifically recognizes that

“internet access, pagers, or two-way radios used away from the campus onlyradios, used away from the campus only to access hospital medical records or information or to access patients or

l h th h it lpersonnel who are on the hospital campus, as well as the identification of the medical staff on a hospital Web-site or in hospital advertising, will meet the single “on campus” requirement….” (emphasis added)

2929

added)

Tracking NonTracking Non--Monetary CompensationMonetary Compensation

The OIG assumes that DHS providers track the

Tracking NonTracking Non Monetary CompensationMonetary Compensation

The OIG assumes that DHS providers track the non-monetary compensation given to each

referring physicianreferring physician.

3030

3131

Who Tracks?Who Tracks?

Compliance Department Legal Department Finance Department Medical Staff Office

3232

Marketing v. NonMarketing v. Non--Monetary Monetary CompensationCompensationCompensationCompensation

Examples:L ff t d Logo coffee mugs, pens, note pads

What are the marketing dollars being spent on in your organization?

3333

When Does Hospital Advertising When Does Hospital Advertising Create a Benefit for a Physician?Create a Benefit for a Physician?Create a Benefit for a Physician?Create a Benefit for a Physician?

Covenant Hospital has the best medical care

Dr. Smith

3434

When Does Hospital Advertising When Does Hospital Advertising Create a Create a BenefitBenefit for a Physician?for a Physician?Create a Create a BenefitBenefit for a Physician?for a Physician?

Covenant Hospital has superior medical staff, like Dr. Smith

Dr. Smith

3535

When Does Hospital Advertising When Does Hospital Advertising Create a Create a BenefitBenefit for a Physician?for a Physician?Create a Create a BenefitBenefit for a Physician?for a Physician?

Covenant Hospital has superior medical staff, like Dr. Smith

Dr. Smith

3636To contact Dr. Smith, call (574) 123-4567

3737

2 dozen cookies, baked in the Hospital’s cafeteria,

delivered to four physician practice.

Cost of ingredients only $1.

3838

Listing of medical staff on Hospital’s website. What if H it l h li k d h i i ti ’ b it ?Hospital hyperlinked physician practice’s website?

3939

F l t di l t ff i th H it l’Free meals to medical staff in the Hospital’s cafeteria?

4040

Two SuperbowlTwo Superbowltickets given to Dr. Jones for use by himself and his

spouse. Face value of tickets is $100of tickets is $100

each but presently being sold onbeing sold on

Sportstickets.com at $500 per ticket.

4141

Hospital pays $10,000 to sponsor a f t h itfoursome at a charity

golf outing. Two physicians are askedphysicians are asked to play golf as part of

the foursome.

4242

$150 th f fl$150 worth of flowers delivered to a two

physician practice tophysician practice to celebrate the opening

of their new office site.

4343

$100 worth of flowers d li d t f ldelivered to funeral

home to pay condolences to acondolences to a physician whose

spouse passed away.p p y

4444

Free lab coats with Dr. SmithCovenant Hospital

the physician’s name and hospital logo

given to all members of the hospital’s medical staffmedical staff.

4545

CEO takes physician t t R th’ Ch i tout to Ruth’s Chris to

discuss the operations of theoperations of the

hospital’s orthopedic department. p

Physician is not employed by the

hospital. Cost of the dinner, including drinks was $150drinks, was $150.

4646

Food given to medical ti ittexecutive committee

during meeting in hospital’s conferencehospital s conference

room.

4747

Medical staff funds d t f diused to pay for dinners

at a local restaurant where the medicalwhere the medical

executive committee holds its monthly y

meetings.

4848

Physician, who is a member of the hospital’smember of the hospital s Board of Trustees, and

spouse travel to Orlando forspouse travel to Orlando for a 3-day Board retreat.

Hospital pays for all travel, hotel, and meal expenses. Total cost for physician and

i $2 000spouse is $2,000. Physician is not an

employee of the hospitalemployee of the hospital.4949

Medical staff member receives a gold watch

$valued at $500 at physician’s retirement

partyparty.

5050

In recognition of Doctor’s Day hospitalDoctor’s Day, hospital

gives each medical staff member a $50staff member a $50

gift certificate that can be used at any y

retailer at the local mall. The gift tifi t d t

$50

certificate does not say “Not Redeemable

for Cash ”for Cash. 5151

Hospital’s inpatient intake coordinatorintake coordinator

meets with physician office that has 4office that has 4

physicians and 10 support staff.

Coordinator brings subs, chips, and

d f llsodas for all attendees.

5252

Physician is given a $200 h i t$200 honorarium to make a continuing medical educationmedical education presentation for the hospital’s medical p

staff. The physician/presenter is

a member of the hospital’s medical

staffstaff.5353

Hospital makesHospital makes $1,000 donation to

local charity in honor yof Dr. Jones, the

medical staff id tpresident.

5454

At hospital holiday party, $150 iTouch is raffled off Doctors do not need to pay to participateoff. Doctors do not need to pay to participate. Independent (non-employed) physician wins.

5555

Referring and independent physician speaks at community health seminar sponsored bycommunity health seminar sponsored by

hospital. Hospital does not pay physician. Physician can promote his/her services atPhysician can promote his/her services at

seminar.

5656

Independent physician attends recruitment dinner at local restaurant Cost of physician’sdinner at local restaurant. Cost of physician s

meal is $75.

5757

Monogrammed scrubs given to physician by hospital Cost to hospital is $150hospital. Cost to hospital is $150.

Dr. Good

5858

Medical staff president is paid $10,000 for service as presidentas president.

5959

Hospital sends physician to out-of-state customer service training Cost of training tocustomer service training. Cost of training to

hospital is $2,000.

6060

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