Guest Column: Gifts for referrals? Know the law

By Elizabeth E. Hogue, Esq.
Burtonsville, MD

Discharge planners and case managers certainly cannot accept cash payments from providers in exchange for referrals of patients. But what about non-cash items that have a relatively low value and that providers are not obligated to provide to case managers? Can case managers accept such items?

The key area that must be considered when answering these questions involves a federal statute that prohibits illegal remuneration, kickbacks, or rebates in Medicare, Medicaid, and other federal and state health care programs. This federal statute makes it a crime for providers to offer to give or actually give anything to anyone in order to induce referrals.

Case managers and providers who violate this federal statute may be guilty of criminal conduct and may go to jail or be forced to pay large amounts of money in the form of fines or civil monetary penalties. They also may be excluded from participation in government health care programs. If case managers are licensed, they also face loss of licensure.

The Office of the Inspector General (OIG) of the U.S. Department of Health and Human Services, the primary enforcer of fraud and abuse prohibitions, has said regulations will be published that will help to define what items of nonmonetary value may be accepted from providers who receive referrals.

Until specific guidance on these issues is provided by the OIG, providers and case managers may be wise to apply final regulations under the Stark laws, even though these laws technically apply only to physicians.

Specifically, the Stark laws indicate that free items of relatively low monetary value are unlikely to cause overuse, if provided within reasonable limits. The regulations further state that as long as all of the following criteria are met, such nonmonetary compensation will not violate the Stark laws:

  • The annual aggregate value of nonmonetary gifts does not exceed $300.
  • Providers that give nonmonetary compensation must make the same compensation available to those similarly situated, regardless of whether they refer patients to the provider for services.
  • The compensation is not determined in any way that takes into account the volume or value of referrals to the provider.

Providers and case managers also should be aware of the following limitations under the Stark laws:

  • Protection from violations of the Stark laws is not available for gifts that are solicited.
  • The exception for nonmonetary compensation up to $300 only protects gifts to individuals.

At this point, it seems unlikely that the OIG will conclude that case managers received kickbacks and rebates if the requirements of the Stark regulations described above are met. Providers and case managers should, of course, monitor developments in this area, especially because the OIG has stated that specific regulations applying to all practitioners will be published in the near future.