Nonmonetary gifts for referrals? Know the law

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 noncash items that have a relatively low value and that providers who receive referrals are not obligated to provide to case managers? Can case managers accept such items? The key area that must be considered to answer these questions involves a federal statute that prohibits illegal remuneration or kickbacks and rebates in the Medicare and 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 the Medicare/ Medicaid and other state and federal 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 that 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 the Stark laws technically apply only to physicians. Specifically, the regulations 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 it 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 should also 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 least in theory, providers and case managers could comply with the requirements of the Stark laws regarding nonmonetary compensation to physicians, but still violate the kickback and rebate statute describe above. At this point, however, 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. In other words, compliance with the requirements of the final Stark regulations may provide protection to case managers with regard to nonmonetary compensation received from providers who get referrals from them.

Providers and case managers should, of course, monitor developments in this area, especially since the OIG has stated that specific regulations that apply to all practitioners will be published in the near future. The temptations are many, but there is a great deal to be lost.