Under the federal Stark Law, hospitals may provide non-monetary compensation to physicians up to an aggregate amount of $429 for calendar year 2021. The dollar limit for “medical staff incidental benefits” (e.g., meals, parking and other items or incidental services that are used on the hospital’s campus) is less than $37 per occurrence. Other requirements of the Stark Law’s exception for non-monetary compensation and medical staff incidental benefits also need to be met. Hospitals should take inventory of such non-monetary compensation and benefits to confirm they are meeting the law’s requirements.
Detailed Analysis
The Stark Law provides that if a hospital has a financial relationship with a physician, the physician may not refer to the hospital for the provision of “designated health services” (including inpatient and outpatient hospital services), and the hospital may not bill for such services unless an exception is met. A “financial relationship” under the Stark Law is construed very broadly, which means all remuneration from a hospital to a physician must be considered, including in-kind compensation.
Pursuant to the Stark Law regulations at 42 C.F.R. § 411.357, there are exceptions for non-monetary compensation. Generally, the non-monetary compensation exception may be used to protect items or services provided to a physician such as entertainment, meals and other non-cash equivalent benefits. Specific detail about the exception is outlined below. Hospitals should review and ensure they are meeting these exceptions.
Non-Monetary Compensation up to $429
Compensation from an entity in the form of items or services (not including cash or cash equivalents such as gift cards) that does not exceed an aggregate of $429 per year, if all of the following conditions are satisfied:
- 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 physician.
- The compensation may not be solicited by the physician or the physician’s practice (including employees and staff members).
Where an entity has inadvertently provided non-monetary compensation to a physician in excess of the $429 limit, such compensation is deemed to be within the $429 limit if the value of the excess non-monetary compensation is no more than 50% of the $429 limit and the physician returns to the entity the excess non-monetary compensation (or an amount equal to the value of the excess non-monetary compensation). The return must be made by the end of the calendar year in which the excess non-monetary compensation was received or within 180 consecutive calendar days following the date the excess non-monetary compensation was received by the physician, whichever is earlier. This “return” option may be used by an entity only once every 3 years with respect to the same referring physician.
Medical Staff Incidental Benefits
Compensation in the form of items or services (not including cash or cash equivalents) from a hospital to a member of the medical staff when the item or service is used on the hospital’s campus, if all of the following conditions are met:
- The compensation is offered to all members of the medical staff practicing in the same specialty (but not necessarily accepted by every member to whom it is offered) without regard to the volume or value of referrals or other business generated between the parties.
- Except with respect to the identification of medical staff on a hospital website or in hospital advertising, the compensation is provided only during periods when the medical staff members are making rounds or are engaged in other services or activities that benefit the hospital or its patients.
- The compensation is provided by the hospital and used by the medical staff members only on the hospital’s campus. Compensation, including, but not limited to, internet access, pagers or two-way radios, used away from campus only to access hospital records or information or to access patients or personnel who are on the hospital campus, as well as the identification of the medical staff on a hospital website or in hospital advertising, meets this “on campus” requirement.
- The compensation is reasonably related to the provision of, or designed to facilitate directly or indirectly the delivery of, medical services to the hospital.
- The compensation is of low value (that is, less than $37) with respect to each occurrence of the benefit (e.g., each meal given to a physician while he or she is serving patients who are hospitalized must be of low value).
- The compensation is not determined in any manner that takes into account the volume or value of referrals or other business generated between the parties.
- Other facilities and health care clinics (including, but not limited to, federally qualified health centers) that have bona fide medical staffs may provide compensation under this exception on the same terms and conditions applied to hospitals.
Notably, the final regulations (“Final Rule”) released by the Centers for Medicare & Medicaid Services (“CMS”) last month removed the requirement for both above-referenced exceptions that the compensation arrangement does not violate the Anti-Kickback Statute or any federal or state law or regulation governing billing or claims submission. The rationale for this removal was that CMS no longer deemed it necessary to cross-reference compliance with the separate Anti-Kickback Statute in order to comply with Stark; it noted that if there was a violation of the Anti-Kickback Statute, most likely the Stark Law would also be violated anyway. The Final Rule is effective January 19, 2021.
COVID-19 Blanket Stark Waivers
On March 30, 2020, CMS issued blanket waivers of several Stark Law requirements related to COVID-19 physician arrangements. These waivers exempt providers from sanctions for noncompliance with the Stark Law in relation to various types of arrangements (absent the government’s determination of fraud or abuse), including remuneration that exceeds the current non-monetary compensation limit and medical staff incidental benefits amount. The Stark waivers are only applicable to financial arrangements related to a proper “COVID-19 Purpose.” Please visit our previous article for a more detailed discussion of the waivers and what constitutes a “COVID-19 Purpose.” The Stark waivers can be relied upon retroactively to March 1, 2020, until the expiration or termination of the declared public health emergency.
Practical Takeaways
Hospitals should update 2021 non-monetary compensation tracking tools to reflect the new non-monetary compensation limit of $429 and medical staff incidental benefits limit of $37 per occurrence. Further, hospitals should review non-monetary compensation provided in 2020 to ensure that such compensation did not exceed the 2020 limit of $423 and take any necessary corrective action to repay excess amounts within the earlier of 180 days of the overpayment or by December 31, 2020. Finally, hospitals that relied upon the blanket Stark waivers for non-monetary compensation and medical staff incidental benefits should verify that the waivers were applied in accordance with CMS guidance.
If you have any questions or would like any additional information about this topic, please contact:
- Gregg M. Wallanderat 317-977-1431 or gwally@wp.hallrender.com;
- Alyssa C. James at 317-429-3640 or ajames@wp.hallrender.com;
- Katherine M. Schwartz at 317-977-1432 or kschwartz@wp.hallrender.com; or
- Your primary Hall Render contact.
Special thanks to Hannah Clarke, law clerk, for her assistance with the preparation of this article.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
