The Dangers of Giving Gifts to Or Throwing Parties for Referral Sources

November 4th, 2013

Gift Inspector

The practice of health care providers giving valuable gifts and throwing parties for referral sources presents considerable risk.  Scrutiny from the Office of the Inspector General (OIG) and other policing bodies is at an all-time high. Here we provide a quick summary of some rules set out by Stark Law, anti-kickback laws, and the Office of the Inspector General.   Penalties for violating rules governing gifts:
  • Civil monetary penalties up to $100,000 if a gift is found to have as its principal purpose the intent to ensure referrals
  • Repayment of Medicare or Medicaid payments related to Stark violations
  • Exclusion from Medicare and Medicaid programs
  • Filing a Medicare or Medicaid claim in violation of the Stark Law constitutes a “false claim” which could trigger liability under the federal False Claims Act.

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To Whom You Give Gifts Can Matter as Much as the Gift Itself: Accepting gifts, parties, or even continuing education from referred-to entities puts a doctor’s or facility’s reputation and even financial future on the line.  How equally physical therapy practices or home health agencies give gifts to referral sources affects the legal appropriateness of the gifts.  If providers are basing their gifts and parties on the amount of referrals sent, it becomes more likely that the gift will be interpreted as a payment / illegal inducement for referral volume.  If a referred-to entity is found guilty of anti-kickback violations, the reputation of everyone receiving and giving gifts can be tarnished, and everyone sending gifts to that doctor will be subject to further investigation.   The OIG set a maximum allowable gift value of $30 per gift and $355 per year for medical staff.  Unfortunately, simply counting the retail value of gifts is not enough to keep home health agencies and physical therapy practices in the clear.  There are some stipulations under which any gift would be unacceptable.  If gifts of any value are construed by inspectors to be given with the intent of ensuring referrals, this would be a violation.  If gifts of any value are found to have a proportional relationship with referral volume, this would be a violation.  There are some exceptions, but free food often counts as gifts.  Services such as continuing education credits can count as gifts, and their retail value must be considered.  Cash equivalents can be instant Stark violations.  Gift cards and gift certificates may be considered cash equivalents and could be an instant Stark violation regardless of value.

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How Investigations Get Started: Investigations are usually instigated by complaints from competitors of the gift givers, by disgruntled employees of the gift givers, or by disgruntled employees of the gift receivers.  OIG, CMS, or their delegates typically investigate such violations.   In conclusion: Gifts that go beyond the category of simple reminder-items (i.e. pens, magnets, note pads) can be construed in ways that harm both the gift giver and the gift receiver.  The enforcement of existing laws can be subjective, making it difficult to know if any gift worth giving is safe. As a marketing approach, it's usually better to focus on informational, value-based outreach and quality of care.  Gift giving as a marketing approach is not a good long-term, growth-oriented strategy. ______________________________________________________________________ Clarifications and Comments Courtesy of Liz Pearson (attorney specializing in the needs of health care providers)
I have counseled home health agencies and healthcare providers in general for over 20 years...and my stance has always been there is NO SAFE gift to a referral source. Gary is correct that the suggested $10 maximum comes from the OIG advisory on gifts to PATIENTS and it has to be non-monetary. It has no application to Drs or other referral sources. The $300-388 number applies to the Stark law and operates as an exception for sit-down meals and other items (again non-monetary) provided to a Dr - only a Dr.(not Drs staff, discharge planners, social workers who refer). And - more important - that Stark exception does NOT apply to the Anti-Kickback law....and giving a gift at Christmas or otherwise does fall into the definition of a kickback. All you have to do is ask yourself WHY are you giving the gift - I understand most will say to thank them, show appreciation for the work they do - but ask again why do you want to thank them...its to generate favor SO....they will continue to refer. That is an inducement and per the Kickback law - a crime. Mind you - the OIG refuses to identify a number as to kickbacks to referrals that is too little to be considered a CRIMINAL violation of the Anti-kickback Act. So- nothing is SAFE, As to what to do - I suggest that instead of gifts make donations and include that in a Christmas card that in lieu of a gift, you made a donation to the American Heart Assn (cardiologist) or American Lung Assn (pulmonologist), Alzheimers Assn etc. Sorry for the lecture...but it is important that everyone understands the risk here. Will the OIG necessary come after you for a box of cookies - NO - but could they YES. Just look up the settlement Lincare made with the OIG a long time ago - $10 million for gift cards, tickets etc given to drs. And Drs got prosecuted for accepting the gifts too. So giving the gift puts them at risk. More important - there is no time better to start on the path of compliance with all laws and the first step is learning the laws. As a plug - but really to provide you necessary info - our website is pblaw,org and we post information regularly to update healthcare providers on compliance. We also have a Compliance conference scheduled for February if you want to know more. As I always say - this is risky business and health care providers need to know where the risk is - especially int he marketing arena.