Gifts and Healthcare

“Free gift with purchase” is a phrase heard often in other sectors of the economy. But “free” has a much more complicated set of associations in healthcare delivery.

gift.jpgCertainly there is care of particular patients that gets rendered for free. But the idea of giving something – an item or service – to incentivize either the receiving or referral of healthcare products or services is bound around by a series of regulatory considerations.

What’s a “Gift” ?

According to the Oxford English Dictionary a gift is ““the transference of property in a thing by one person to another, voluntarily and without valuable consideration.” In healthcare gifts are also referred to as “remuneration” and “non-monetary compensation”.

What’s available?

At least in the past, just about everything. Here’s a list from one University healthcare center’s policy on gifts from vendors:

  • …pens, pads, and other promotional items, cash, food and drink, entertainment such as tickets to events, golf, and other sports outings, medical or research equipment, devices, or other products or services or discounts, use of company vehicles or vacation facilities, hotels, transportation, and other travel expenses, stocks, equity, and other such financial offerings, group gifts, text books, biological samples, software, computer hardware and accessories, electronic devices such as cell phones, pagers, music and video players, PDAs, consulting, financial, and other services, and office and research supplies…

What are the limits?

#1 - No “remuneration” to beneficiaries of federal healthcare programs

The Health Insurance Portability and Accountability Act of 1996 (original HIPAA) added a provision to the Social Security Act that authorizes the imposition of a civil monetary penalty (CMP) of up to $10,000 on anyone that “offers or transfers remuneration” to beneficiaries “ that such person knows or should know is likely to influence such individual to order or receive” services”. What’s “remuneration”? “Transfers of items or services for free or for other than fair market value”

The enforcement agency for this provision is the Department of Health and Humans Services Office of the Inspector General (OIG). In 2002 that Office issued a Special Advisory Bulletin to provide “bright line” guidance about what it did and did not consider “remuneration” worthy of enforcement action. According to that document the following may be offered or transferred:

  • Inexpensive gifts worth not more than $10 (and not totaling more than $50 in a year)

  • Free care based on financial need

  • Incentives related to preventative care

  • Hospital waivers of Outpatient Department copayments

  • Independent patient assistance programs (e.g. American Kidney Fund)

That same OIG has also been tasked with issuing advisory opinions about the application of this prohibition - as well as the criminal Antikickback Act – to various scenarios posed by those requesting the opinions. More than 20 opinions about free items and payment waivers are available on the Office’s website.

Hospitals are also adopting voluntary restrictions on the distribution of "gift bags" from formula manufacturers to new moms. The American Health Lawyers Association's Public interest Committee has published a White Paper on Beneficiary Inducements (2013) describing some of the risks and potential benefits in this area.

# 2 - No “compensation” for referral sources or their family members – unless an exception applies

The Stark law is discussed on another wiki page. What’s relevant here are three exceptions which can be used to protect gestures of generosity between those billing federal healthcare programs and their physician referral sources and the physician's families:

  • Non-monetary compensation (42 C.F.R. § 411.357(k))
    – plus one “Medical Staff appreciation event”-
  • Incidental Medical Staff Benefits (42 C.F.R. § 411.357(m))
  • Compliance training! (42 C.F.R.§ 411.357(o))

#3 – Check for a Gift Ban

Several states have put in place bans on gifts to various folks in healthcare.

  • Minnesota was the first, in 1993, to ban gifts from drug manufacturers and distributors to “practitioners” – a broad term that includes licensed doctors, podiatrists, veterinarians and their assistants;

  • The Massachusetts ban is part of a drug and medical device manufacturer code of conduct in their interactions with “health care practitioners”.

  • Vermont’s ban covers gifts to “health care providers” – including institutional ones. That state's Attorney General publishes a "guide" to how the law applies.

Medical schools have also started implementing bans on their campuses - and early research shows a change in physician prescribing habits among those subject to the most stringent policies.

#4 – Beware the “sunshine”

Rule-making is final on the federal Physician Payment Sunshine Act and reporting to the Centers for Medicare and Medicaid Services of payments and other “transfers of value” to both physicians and teaching hospitals is set to begin in March 2014. Of note is the low threshold for reporting - $10 or more per item or $100 total in a year. Here’s a summary of what’s to come.

Gift policy examples on the Web:

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