Under the federal Stark Law, hospitals, physician groups, labs and other provider entities may provide non-monetary (i.e., non-cash or cash equivalent) compensation to physicians up to an aggregate amount of $507 for calendar year 2024. The dollar limit for “medical staff incidental benefits” provided by a hospital to a member of its medical staff (e.g., meals, parking and other items or incidental services that are used on a hospital’s campus) is less than $44 per occurrence. Other requirements of the Stark Law exceptions for non-monetary compensation and medical staff incidental benefits also need to be met. Hospitals, physician groups, labs and other provider entities should take inventory of such non-monetary compensation and benefits to confirm they are meeting the law’s requirements, as applicable.
Detailed Analysis
The Stark Law provides that if an entity has a financial relationship with a physician, the physician may not refer to the entity for the provision of “designated health services” (e.g., inpatient and outpatient hospital services, imaging, laboratory, radiation therapy, physical and occupational therapy, etc.), and the entity may not bill for such services unless an exception is met. A “financial relationship” under the Stark Law is construed broadly to mean all remuneration from an entity to a physician, 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, certain CME and other non-cash equivalent benefits. Additionally, the medical staff incidental benefit exception can be used to cover meals, parking and other incidentals provided by a hospital to a member of the medical staff while “on campus.” Specific detail about the exceptions is outlined below. Hospitals, physician groups, labs and other entities that provide “designated health services” should review and ensure they meet these exceptions.
Non-Monetary Compensation up to $507
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 $507 per year may be provided, if all 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 over the $507 limit, such compensation will be deemed within the $507 limit if the value of the excess non-monetary compensation is no more than 50% of the $507 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 earlier of the end of the calendar year in which the excess non-monetary compensation was received or within 180 consecutive calendar days following the date on which the excess non-monetary compensation was received by the physician. This “return” option may be used by an entity only once every three 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 may be provided, if all 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 $44) for 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 staff may provide compensation under this exception on the same terms and conditions applied to hospitals.
Limited Remuneration Exception
As part of the final regulations released by the Centers for Medicare & Medicaid Services (“CMS”) effective January 19, 2021, CMS finalized an exception for arrangements where an entity pays compensation, including cash and cash equivalents, to a physician in exchange for items or services provided such amount is less than $5,000 during the given calendar year. This exception does not include writing, signature or set-in-advance requirements, but the compensation paid must be consistent with fair market value and the terms of the arrangement must be commercially reasonable. The $5,000 limit is adjusted annually for inflation and will increase from the 2023 limit of $5,702 to $5,913 beginning January 1, 2024, for the 2024 calendar year.
Practical Takeaways
Hospitals, physician groups, labs and other entities that provide “designated health services” should update their 2024 non-monetary and monetary compensation tracking tools to reflect the new non-monetary compensation limit of $507, medical staff incidental benefits limit of less than $44 per occurrence, and limited remuneration limit of $5,913, as applicable. Further, entities should review non-monetary compensation provided in 2023 to ensure that such compensation did not exceed the 2023 limit of $489 and take any necessary corrective action to repay excess amounts within 180 days of the overpayment or by December 31, 2023.
If you have any questions or would like any additional information about this topic, please contact:
- Erin Drummy at edrummy@hallrender.com or 317-977-1414;
- Alyssa James at ajames@hallrender.com or 317-429-3640;
- Katherine Schwartz at kschwartz@hallrender.com or 317-977-1432;
- Caulin McGraw at cmcgraw@hallrender.com or 317-977-1421; or
- Your primary Hall Render contact.
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.
