QUESTION:
We would like to give our physicians backpacks and laptop cases that include our hospital’s logo with the intent that they use these items when traveling to and from work.  The backpack and laptop case would total $225 per physician.  Does this count as remuneration under Stark?

OUR ANSWER FROM HORTYSPRINGER ATTORNEY MARY PATERNI:
The short answer is – yes.  If a hospital provides remuneration to a physician, then the arrangement must satisfy an exception to Stark.  Remuneration is defined broadly under the law, and gifts such as backpacks and laptop cases will likely count as such.  But don’t fret.  The first step is recognizing remuneration.  The second step is finding out whether an exception applies!

There are several exceptions from which we can choose to address these gifts.

First, Stark exceptions offer the most flexibility for gifts offered to employed physicians.  42 C.F.R § 411.357(c).  Most gifts, such as backpacks, that are provided to an employed physician qualify as employee fringe benefits.  Such benefits are covered under the bona fide employment exception under Stark.  If the physicians who are receiving these backpacks and laptop cases are employed, you would not have to record this as a non-monetary compensation under the law.

Assuming that the physicians are not employed, the “non-monetary compensation” exception under Stark allows for compensation in the form of gifts so long as these gifts do not exceed an annually adjusted amount for each Calendar Year.  42 C.F.R. § 411.357(k).  For Calendar Year 2022, the annual non-monetary compensation exception limit is $452.  You can find the annual changes to the compensation amount here.

Please keep in mind that, in order for this exception to count, the hospital must record all items and gifts provided by the hospital to the physician.  In addition, the decision to give such gifts must not be based on, or take into account, the volume or value of referrals or business generated by the referring physician and may not be solicited by the physicians.  It appears that the amount for the backpacks and laptop cases per physician would fit within the non-monetary compensation exception, assuming no other items or gifts were already provided to the physicians that could tip the scale of compensation over the limit.  Just be sure to keep track of the value of all non-monetary compensation provided to each of your physicians for each Calendar Year.

In light of the COVID-19 public health emergency, there is still a blanket waiver in effect for the non-monetary compensation limit that allows remuneration from a hospital to a physician in a form of non-monetary compensation that exceeds the limit for the Calendar Year.  The remuneration covered under the COVID-19 blanket waivers must be solely related to COVID-19 purposes, which may include, but is not limited to, (1) ensuring the ability of health care providers to address the patient and community needs due to the COVID-19 outbreak and (2) ensuring the ability of health care providers to address patient and community needs due to COVID-19.