QUESTION: “I know that the Stark law covers a lot of seemingly innocuous activities. But surely Stark does not affect the ability of the MEC to serve food and drinks at an off-site medical staff meeting – Can it???”
ANSWER: As you may have guessed – the answer is YES. But, do not despair, there are several ways to comply with the law.
Any time that a hospital provides remuneration to a physician, the arrangement must satisfy an exception to the law. Unfortunately, the Stark law defines “remuneration” so broadly that any meal or gift that a hospital provides to a physician will be considered to be “remuneration” and so the law will apply. Once the law applies, you must find an exception that will permit the proposed conduct.
The fact that the meeting will he held off campus will limit the exceptions that might otherwise apply. But even still, the good news is that the hospital gets to choose the exception that applies and depending on the facts, there are several exceptions from which to choose to address the meals to physicians provided at a committee meeting or at an educational event. Also, you should be aware of a new Stark exception that became effective on January 19, 2021, that will be very helpful in situations such as what you have described.
Employed Physicians
The Stark law provides the greatest amount of latitude when a hospital provides the meal or other benefit to an employed physician. Most meals and other medical staff benefits provided to an employed physician should be considered to constitute employment related fringe benefits and are covered by the Stark employment exception.
For the purpose of your question, we will assume that the Physicians who will receive the meals or other medical staff benefits are not Hospital employees – but we wanted to mention the Employment exception in case it can be used to minimize the record keeping that will be required by the exceptions that are described below.
Non-Employed Physicians
When dealing with non-employed physicians, the Stark law divides meals and other medical staff benefits into two categories – (1) non-monetary compensation that may be provided anywhere, have no individual per gift limit, but are subject to an annual cap; and (2) medical staff incidental benefits that must be provided on the hospital campus, have a per item limit but no annual limit. Depending on the facts, other exceptions may apply as well. However, the two meal related exceptions work like this:
(1) Non-Monetary Compensation Exception
The “nonmonetary compensation” exception (42 C.F.R. §411.357(k)) permits compensation in the form of items, meals or gifts (but not cash or cash equivalents) that do not exceed the then applicable limit in any Calendar Year, adjusted for inflation. When this exception was adopted, this amount was $300/Calendar Year. However, this amount is annually adjusted for inflation and the annual limit for Calendar Year 2021 is $429. CMS updates this amount annually, and the current annual limit may be found at http://www.cms.hhs.gov/PhysicianSelfReferral/10-CPI-U-Updates.asp.
Even when indexed to inflation, the $429 maximum in Calendar Year 2021 makes this exception of limited utility. Furthermore, in order to satisfy this exception, the hospital must track all such items, meals or gifts, the item, meal or gift must not be determined in any manner that takes into account the volume or value of referrals or business generated by the referring physician and may not be solicited by the physicians. However, there is no requirement that the meal or other benefit be provided on the Hospital’s campus.
In case it is needed, this rule also provides: (1) no more often than once every three years, a physician who has inadvertently received non-monetary compensation of up to 50% in excess of the then applicable annual limit, may repay the excess within the earlier of the same Calendar Year or 180 days of receipt of the excess, but this exception may be used only once every three years with respect to the same physician. In addition, a hospital may provide one medical staff function per year for the entire medical staff without regard to any monetary limit.
In order to comply with this exception, the hospital must track the value of all of the nonmonetary compensation that is provided to each physician during each Calendar Year. However, this can be done by taking the cost of the event and dividing that cost by the number of physicians who attended (you do not need to track what each physician may eat). Also, this exception does not include any geographic limitation.
(2) Medical Staff Incidental Benefits
The other meal/gift related exception that applies to non-employed physicians is the “Medical Staff Incidental Benefits” exception (§411.357(m)). While it is helpful that CMS has recognized that the Stark regulations should include an exception that recognizes a number of traditional relationships between a hospital and the physicians who are appointed to its medical staff, this exception is still relatively narrow and has a number of requirements, including the requirements that the item or services be offered to all staff members practicing in the same specialty without regard to the volume or value of their referrals to the hospital, provided only during periods when the medical staff members are making rounds or are engaged in other activities that benefit the hospital or its patients, used by the medical staff member “on the hospital’s campus,” be reasonably related to the delivery of medical services at the hospital, and not intended to induce referrals.
Also, the compensation must be of low value. Originally, each item was valued at $25 or less, and subject to the same inflation adjustment used in the non-monetary compensation exception. In Calendar Year 2021 this amount has been adjusted to $37 per occurrence. Future updates can be found at the same area of the CMS website as the update for non-monetary compensation. However, there is no annual limit and so there is not the same need for the per physician records to be maintained as there is for the above-described exception – but the hospital should keep records of the incidental benefits provided and their costs.
This is the so-called “free lunch exception.” Therefore, assuming that all of the requirements to the exception are met, a hospital may provide free meals, free parking or any other “on campus” incidental benefit that it normally provides to all members of its medical staff practicing in the same specialty without fear that that benefit will be construed as a prohibited compensation arrangement, so long as each individual benefit (i.e., each meal) is less than $37 in 2021 even if the aggregate value of all of the benefits provided to a physician over the course of a year exceeds $429 in Calendar Year 2021. That said, based on the facts that you have provided (i.e., the off-campus location of the meeting), this exception will not apply.
(3) Compliance Training Exception
There is a broad exception that permits a hospital to provide compliance training to a physician or to a physician’s staff, so long as the training is “held in the local community or service area” 42 C.F.R. §411.357(o) Compliance training is defined in this exception and is pretty broad – so it should apply to a medical staff committee meetings and most medical staff educational meetings. While the exception will permit the hospital to provide the training and CME so long as compliance training is the primary purpose of the program, this exception does not address serving food at the training. While this exception should protect the training itself that you have described, we do not recommend relying on this exception to serve food at any such program.
(4) Limited Remuneration to a Physician Exception – Added January 19, 2021
A new exception that became effective on January 19, 2021 will apply to a number of situations, including the one that you have described if none of the other exceptions apply. It does not require a written agreement, is very broad and permits a payment of up to $5,000 per Calendar Year per physician (with the $5,000/Calendar Year limit to be indexed to inflation in the same manner as the two exceptions described above).
Since this exception is new there is no case law interpreting. However, it does not require a written agreement and is very broad. While it has the disadvantage of requiring the hospital to track the amount paid to each physician each year (we recommend that you determine the amount/physician in the same manner described above), it will, in our opinion, cover the training that you described and much more.
We recommend relying on this exception first and should the $5,000/Calendar Year limit be exhausted then you may rely on the nonmonetary exception described above for the balance of the then applicable annual benefit.